Business 101: Principles of Management

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Time-based decision methods are used a great deal when a manager or company looks at a time-based project. To ensure the project can be done on time, managers use PERT analysis, a tool for estimating the time it will take to complete a project. This lesson will outline PERT and help you to understand how it is used to predict time based projects.

Never Enough Time

The great historic figure Ben Franklin had a great comment about time. He said 'You may delay, but time will not.' What old Ben was really saying is that you do not have to be on time, but the clock keeps ticking because time does not stand still.

Managers have to deal with the issue of time daily (if not hourly, if you will pardon the really bad joke). When they have a task they need to accomplish or, more specifically, a large project they need to work with, they are usually constrained by some type of time frame. Rarely, if ever, will you hear a boss say 'Here's a project, and finish it whenever you can.' On the contrary, everything in the business world is time-bound, and making sure a project gets done on time falls on the shoulders of the manager that the project is assigned to.

PERT

Luckily, we have an answer, and that answer is the PERT analysis, which stands for 'Program Evaluation and Review Technique.' That is a tool for estimating the time it will take to complete a project by estimating the time each part will take to accomplish, then adding up all the parts. Once we add up all the parts, we will know (roughly) how long the entire project will take.

Before a PERT can be used, we have to first determine the tasks that will be assigned to a particular project. For our example, let us say we want to grow a garden. Thus the tasks that could be assigned, among others, would be:

• Determine where we want the garden to be
• Determine what materials we will need to clear the land for the garden
• Get the materials to clear the land for the garden
• Determine what we want to plant in the garden
• Get the materials to plant the items we want in the garden
• Clear the area
• Plant the items
• Water them and watch them grow
• Harvest them when they are ripe

Now that we have tasks, we have to determine how much time each task will take. This is where PERT comes into play. Believe it or not, there is an actual formula we can use to estimate the time needed. It is important to understand I said estimate the time needed. The one weakness of PERT is that all the time associated with a task is estimated. Thus, the more experience you have with a certain type of work or project, the better your estimations become. That is why project managers (people educated and skilled in managing projects) are so valuable - because they typically work on the same type of project over and over and develop a good sense of how long each task should take.

Types of Time

Okay, time for a little math. Not a lot, mind you, and actually, the formula is very simple, but this is the formula that project managers will use when they are estimating time using a PERT analysis. The components are:

• Optimistic time (O): The minimum possible time required to accomplish a task, assuming everything proceeds better than is normally expected.
• Pessimistic time (P): The maximum possible time required to accomplish a task, assuming everything goes wrong (but excluding major catastrophes).
• Most likely time (M): The best estimate of the time required to accomplish a task, assuming everything proceeds as normal.
• Expected time (TE): The best estimate of the time required to accomplish a task, accounting for the fact that things don't always proceed as normal.

Once this is all done, we simply plug the time into the formula below, and presto, we have our estimated time for the task!

TE = (O + 4M + P) ÷ 6

Okay, back to our garden example. Our PERT time frame analysis for the first step (determine where the garden could be) could look something like this:

Optimistic time: 1 hour

Pessimistic time: 3 hours

Most likely time: 2 hours

Thus, our formula looks like:

1 + (4 * 2) + 3 = 12

12 / 6 = 2 hours

Looking at our example, we can see how this makes sense. Our optimistic time is one hour, and our pessimistic time is three hours, and two is right in the middle. Now, it does not always work this cleanly, as in the next example we will show.

Let's look at the clearing the area portion of this project:

Optimistic time: 5 hour

Pessimistic time: 12 hours

Most likely time: 7 hours

Thus our example looks like this:

5 + (4 * 7) + 12 = 45

45 / 6 = 7.5 hours

Now, if we look at each task, do the PERT formula for each, then add up all the answers, we will get answers that tell us how long it will take to do the entire project. Pretty simple, right? Ah, but not so fast. What if the number we come up with is longer than the time our manager has given us to accomplish the entire project? That can and does happen. When that happens there are only a few options you have:

• See what tasks you can shorten to save time
• Add manpower to a task (or equipment) to get it done faster
• Remove steps or entire tasks if they are not critical
• Tell your boss you cannot get it done in that time frame

Project managers deal with this every day of their lives and are special individuals to be able to manage all this to get projects done on time.

Lesson Summary

Time is money and money is time. That has been a part of business for as long as anyone can remember. Thus, it is important to use a tool like PERT analysis to break down the tasks of a project and how much time each task will take. As many projects are time-frame sensitive, a program such as this is vital in the business world.

Remember, first you have to identify the tasks, then you have to use the formula we discussed (TE = (O + 4M + P) ÷ 6) to determine what the time could be for each task, identifying the different types of time involved. Once that is done, we add them all up and see if the time frame works and, if not, start trying to figure out what we can do to get the project done on time.

Remember old Ben Franklin: 'You may delay, but time will not.'