Introduction

In the Ballistic Missile program, one of the most ambitious the US had ever undertaken, U.S. Defense establishments developed and applied their Program Evaluation and Review Technique (PERT).  This was one of their most ambitious programs. Completing this on time, ahead of their competitors, was critical to their success.  A lot of uncertainty was associated with such a missile development program since it required numerous suppliers to work on new technology. They used the PERT estimation method to encapsulate all the uncertainty into their estimates so that the program could be completed on schedule.  The technique has since been used for over 60 years, demonstrating its effectiveness to project managers.

Using PERT for a one-off engineering project enhances the accuracy of time and cost estimates, optimizes resource allocation, improves risk management, and facilitates informed decision-making. Its structured approach and visual representation improve communication and coordination among stakeholders, leading to more effective cost control and overall project management. 

Advantages

Using the PERT for estimating the cost of a one-off engineering project can be highly advantageous for several reasons:

1. Improved Accuracy in Time Estimation:

PERT uses three time estimates (optimistic, pessimistic, and most likely) to calculate the expected time for each activity. This probabilistic approach accounts for uncertainty and variability, leading to more realistic and reliable time estimates. Accurate time estimates are crucial for determining labor costs, scheduling, and resource allocation, all of which directly impact the project's cost.

2. Identification of the Critical Path:

By identifying the critical path—the sequence of tasks that determine the project's minimum completion time—PERT helps managers focus on activities that are critical to the project's timeline. Understanding the critical path allows for better prioritization of resources and activities, which can help avoid delays and associated cost overruns.

3. Resource Optimization:

PERT enables the identification of dependencies between tasks, facilitating better planning and coordination of resources. This optimization helps ensure that resources are utilized efficiently, reducing idle time and minimizing costs associated with resource mismanagement.

4. Risk Management:

The PERT approach highlights tasks with significant time uncertainty, allowing project managers to identify potential risks and develop mitigation strategies. By anticipating and addressing potential delays or issues, managers can avoid costly disruptions and ensure the project stays within budget.

5. Informed Decision Making:

PERT provides a detailed and structured analysis of the project timeline and costs, offering valuable insights for decision-making. This information allows managers to evaluate different scenarios, assess the impact of changes, and make informed decisions that balance time, cost, and quality.

6. Enhanced Communication and Coordination:

The visual representation of the project through the PERT network diagram facilitates clear communication among stakeholders. It helps ensure that everyone involved has a shared understanding of the project's timeline, dependencies, and critical activities, improving coordination and reducing misunderstandings that could lead to cost overruns.

7. Effective Cost Control:

By breaking down the project into smaller, manageable tasks with specific time and cost estimates, PERT allows for detailed tracking and control of expenses. This granular approach helps identify and address cost deviations early, ensuring the project remains on budget.

8. Flexibility in Project Planning:

PERT's task structure allows for continuous monitoring and updating as the project progresses. This flexibility ensures that changes in project scope, unexpected delays, or new information can be incorporated into the plan, allowing for dynamic cost estimation and control.

PERT
used to estimate project duration or cost.
a “weighted” average estimate technique.
best used for planning to ensure accurate scope.
determined using three points: Optimistic (O), Most Likely (M), and Pessimistic (P).
defined as (O + 4xM +P) / 6.

The 3 Estimation Points

Optimistic Estimate (O): Estimate based on all favourable conditions without risks or changes.
Pessimistic Estimate (P): Estimate based on all unfavourable conditions with all negative risks present and no mitigation of negative risks
Most Likely Estimate (M): This estimate considers both favourable and unfavourable conditions and some risks.

PERT and Integro

Integro provides a PERT estimation tool to assist in project cost estimation. The tool breaks the project processes into more atomic units that can be subjected to the PERT technique.

This video introduces the key concepts of the PERT tool.