Program Evaluation Review Technique (PERT)

Definition

The Program Evaluation Review Technique (PERT) is a statistical tool utilized in project management, specifically designed to analyze and represent the tasks involved in completing a given project. It illustrates the order of tasks and the time required to finish each one, providing a projected timeframe to complete the project. PERT also incorporates uncertainty and adds flexibility to the duration of a project by providing a range of possible time frames, rather than a fixed timeline.

Phonetic

Program: /ˈproʊˌɡræm/Evaluation: /ɪˌvæl.juˈeɪ.ʃən/Review: /rɪˈvjuː/Technique: /tɛkˈnik/(PERT): /pɜːrt/

Key Takeaways

1. Planning and Scheduling Tool: The Program Evaluation Review Technique (PERT) is a robust project management tool used to plan and schedule complex tasks and projects. It allows managers to map out the key activities in a project, evaluate the time necessary to complete them, and identify the critical path that will ensure the project’s completion in the least amount of time.
2. Accommodates Uncertainty: PERT is beneficial in fields where time and activity duration are uncertain. It operates on probabilistic estimates for activity durations, accommodating the inherent uncertainty in projects. Therefore, it allows for risk assessment and management, helping project managers identify potential challenges and time buffers needed to compensate for them.
3. Identifies Critical Path: Perhaps the most essential feature of PERT is that it aids in identifying the ‘critical path’ in a project. The critical path is the sequence of tasks that if delayed, will extend the overall project timeline. Understanding the critical path is instrumental in ensuring timely project completion and efficient resource allocation.

Importance

The Program Evaluation Review Technique (PERT) is a vitally important tool in business and finance due to its critical role in project management. As a quantitative method, PERT allows professionals to systematically manage and control complex projects by analyzing the tasks involved in project completion. It aids in identifying the minimum time needed to complete a project, understanding the sequencing and interdependencies of project activities, and determining which activities are “critical,” i.e., those that do not have flexibility in scheduling. By calculating the potential risks and delays in a project, it facilitates proactive troubleshooting and effective decision-making. Thus, PERT aids in efficient resource allocation, improving productivity, and providing a transparent roadmap to accomplish project goals.

Explanation

Program Evaluation Review Technique (PERT) is a vital tool used in the field of project management to schedule, organize, and coordinate tasks within a project. The primary purpose of PERT is to facilitate decision-making and improve efficiency and effectiveness in achieving project objectives. Essentially, PERT serves as a roadmap, providing a visual and strategic blueprint for designing, managing, and controlling large, complex projects with a high degree of interdependent activities. It assists project managers in identifying critical tasks that could potentially delay the project if not completed on time, thus allowing for better planning and scheduling of activities to prevent such delays.PERT is also renowned for its ability to address uncertainties in project management. This technique focuses on the time variable, considering the minimum, maximum, and expected time required to complete each task. Through PERT, project managers can estimate the shortest possible time to complete the project (optimistic time), the longest possible time (pessimistic time), and the probable time. This aspect of PERT aids managers in anticipating the impact of project timeline fluctuations, enabling effective risk management and adding a buffer for unexpected obstacles or setbacks. Thus, PERT provides a comprehensive analytical framework to make informed decisions and maximize project efficiency.

Examples

1. NASA Apollo Project: PERT was first developed by the U.S. Navy in the 1950s to manage the Polaris submarine missile program. Around the same time, NASA used PERT to coordinate the massive and complex tasks involved in sending a man to the Moon in the Apollo project. The method helped coordinate thousands of contractors, subcontractors, schedules, costs, and deadlines, ultimately aiding in the successful execution of the ambitious project.2. Construction Projects: In modern civil engineering and construction projects, PERT is often used to manage large-scale tasks. In the construction of a major shopping mall, for instance, tasks can range from obtaining planning permissions, coordinating different construction teams (for electrical, plumbing, etc.), scheduling inspections, to managing supplies and deadlines. PERT charts would help in tracking these tasks efficiently and identifying critical paths which can’t be delayed without holding up the entire project.3. Software Development Projects: Many tech companies use PERT in their software development projects. When developing a new software or application, there are various tasks such as designing, coding, testing and debugging, that all have to be coordinated simultaneously. PERT helps to map and keep track of these tasks, estimate the time needed for each task, and identify which tasks are critical to the overall timeline. This allows project managers to allocate resources efficiently and effectively manage project risks.

Frequently Asked Questions(FAQ)

Related Finance Terms

• Critical Path Method (CPM)
• Project Management
• Gantt Chart
• Task Dependency
• Project Scheduling

Sources for More Information

• Investopedia
• Simplilearn
• Business.com
• Project Management Institute