Project Estimation and Review Technique, Summaries of Project Management

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CRITICAL PATH METHOD

Objective:

1. Calculate the critical path

WHAT IS THE CRITICAL PATH METHOD?

• The Guide for Project Management (better known as PMBOK Guide), defines the critical path as:  “The sequence of scheduled activities that determines the duration of the project”.
• To complete a project, we must perform all the activities that compose it. Some activities can be done simultaneously, but others must be done in a certain order. For example, if I am going to build a house, I must first build the walls before painting them. Of all the sequences of activities that make up the project, the sequence that has the longest duration will be the critical path and determines the total project time. As a consequence, the critical path method specifies the algorithm for finding it.

WHAT METHODS ARE USED TO CALCULATE THE CRITICAL PATH?

• The methods used to calculate the critical path are the Project Evaluation and Review Technique (PERT) and the Critical Path Method (CPM).
• Although both methods are similar, they used different techniques to estimate task durations. The PERT method used three different time estimates for the duration of each task, plus it calculated the probability of completing the project at a given time. The CPM method used a single duration for each task; however, it also analyzed the additional costs that would be incurred if the project is accelerated.
• The differences between the two techniques are now considered to be minimal; therefore, we can refer to both as an overall method called PERT CPM.

HOW TO CALCULATE THE CRITICAL PATH?

• To calculate the critical path, we will follow the following steps:
• Step 1 : Obtain the project data. Make a list of all the activities of the project along with their dependencies and their specific times.
• Step 2 : Elaborate the network diagram. We have written a post that explains how to elaborate the project network diagram step by step.
• Step 3 : Calculate the Early Start and Late Start Times. Determine the Early Start and Late Start Times for each activity.
• Step 4 : Calculate the Early Finish and Late Finish Times. Determine the Early Finish and Late Finish Times for each activity.
• Step 5 : Calculate the slack time. The critical path must be determined by finding out the slack for each activity of the process. The activities where there is no slack are the ones making up the critical path.

• Duration (t):
• Indicates the time it takes to complete the activity.
• Early Start Time (ES):
• This is the earliest time that an activity can be started assuming all previous activities have been completed beforehand. For activities that have more than one precedent, the ES is the greatest of the late start time of their precedents.

• Early finish Time (EF):
• This is the earliest time that an activity can finish. It is equal to the early start time plus its estimated duration (t):
• EF = ES + t

• Late Start Time (LS):
• It is the latest time an

activity can begin

without delaying the

whole project. It is equal

to the Late Finish Time

minus the expected

duration of that activity

(t):

• LS = LF – t

• Slack – Float (S):
• A period of time when an activity can be delayed without causing the entire project to be delayed. All activities contained in the critical path zero slack.
• Here is how it is calculated mathematically: have
• S = LS – ES = LF – EF

THREE-POINT ESTIMATING

• Objectives:
• Students will be able to:

1. Calculate the Triangular Distribution and Beta Distribution

6.4.2.4 THREE-POINT ESTIMATING

• The accuracy of single-point duration estimates may be improved by considering estimation uncertainty and risk. Using three-point estimates helps define an approximate range for an activity’s duration: - Most likely (tM). This estimate is based on the duration of the activity, given the resources likely to be assigned, their productivity, realistic expectations of availability for the activity, dependencies on other participants, and interruptions. - Optimistic (tO). The activity duration based on analysis of the best-case scenario for the activity. - Pessimistic (tP). The duration based on analysis of the worst-case scenario for the activity.
• Depending on the assumed distribution of values within the range of the three estimates, the expected duration, tE, can be calculated. One commonly used formula is triangular distribution: tE = (tO + tM + tP) / 3. Triangular distribution is used when there is insufficient historical data or when using judgmental data. Duration estimates based on three points with an assumed distribution provide an expected duration and clarify the range of uncertainty around the expected duration.

WHAT IS THREE-POINT ESTIMATING IN PROJECT MANAGEMENT?

• Three-point estimating is a project estimation technique used to assess the likely outcomes or costs of anticipated. This approach enables project managers to generate realistic estimates and derive an expected value through a comprehensive evaluation, even with limited information.
• This is a powerful approach that involves analyzing and incorporating multiple estimates: optimistic (O), pessimistic (P), and most likely (M).

• They are described below:
• O - The "O" represents an optimistic estimate, also referred to as a best-case scenario or best-case estimate. This estimate assumes that everything will progress smoothly, with minimal obstacles or challenges.
• P - The symbol "P" represents a pessimistic estimate, which is also referred to as a worst-case scenario or worst-case estimate. This estimation assumes that everything will go wrong, leading to a more negative outcome than initially anticipated.
• M - The "M" represents the most likely estimate, which falls between the optimistic and pessimistic estimates. It represents a middle ground, acknowledging that some aspects of the future event may go right while others may encounter difficulties.

WHAT IS THE THREE-POINT ESTIMATING FORMULA?

• Project managers utilize three point estimating formulas to determine the most likely estimate when multiple variables are involved. Two common types of three point estimating formula are the triangular distribution and the Beta distribution (PERT).
• Triangular Distribution:
• The triangular distribution provides a straightforward method to calculate the average outcome. It involves taking the mean value of the components in the three-point estimate.
• For example, considering the previous example of daily work hours:
• E = (14 + 10 + 12) / 3
• E = 12
• According to the triangular distribution formula, the ideal time range to complete all tasks would be 12 hours.

BETA DISTRIBUTION (PERT):

• The Beta distribution, also known as Project Evaluation and Review

Technique (PERT), is a more intricate approach to three-point estimating in

project management calculation. It entails applying a weighted average

of the Optimistic, Pessimistic, and Most Likely estimates.

• The PERT beta distribution involves multiplying the Most Likely estimate by

four, which is four times its original value, and then dividing the sum of the

three estimates by six.

• For example:
• E = (14 + 4(12) + 10) / 6
• E = 12
• After applying the PERT beta distribution formula to our fictional data, the

resulting estimate remains 12 hours.