Page 264 - DMGT521_PROJECT_MANAGEMENT

Unit 14: Conflict and Negotiation

Notes
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Case Study Probability in PERT

ERT is probabilistic in nature. It is used in those projects which are being developed
for the first time. Hence, the developer has no previous experience and seeks
Pguidance from the knowledgeable persons. On the other hand, CPM is
deterministicin nature as all estimates are based on own experience or track-records.
But it must be remembered that many internal and external events may frustrate the
predictions. This happens frequently and is taken as norm rather than exception especially
in unstable economic and political environments.
In order to make realistic estimates, PERT obtains three estimates of different scenarios as
shown below:

 Optimistic Time Estimates if everything turns favorable.
 Pessimistic Time Estimates if all goes bad.
 Mostly likely time which would be experienced in normal conditions.

Time Estimation Formula
Since Optimistic and Pessimistic conditions would be far less than normal conditions, a
weight of one each is assigned to Optimistic and Pessimistic Times. In case of mostly
likely time, a weight of 4 is assigned. This is a standard practice. The result is divided by
total weight of 6, to find out weighted average which would serve as Time Estimate or Te
as in the formula shown on the right-hand side:
Basic Question

Contd...

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