Page 122 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Unit 7: Project Scheduling

distinction is merely fussy. Traditional PERT is used less often than CPM; but CPM can be used Notes
with three-time estimates, and we can do things with PERT that were restricted to CPM in
“olden times.” We use both names because users in the real world are apt to use either.
7.1 Brief History of CPM/PERT

CPM/PERT or Network Analysis as the technique is sometimes called, developed along two
parallel streams, one industrial and the other military.

CPM was the discovery of M.R. Walker of E.I. Du Pont de Nemours & Co. and J.E. Kelly of
Remington Rand, circa 1957. The computation was designed for the UNIVAC-I computer. The
first test was made in 1958, when CPM was applied to the construction of a new chemical plant.
In March 1959, the method was applied to a maintenance shutdown at the Du Pont works in
Louisville, Kentucky. Unproductive time was reduced from 125 to 93 hours.
PERT was devised in 1958 for the POLARIS missile program by the Program Evaluation Branch
of the Special Projects office of the U.S. Navy, helped by the Lockheed Missile Systems division
and the Consultant firm of Booz-Allen & Hamilton. The calculations were so arranged so that
they could be carried out on the IBM Naval Ordinance Research Computer (NORC) at Dahlgren,
Virginia.

7.2 Language of PERT/CPM

Several terms used in discussing PERT/CPM analysis have been adopted from everyday language
but have quite different meanings than in common usage. These terms are defined here as used
in PERT/CPM.

Self Assessment

Fill in the blanks:

1. The ....................... was designed for the UNIVAC-I computer.
2. ....................... was devised in 1958 for the POLARIS missile program by the Program
Evaluation Branch of the Special Projects office of the U.S. Navy.

3. The calculations were so arranged so that they could be carried out on the .......................
Ordinance Research Computer (NORC) at Dahlgren, Virginia.
4. Traditional PERT is used less often than .......................

7.3 Project Uncertainty and Risk Management

Calculating Probabilistic Activity Times

First, it is necessary to define what is meant by the terms “pessimistic,” “optimistic,” and “most
likely” (or “normal”). Assume that all possible durations (or all possible costs) for some task can
be represented by a statistical distribution. The individual or group making the estimates is
asked for a task duration, a, such that the actual duration of the task will be a or lower less than
1 percent of the time. Thus a is an optimistic estimate. The pessimistic estimate, b, is an estimated
duration for the same task such that the actual finish time will be b or greater less than 1 percent
of the time. (These estimates are often referred to as “at the .99 or the 99 percent level” or at the
“almost never level.”)

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