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Section 4.2: PERT

Based on Dr. Ming Lu’s material

Fall 2024
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What is PERT:

▪ Program evaluation and review technique (PERT) was originally oriented to the
time elements of a project.
▪ PERT has all the benefits of CPM (Critical path method), further incorporating
uncertainty and risk analysis to estimate the completion time of the project.
▪ Both CPM and PERT identify a project critical path, activities that cannot be
delayed plus slack activities that can be delayed to some extent without
lengthening the project completion time.
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What is PERT:

▪ Defines pessimistic, most likely and optimistic estimates of the

activity time to obtain the expected mean and the standard
deviation for each activity’s time.
▪ It allows for computation of “probability” of running over time on
the “expected project duration”.
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What is PERT
What is PERT

Using PERT, you can:

1.List each step needed to make the pizza.

2.Put them in order: The dough has to rise before you can assemble the pizza, and you
need to preheat the oven before baking.
3.Estimate three times for each step: the shortest, longest, and most likely time. For
example, the dough might rise quickly (30 minutes), take a long time if it’s cool (2
hours), or usually around 1 hour.
4.Calculate Total Expected Duration
5.Determine Probability of Completing within a Target Time. For example, the
probability to finish within 120 minutes

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What is PERT Prepare the toppings

Dough rising

Oven
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What is PERT

Activity Estimated Time Source of Uncertainty

Dough rising 30 minutes - 120 minutes Temperature, Yeast activity

Prepare the toppings 5 - 10 minutes How much you want to prepare

Preheating the oven 10-20 minutes Your oven type/condition

The way you want to arrange
Assemble the pizza 5 - 10 minutes
toppings

Thickness of pizza, oven type,

Baking the pizza 10 - 15 minutes
crispiness

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What is PERT

Shortest/ Longest/
Most Likely
Activity Optimistic Time Pessimistic Source of Uncertainty
Time (M)
(U) Time (L)
Dough rising 30 minutes 120 minutes 60 minutes Temperature, Yeast activity
Prepare the How much you want to
5 minutes 20 minutes 10 minutes
toppings prepare
Preheating the
10 minutes 20 minutes 15 minutes Your oven type/condition
oven
Assemble the The way you want to arrange
3 minutes 10 minutes 5 minutes
pizza toppings
Baking the Thickness of pizza, oven
10 minutes 15 minutes 12 minutes
pizza type, crispiness

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With PERT, you create a plan with time estimates

You’re prepared even if the dough takes longer to rise, or the

oven needs more time to heat.

This way, you’re ready to enjoy your pizza at the right time,
even if things don’t go perfectly on schedule!

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Difference between PERT and CPM

• PERT allows for flexibility with uncertain time estimates, which

helps if things like dough rising, or oven heating times are
unpredictable.

• CPM is used when you’re confident about each step’s timing, and
you need to follow a strict schedule.
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How PERT works?

Step 1: From the inputs [given L (pessimistic), M (most likely), U (optimistic) estimates], the mean value
(no rounding; but keeping two decimal places) for each activity is calculated as below:

𝐿+4𝑀+𝑈
(Equation 1) 𝜇=
6
(20 +4* 15 + 10)/6 =15

Optimistic Time Pessimistic Most Likely

Activity Mean value 𝝁
(U) Time (L) Time (M)
Preheating the
oven
10 minutes 20 minutes 15 minutes 15 minutes
Assemble the
pizza
3 minutes 10 minutes 5 minutes 5.50 minutes
(10+4* 5 + 3)/6 =5.5
How PERT works?
Step 2: Use the mean value of each activity to perform standard CPM. Identify critical path and
determine total project duration as the mean of project duration.

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5.5 15 12.17
Mean Time Dough
Activity Rising
(min)
Assemble Preheat Bake
Dough Rising 65
Pizza Oven Pizza
Prepare Toppings 10.83
Assemble Pizza 5.5
Preheat Oven 15 Prepare
Bake Pizza 12.17 Toppings

10.83 Mean of project duration: 97.67

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How PERT works?
Step 3: From the inputs [given L (pessimistic), M (most likely), U (optimistic) estimates], calculate the
variance for each activity on the critical path as below (keeping two decimal places):

2 𝑈−𝐿 2
(Equation 2) 𝜎 =
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Optimistic Pessimistic Most Likely

Activity
Time (U) Time (L)
Mean value 𝝁 Variance σ2
Time (M)
Preheating
10 minutes 20 minutes 15 minutes 15 minutes 2.78
the oven
Assemble
3 minutes 10 minutes 5 minutes 5.50 minutes 1.36
the pizza

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How PERT works?
Step 4: Add up variances of activities along critical path to calculate the variance of
project duration

Activity U M L Mean μ Variance σ2

Dough Rising 30 min 60 min 120 min 65 min 225
Prepare the
5 min 10 min 20 min Not critical Not critical
Toppings
Preheating the Oven 10 min 15 min 20 min 15 min 2.78
Assembling the
3 min 5 min 10 min 5.5 min 1.36
Pizza
Baking the Pizza 10 min 12 min 15 min 12.17 min 0.69
Total 97.67 min 229.83

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How PERT works?

Step 5: Establish a normal distribution using the mean and variance of project duration

Now, we have:

• Mean = 997.67 minutes

• Variance = 229.83 minutes

The standard deviation:

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How PERT works?

Step 6: Perform scheduling risk analysis based on the cumulative probability density function (CDF) of
the normal distribution obtained:
If x is normally distributed with mean μ and variance 𝜎 2 , then the random variable z is normally
distributed with mean μ = 0 and variance 𝜎 2 =1, calculated as below.
𝑥−𝜇
(𝐸𝑞𝑢𝑎𝑡𝑖𝑜𝑛 3) 𝑧=
𝜎

If we want to find the probability of completing the pizza within 110 minutes, we calculate:
How PERT works?

There is a 79% chance of finishing the pizza within 110 minutes.

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Example 1

“Convenience store building” case:

A general contractor has been invited to submit a bid for producing, transporting, delivery and
installing a modular frame to a building. Based on the company history, the general contractor has
determined the three time estimates for each activity (in days), along with sources of uncertainty
identified for each activity.

Based on the given network relationship, estimate the probability of completion of the project within
72 days and 75 days, respectively.
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Example 1:

C E F

A B D
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Example 1: Solution
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Example 1: Solution
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Example 1: Solution
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Example 1: Solution
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Example 1: Solution
 Standard Normal Distribution

Shadow Area = P
X cut = Z
Z=1 P= 68%
Z=2 P= 97 %
Z=3 P= 99 %

-4 -3 -2 -1 0 1 2 3 Z 4

NORM ( µ = 0 , SD = 1)
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PERT limitations: Think Critical

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PERT limitations

• The PERT calculated mean project time is always an underestimate of the

true project mean.

• This bias in the mean estimate is called the “merge event bias”.
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Merge Event Bias

• Merge Event refers to the start event of Activity having more than one merging
arrow, resulting in multiple paths in the project network.
• Some non-critical paths with the potential to become critical are called sub-critical
paths.
• Ignoring uncertainties in activity times on sub-critical paths leads to merge event bias.
Merge Event Bias
• If either C or D takes longer than planned, E will be delayed, since it depends on the completion of
both preceding tasks. This is where merge event bias can come into play.

• Even if the longest path was planned for, any additional delay from either path would impact the
start of E.

Mean Proj. Duration Standard Deviation (SD) Probability by 72 Probability by 75

PERT 70.17 2.42 76% 97%

True Value 70.59 2.91 68% 92%

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PERT Simulation based on Path Float (1.2)

• To identify critical tasks, we calculate each path's duration and its path float (the
difference between its time and the longest path).
• The longest path shows the critical tasks, and paths with low floats are also close to
being critical.
• For merge events, any delay in the merging paths can delay the project.
• Using path floats helps us see which paths are close to critical, making it easier to
understand how delays in these paths might affect the project as a whole.
• Activity criticality can be inferred from path criticality. Note, to simplify PERT
simulation, total float calculation on activity is not necessary.
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Method for Path Simulation

Step 1: Generate Random Numbers (using RAND() in Microsoft Excel)

Step 2: From the given inputs for optimistic, pessimistic and most likely durations, the values are fit into a

triangular distribution. Triangular is preferred due to its simplicity and flexibility to allow for skewness of

activity time distribution.

Step 3: Sample Values: use the following inverse function to generate triangular-distributed random

variates.
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Method for Path Simulation

Step 4: Use sampled values to run path calculation (calculate the duration of each path)

Step 5: Confirm the longest path and record the project duration

Step 6: The mean value, standard deviation and percentiles on a target output over the N runs of the project

will be calculated.

Step 7: Record the number of times each path ends up being critical and calculate its possibility.

Step 8: Record the path float of each path in each run, calculate the average, mean and percentiles.
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PERT Simulation Results: Total Project Duration for
Convenience Store Case
Statistical Output 100 runs
Mean Project Duration 70.586
Std. Dev Project Duration 2.910
Percentiles 0.10 67.228
Percentiles 0.15 68.074
Percentiles 0.20 68.385
Percentiles 0.25 68.574
Percentiles 0.30 68.900
Percentiles 0.35 69.285
Percentiles 0.40 69.418
Percentiles 0.45 69.722
Percentiles 0.50 70.191
Percentiles 0.55 70.594
Percentiles 0.60 71.454
Percentiles 0.65 71.769
Percentiles 0.70 72.178
Percentiles 0.75 72.674
Percentiles 0.80 73.005
Percentiles 0.85 73.294
Percentiles 0.90 74.159
Percentiles 0.95 75.591
Percentiles 1.00 78.179
• Re-estimate the probability of completion of the
project within 72 days and 75 days, respectively

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 Standard Deviation
Mean Proj. Duration Probability by 72 Probability by 75
(SD)
PERT 70.17 2.42 76% 97%

70.59 2.91 68% 92%

Simulation

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Path Criticality [0,1]
• Record the number of times each path ends up being critical and
calculate its probability [probability equals to the number of repetition
over the total number of runs (which is 30 in this example)].

C E F

A B D

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Important to note: PERT

• One underlying assumption of PERT is that any two activity times must be
independent of one another.
In case interdependency exists between times of two activities, PERT is not
applicable.
• There is no need to calculate activity time variance for a non-critical activity in
the classical PERT.
uncertainties in connection with non-critical activities are ignored,
resulting in Merge Event Bias of PERT.
• Normal distributions in classical PERT vs. Triangular distributions in PERT
simulation
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Example 2: Problem Statement

The same case given in example 1 will be solved by the above

simulation method in Excel. Based on the given network relationship,
estimate the probability of completion of the project within 72 days and
75 days, respectively.
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Example 2: Solution

a: U
c: M
b: L
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Example 2: Solution
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Example 2: Solution
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Example 2: Solution
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Excel Application
Step 1: Generate Random Numbers (using RAND() in Microsoft Excel). The number of runs will be 30.
So, 30 X 5 random numbers will be produced and fixed. Using the RAND() function in excel, the random
numbers will be used in the Step 3.
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Excel Application
Step 2: From the given inputs for optimistic, pessimistic and most likely durations, the values are fitted into
a triangular distribution.
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Excel Application
Step 3: Sample Values: use the inverse function to generate triangular-distributed random variates.

Using the same approach, we can get the results as following:

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Excel Application
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Excel Application
Step 4: use sampled values (obtained in the step 3) to run path calculation (calculate the duration of each
path)
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Excel Application
Step 5: Confirm the longest path and record the project duration (use “IF” function to identify the longest
path and project duration)
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Excel Application
Step 6: The mean value, standard deviation and percentiles over N (30) runs of the project will be
calculated (mean 70.242; standard deviation 2.754).
Step 7: Record the number of times each path ends up being critical and calculate its probability
[probability equals to the number of repetition over the total number of runs (which is 30 in this example)].
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Excel Application
Step 8: Record the path float of each path in each run, calculate the average, mean and percentiles. Statistics
such as average, standard deviation and percentiles will be calculated as illustrated below:
Comparison Items Path 1 Path 2
Use PERCENTILE.INC (PERCENTILE in older versions) Mean of path float 0.95 2.64
Std.Dev of path float 1.65 3.16
command in Excel to calculate the percentiles. Do not use Percentiles 0.10 0.00 0.00
Percentiles 0.15 0.00 0.00
Percentiles 0.20 0.00 0.00
PERCENTILE.EXC.
Percentiles 0.25 0.00 0.00
Percentiles 0.30 0.00 0.00
Percentiles 0.35 0.00 0.00
Percentiles 0.40 0.00 0.62
Percentiles 0.45 0.00 1.13
Percentiles 0.50 0.00 1.48
Percentiles 0.55 0.00 2.25
Percentiles 0.60 0.06 2.53
Percentiles 0.65 0.66 3.10
Percentiles 0.70 0.89 3.46
Percentiles 0.75 1.53 3.58
Percentiles 0.80 1.98 4.66
Percentiles 0.85 2.30 6.52
Percentiles 0.90 2.80 7.95
Percentiles 0.95 4.29 8.86
Percentiles 1.00 6.43 10.36
Questions from eBook

Choose the right answer.

1. What does Merge Event Bias in project scheduling mean?
a) Uncertainties inherent in sub-critical paths in project
network analysis
b) Milestone that merge activities at a point of time
c) An event that ignore the risks for critical activities in the
project
d) All of the above

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2. What is an approach to overcome Merge Event Bias in PERT?
a) Program evaluation and review technique (PERT)
b) Path Float Critical Path Method (PFCPM)
c) Simulation based on random sampling
d) None of the above

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3. In regard to classic PERT method, which statement is NOT
correct:
a) Variance of project duration is calculated by adding up
variances of activities’ durations along the critical path
b) Variances of the noncritical activities’ durations are ignored.
c) Normal distribution is used to represent activity duration
d) Normal distribution is used to represent project duration
e) All intermediate calculations need to be rounded to
integers.

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5. Which statement is correct regarding merge event
bias?
a) Ignoring uncertainties in activity times on sub-
critical paths leads to merge event bias.
b) The PERT calculated mean project time is always an
underestimate of the true project mean.
c) The Monte Carlo simulation can be used to correct
the merge event bias.
d) All above
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7. What distinguishes PERT from CPM? Check mark the
options applied.
a) Defining uncertain activity times
b) Calculating activities start and finish dates
c) Analyzing risks associated with project completion
time
d) Identifying critical activities and critical path

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10. Similar to CPM, PERT is focused on planning for
activity start and finish times and floats.
False
Rationale: PERT is more focused on predicting the probabilities associated with
lengthened project completion time; in contrast with CPM that is more concerned
with planning for activity start and finish times and floats.

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4. Check mark correct answer. In Path Float Critical Path Method
(PFCPM):
a) Path float is the difference of each path duration from the
longest path in the network
b) The longest continuous path defines the shortest project time
duration that is the critical path
c) PFCPM circumvents the backward pass analysis of classic
CPM
d) All of the above

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6. Which statement is NOT correct regarding Path
Float (PF)?
a) Path Float is the difference in length between any
path and the project duration
b) PF is zero for critical path
c) PF is positive for a sub-critical paths
d) PF can turn negative when project is delayed

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8. In case interdependency exists between times of
two activities, PERT simulation based on random
sampling is not applicable
True

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9. In PERT method, probability of completing a
project in x time units or less, is the probability
corresponding to the value of the standard normal
variate of x.
True

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