Program Management Interpretation


Interpreting PERT and CPM is fairly straightforward. They do not tell you what to do, but they provide the consequences in terms of time and resources (usually, money) of alternative choices you might make given the assumptions you built into the analysis.

It is generally a good idea to review the five assumptions whenever you interpret the results of a program management analysis, particularly CPM:

  1. All tasks have distinct beginning & ending points
  2. Time estimates are quantitatively well-defined
  3. Resources can be shifted from one task to another
  4. Cost of each activity is evenly spread over time
  5. No discounting or indirect costs

The probability of meeting the expected time, which is part of PERT, also requires some explanation. By adding the standard deviation of the time estimate for each activity into a pooled estimate, you create the opportunity to estimate the probability of completing the project within a certain time. This is a crude estimate (not a guarantee!). If the pooled deviations are treated as confidence limits (if these words don't make sense, go back and review the statistical terms in the syllabus), then 95% of the time the project can be expected to be completed somewhere between -2 and +2 times the probability of the expected time, assuming the distribution of completion times are normally distributed. In other words, if the PERT analysis arrives at an expected completion time of 10 weeks and the probability of that estimate (i.e., the pooled standard deviations of the various tasks) is 1.0, then you can expect that 95% of the time (or, you can predict with 95% confidence) the project will be completed in 8-12 weeks. If you are more of a risk-taker, the confidence interval for + or - 1 standard deviation is about 68%.


PERT
604

1996 A.J.Filipovitch
Revised 4 October 96