Making use of the PERT formula is one way to more accurately forecast project completion times to save your business money and keep others satisfied with the work completed. Time management is key to meeting customer expectations as well as to meeting business goals and projections.
There's nothing like the stress of missing a deadline and knowing that you are letting someone down, whether that be your boss or your customer. As if the emotional stress is not enough, when it comes to business, time is money. Missing deadlines costs our businesses money and keeps us from moving on to our next income-producing project as soon as we thought.
PERT stands for the program evaluation and review technique, which is a method of calculating project completion times both for your own scheduling and for your customers' needs. The PERT calculation takes into consideration the shortest, longest and most likely amount of time you think it will take to complete a project in order to help you plan your time in the most accurate way possible.
When you are planning your business schedule and communicating with customers, the PERT formula will help give you a feeling of confidence in time estimation. Instead of basing this date on your gut hunches or best-case scenarios, your customers and your work team will have a more realistic set of time expectations before the project begins. This results in greater job satisfaction as well as greater customer satisfaction.
One of the measures included in the PERT formula is the optimistic time estimate. When plugging this value into the equation, choose the best-case scenario. Think about if every person in the project finished his part perfectly and if there were no need for extra parts and no time hangups anywhere in the process.
For instance, if you are a contractor who is building a new, four-bedroom home, past experience might show a 120-day completion time when everything goes perfectly. There were no budget slow downs, no missing materials and no major weather snafus, and employees were able to complete their pieces in a timely manner. Of course, it is rare that things work this well, but this is just one number included in the PERT calculation, and the other values will help to even things out.
Another value included in the PERT calculation is the most likely time estimate. This would be your average completion time for a project. Not everything goes according to plan on the project, but it is not your worst-case scenario either. For the most part, everyone completes her part of the project on time, even if there was the occasional slow down.
For example, as a contractor for a four-bedroom home, you might find that when things generally go as planned, you average a 180-day completion time. This means that maybe you missed a day or two for rain here and there, or a sick day got in the way, but by and large, you were able to work on the days you planned to work. Maybe a material substitution was occasionally needed, or something needed to be remeasured and cut, but for the most part, things went as planned.
While nobody really likes to think about it, sometimes things do not go at all as planned on a project. The PERT formula takes this value into account as well. This is your worst-case scenario for project completion, when a project was derailed for months due to factors outside of your control, and every time you thought you were getting ahead of the troubles, something else went wrong.
For a contractor working on a four-bedroom home, this would be the home that actually took 365 days to complete instead of four to six months. The customer ran into problems with the bank that held up funds, and suppliers were out of materials. You forgot to do something prior to an inspection, there were utility hangups and zoning problems and weather kept you off the work site for two months. While we don't like to think about all the worst things happening at once, the PERT estimate helps us take it into consideration without dwelling on it.
The PERT estimate (E) is based on a formula that includes your optimistic time estimate (O), your most likely time estimate (M) and your pessimistic time estimate (P). The basic equation is this: E = (O + 4M +P) / 6 . If you have a hard time with equations, consider using a PERT calculator on the web to simplify things a bit.
In the case of our home contractor working on a four-bedroom home, the optimistic time estimate was 120 days, the most likely time estimate was 180 days and the pessimistic time estimate was 365 days. The equation to figure out the PERT estimate would look like this: E = (120 + 4 x 180 + 365) / 6. Done correctly, this equation gives the contractor a PERT estimate of 200.83 days to finish building the four-bedroom home.
At the same time, PERT can help to calculate the standard deviation (SD) from this estimate. The PERT equation for this value is: SD = (P-O) / 6. The standard deviation tells us how accurate the initial PERT time estimate is so we can give our workers, superiors and customers a completion window rather than a hard and fast completion date. Web-based calculators are available online to simplify the standard deviation calculation for convenience.
In the case of our contractor example, the standard deviation estimate would look like this: SD = (365-120) / 6. This works out to a 40.83 standard deviation from the 200.83 days required to finish building the four-bedroom home. This means that the building process is likely to take anywhere from 160 to 241.66 days to complete. Instead of telling the customers that building will take just over 200 days to complete, the contractor can choose to quote them 160 to 241.66 days.
PERT time estimates can be helpful when figuring out project and time management as well as best guesses on completion dates to communicate to the customer. Several pros of using PERT values are clear, including:
- Potentially higher customer satisfaction
- Higher worker satisfaction
- Lowered business costs
- Increased project efficiency
- Clearer data for easier project decision making
- Awareness of an accurate completion window
While PERT time estimates are often extremely helpful for large projects, this method is not without its faults. Some possible cons include:
- PERT is not as accurate for small projects.
- Optimistic, most likely and pessimistic values are still subjective values.
- PERT can be hard or impossible to calculate on extremely large projects with many variables.
While PERT might not be right for every project, medium- or large-sized projects without too many variables are good candidates for using these equations. For smaller or much larger projects, consider looking into Gantt charts as an alternative way to predict project start and end dates.