Introduction

PM Milestone Project Management Templates

PM Milestone Project Management Templates

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Management is continually seeking new and better control techniques to cope with the complexities, masses of data, and tight deadlines that are characteristic of many industries and their highly competitive environments today, as well as seeking better methods for presenting technical and cost data to customers.

Scheduling techniques have taken on paramount importance since World War II. The most common techniques are shown below:

• Milestone charts

• Line of balance1

• Program Evaluation and Review Technique (PERT)

• Arrow Diagram Method (ADM) [Sometimes called the Critical Path Method (CPM)]2

• Precedence Diagram Method (PDM)

• Graphical Evaluation and Review Technique (GERT)

1 Line of balance is more applicable to manufacturing operations for production line activities. However, it can be used for project management activities where a finite number of deliverables must be produced in a given time period. The reader need only refer to the multitude of texts on production management for more information on this technique.

2 The text uses the term CPM instead of ADM. The reader should understand that they are interchangeable.

Perhaps the best known of all the relatively new techniques is the program evaluation and review technique. PERT has several distinguishing characteristics:

• It forms the basis for all planning and predicting and provides management with the ability to plan for best possible use of resources to achieve a given goal within time and cost limitations.

• It provides visibility and enables management to control ''one-of-a-kind" programs as opposed to repetitive situations.

• It helps management handle the uncertainties involved in programs by answering such questions as how time delays in certain elements influence project completion, where slack exists between elements, and what elements are crucial to meet the completion date. This provides management with a means for evaluating alternatives.

• It provides a basis for obtaining the necessary facts for decision making.

• It utilizes a so-called time network analysis as the basic method to determine manpower, material, and capital requirements as well as providing a means for checking progress.

• It provides the basic structure for reporting information.

• It reveals interdependencies of activities.

• It facilitates "what if" exercises.

• It identifies the longest path or critical paths.

• It allows us to perform scheduling risk analysis.

These advantages apply to all network scheduling techniques, not just PERT.

PERT was originally developed in 1958 and 1959 to meet the needs of the "age of massive engineering" where the techniques of Taylor and Gantt were inapplicable. The Special Projects Office of the U.S. Navy, concerned with performance trends on large military development programs, introduced PERT on its Polaris Weapon System in 1958, after the technique had been developed with the aid of the management consulting firm of Booz, Allen, and Hamilton. Since that time, PERT has spread rapidly throughout almost all industries. At about the same time the Navy was developing PERT, the DuPont Company initiated a similar technique known as the critical path method (CPM), which also has spread widely, and is particularly concentrated in the construction and process industries.

In the early 1960s, the basic requirements of PERT/time as established by the Navy were as follows:

• All of the individual tasks to complete a given program must be visualized in a manner clear enough to be put down in a network, which comprises events and activities; i.e., follow the work breakdown structure.

• Events and activities must be sequenced on the network under a highly logical set of ground rules that allow the determination of important critical and subcritical paths. Networks can have up to one hundred or more events, but not less than ten or twenty.

• Time estimates must be made for each activity of the network on a three-way basis. Optimistic, most likely, and pessimistic elapsed-time figures are estimated by the person(s) most familiar with the activity involved.

• Critical path and slack times are computed. The critical path is that sequence of activities and events whose accomplishment will require the greatest expected time.

A big advantage of PERT is the kind of planning required to create a major network. Network development and critical path analysis reveal interdependencies and problem areas that are neither obvious nor well defined by other planning methods. The technique therefore determines where the greatest effort should be made for a project to stay on schedule.

The second advantage of PERT is that one can determine the probability of meeting specified deadlines by development of alternative plans. If the decision maker is statistically sophisticated, he can examine the standard deviations and the probability of accomplishment data. If there exists a minimum of uncertainty, one may use the single-time approach, of course, while retaining the advantage of network analysis.

A third advantage is the ability to evaluate the effect of changes in the program. For example, PERT can evaluate the effect of a contemplated shift of resources from the less critical activities to the activities identified as probable bottlenecks. Other resources and performance trade-offs may also be evaluated. PERT can also evaluate the effect of a deviation in the actual time required for an activity from what had been predicted.

Finally, PERT allows a large amount of sophisticated data to be presented in a well-organized diagram from which both contractor and customer can make joint decisions.

PERT, unfortunately, is not without its disadvantages. The complexity of PERT adds to the implementation problems. There exist more data requirements for a PERT-organized MCCS reporting system than for most others. PERT, therefore, becomes an item that is expensive to maintain and is utilized most often on large, complex programs.

In recent years, many companies have taken a hard look at the usefulness of PERT on small projects. The literature contains many diversified approaches toward applying PERT to other than large and complex programs. The result has been the PERT/LOB procedures, which, when applied properly, can do the following job:

• Cut project costs and reduce time scale

• Coordinate and expedite planning

• Eliminate idle time

• Provide better scheduling and control of subcontractor activities

• Develop better troubleshooting procedures

• Cut the time required for routine decisions, but allow more time for decision making

Even with these advantages, many companies should ask themselves whether they actually need PERT. Incorporation of PERT may not be easy, even if canned software packages are available. One of the biggest problems with incorporating PERT occurred in the 1960s when the Department of Defense requested that DoD customers adopt PERT/cost for relating cost and schedules. This resulted in the expenditure of considerable cost and effort on behalf of the contractor to overcome the numerous cost-accounting problems. Many contractors eventually went to two sets of books; one set was for program control (which was in compliance with standard company cost control procedures), and a second set was created for customer reporting. Therefore, before accepting a PERT system, management must perform a trade-off study to determine if the results are worth the cost.

The criticism that most people discover when using PERT includes:

• Time and labor intensive effort is required.

• Upper-level management decision-making ability is reduced.

• There exists a lack of functional ownership in estimates.

• There exists a lack of historical data for time-cost estimates.

• The assumption of unlimited resources may be inappropriate.

• There may exist the need for too much detail.

An in-depth study of PERT would require a course or two by itself. The intent of this chapter is to familiarize the reader with the terminology, capability, and applications of networks.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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