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Cost Estimating and Assessment


PERT helps managers shape their projects and manage the time allotted more effectively. Here are some of the reasons PERT is used:This article provides a good explanation of how to use standard deviation to calculate confidence intervals and probabilities for meeting targeted completion dates. The basic concept is that if your pessimistic date (i.e. the worst case scenario) falls within one standard deviation (a measure of variance from the average) then your likelihood of achieving it is greater than if it were two, three, four, etc. standard deviations away. In this context optimistic is bad (because it’s the most rushed and requires more things to come off in the best possible way) and pessimistic is good (because it’s easier to achieve).  

Find where you have flexibility – If a project manager needs to save time, PERT helps him or her identify which activities are good candidates for speeding up the deliverables. Tasks with a large range between optimistic and pessimistic time estimates have the greatest flexibility.

Improve scheduling of tasks – Project managers can be more precise using PERT. With very large projects, it may not be immediately obvious when particular activities should begin and end. The project manager using PERT can schedule each activity based on estimated completion time and derive start and end dates for the project based on the first task’s start date and the last task’s completion date.

“In my experience, most people assessing the amount of time required to complete a task are overly optimistic,” said Michael Campbell, a Consultant, Adjunct Professor at St. Edward’s University, and author of Idiot’s Guide to Project Management. “The value of using PERT charts is forcing them to think of the estimate in three ways – best case, worst case, [and] most likely. Just the exercise of thinking through those three estimates removes much of the optimistic bias and makes for a much more realistic estimate.” 

In project management theory, three main constraints exist (they are often illustrated as a triangle and sometimes called the Iron Triangle or Triple Constraint). The constraints are time, cost and scope (the deliverables, technical specifications or intended features), and the interaction of these three determines quality.