Module-5

Module-5
Project Evaluation and Review Technique (PERT)

Advantages of PERT :
Critical Path Method for Project management
• Critical Path Method (CPM) is a method used in project

planning, generally for project scheduling for the on-
time completion of the project.
• It helps in the determination of the earliest time by
which the whole project can be completed.
• There are two main concepts in this method namely
critical task and critical path.
What is a Critical task in project management?
• It is the task/activity that can’t be delayed otherwise the

completion of the entire project will be delayed. It must
be completed on time before starting the other
dependent tasks.
What is the Critical path in project management?
• It is a sequence of critical tasks/activities and is the

largest path in the project network.
• It gives us the minimum time which is required to
complete the entire project.
• The activities in the critical path are known as critical
activities and if these activities are delayed then the
completion of the entire project is also delayed.
Monte carlo Simulation
• Monte Carlo Analysis is a risk management technique used to conduct a

quantitative analysis of risks.
• This mathematical technique was developed in 1940 by an atomic nuclear

scientist named Stanislaw Ulam and is used to analyze the impact of risks
on your project in other words.
• if this risk occurs, how will it affect the schedule or the cost of the project.
• Monte Carlo gives you a range of possible outcomes and probabilities to

allow you to consider the likelihood of different scenarios.
• For example, let’s say you don’t know how long your project
will take.
• You have a rough estimate of the duration of each project
task. Using this, you develop a best-case scenario (optimistic)
and worst-case scenario (pessimistic) duration for each task.
• You can then use Monte Carlo to analyze all the potential
combinations and give you probabilities of when the project
will complete
• The results would look something like this:
• 2% chance of completing the project in 12 months (if
every task finished by the optimistic timeline).
• 15% chance of completion within 13 months
• 100% chance of completion within 16 months (If
everything takes as long as the pessimistic estimates)
•Using this information, you can now better estimate
your timeline and plan your project.
Benefits of Monte Carlo analysis in project management
• The primary benefits of using Monte Carlo analysis on your
projects are:
• Provides early inducation of how likely you are to meet
project milestones and deadlines.
• Can be used to create a more realistic budget and schedule

• Predicts the likelihood of schedule and cost overruns
• Quantifies risks to assess impacts
• Provides objective data for decision making
Limitations of Monte Carlo analysis in project
management:
•There are some challenges to using the Monte Carlo analysis.
• These include: You must provide three estimates for every activity
or factor being analyzed The analysis is only as good as the estimates
provided.
•The Monte Carlosimulation shows the overall probability for the

entire project or a large subset (such as a phase).
•It can’t be used to analyze individual activities or risks.

Resource allocation
• Resource allocation in project management, also known as resource
scheduling, is the sourcing and distribution of funds and materials for
business purposes.
• Companies spend money on services and supplies to complete various
projects and project tasks.
•As companies often have a certain amount of resources, it's essential to
move them to the correct places to minimize waste and maximize
return on investment.
•While allocation is a necessary step at the beginning of the project
planning process, managers also continue to monitor resource usage
throughout a project life cycle and reassign assets as needed.
Here are some typical types of resources in project
management:
• Labor: Part of resource allocation is taking advantage of the talents,

qualifications and professional experience of employees and delegating tasks and
positions that match employee skill level.
• Labor also includes external services or contingent staff a company hires for
support, such as IT, consultation or marketing agencies.
•Equipment: This kind of resource is any machine or tool, hardware or software,

that companies use to create products, provide services or complete other business-
related tasks.
•For example, for a construction company, their equipment could be excavators,
bulldozers and CAD software.
Space: Companies require space in which to complete work, develop
products and offer services, and they may lease or buy physical facilities
and headquarters.
• For example, an interior design firm may decide to lease an office
space in which supervisors can meet with clients and employees can
complete designs.
• Materials: The resource of materials involves any physical supplies
that help a company generate outputs or products or facilitate services.
•This includes raw materials like steel, oil and lumber, inventory for
sale to customers and office supplies like computers, desks, chairs,
printers, stationery and writing tools.
Money: Sometimes, part of resource allocation involves
assigning budgets and funds to different business departments
to complete project phases.
•These teams can use the money to purchase resources, pay

employee salaries and even make investments to generate
more revenue for the company.
Reasons why resource allocation is essential for businesses
•Ensuring projects are successful: The success of projects depends on

whether they have the right resources. Business leaders can ensure the
achievement of goals by allocating money, labor, equipment and
materials correctly.
•Minimizing costs: Planning resource allocation can help a company

identify the best resources for a project at the best prices. They can
determine the most cost- effective strategies, increase profitability and
generate high returns on investments.
•Submitting projects on time and within budget:
Organizing resource availability at the beginning of work
processes can support team efforts to complete a project on
time and within budget. This can then lead to client
satisfaction and brand awareness.
•Improving products and services: With the proper

resources, companies can develop products and services that
are high-quality and competitive in consumer markets. They
can also improve allocation over time to foster product
innovations.
•Optimizing employee skill sets: Assigning human resources or team
members to various types of projects can help them build skills and
develop professionally.
•This can optimize their ability to contribute to a company's mission
and objectives.
•Improving employee productivity: Employees who have the right

resources and opportunities to complete tasks can typically engage
more enthusiastically with their work and perform better. They can
operate at high productivity levels and work together efficiently.

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Module-5

Project Evaluation and Review Technique (PERT)

• Critical Path Method (CPM) is a method used in project

• It is the task/activity that can’t be delayed otherwise the

• It is a sequence of critical tasks/activities and is the

• Monte Carlo Analysis is a risk management technique used to conduct a

• This mathematical technique was developed in 1940 by an atomic nuclear

• Monte Carlo gives you a range of possible outcomes and probabilities to

• Can be used to create a more realistic budget and schedule

•The Monte Carlosimulation shows the overall probability for the

•It can’t be used to analyze individual activities or risks.

• Labor: Part of resource allocation is taking advantage of the talents,

•Equipment: This kind of resource is any machine or tool, hardware or software,

•These teams can use the money to purchase resources, pay

•Ensuring projects are successful: The success of projects depends on

•Minimizing costs: Planning resource allocation can help a company

•Improving products and services: With the proper

•Improving employee productivity: Employees who have the right

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