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Topics: Estimating, Leadership, Organizational Project Management, Schedule Management, Scheduling
The Use of PERT
The organization I am a part of is desiring a 15% labor savings on all projects. I use PERT in MS Project to generate my savings. For instance - for a task that may have 10 hrs of labor associated with it. I use 10 as Pessimistic. I use a mulitplier of 85% for Most Likely (8.5 hours). Optimistic would be a multiplier of 70% (7 hrs). Has anyone used PERT in this manner?
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I used PERT in this manner but the factors are up to you or best said up to your organizational environment. My recommendation is taking a look to Barry Bohem´s Cone of Uncertainty because I thing it could help due to no matter it was created for software its use has been extended to lot of other domains.
Joshua -

this approach is looking at reducing effort for activities vs. reducing scope or focusing on "must haves" which might be a safer approach to cut costs.

I find your approach a reasonable one. I use somehow a similar approach when I do the estimate for our projects,
I think it works.
Not knowing anything about the projects, or how you plan to reduce the effort, my initial thought would be that it seems somewhat arbitrary and overly optimistic. It might be an easy way to show your desired savings, but I would be skeptical about hitting the goal.

Unless the projects are very regular in nature and there is a systemic improvement that applies to all of them, assuming all projects will realize an improvement because of leadership direction is not likely to be a valid assumption. The factors you use suggest that opportunities will always be equal or greater to risks, and your optimistic estimate is very optimistic at 30% improvement.

Whether is tasks in a process or projects in a portfolio, you will usually find you have more opportunity in some tasks/projects than others. You’re more likely to be successful focusing on the high value opportunities and achieving an average improvement equal to your goal than spend that effort on low value opportunities.
It is very theoretical but in the real life to reduce 15% of your labor you will need more than just a PERT analysis!
Increase productivity will not come from your PERT analysis - with it you can create targets and scenarios - but it will take more than that!
I'm not sure I understand the point. It sounds like you have a task with an estimated 10 hours of effort. To make your organization happy, you're reducing that and providing a happy estimate. If that's what you're doing, I would highly recommend that you stop. Give your stakeholders / company good estimates, even if they don't like them. If they demand a 15% labor savings, then you need to negotiate scope, quality, or schedule. Use the classic "Iron Triangle" to explain this to them: you can't magically change one side of the triangle without affecting the other sides. Budget savings can't emerge from a vacuum; if they want to pay less, they must be willing to get less (or get it later).

A good PERT analysis may help, but you shouldn't just reduce your estimates by 15% and call it optimistic. That's actually backwards. You need the estimates to calculate the percentages.

Go through your project with your project team and ask for 3 different estimates: realistic, optimistic, and pessimistic. For some tasks, there may be little (if any) difference between these three, or there may be a great deal of difference depending on the imagination of your project team. Next, you- the project manager- need to do some critical path analysis based on these estimates, because it may change depending on the scenario. Weight the realistic estimates (often by a factor of 4) and use the following formula to calculate your expected time of completion:
(Pessimistic + (4*Realistic) + Optimistic) / 6

Before reporting this to your company, you need to calculate the standard deviation between critical paths. That way you can express your estimates with a degree of confidence. This will really help you in this case. If you tell your company there's only an 68% confidence your project will be done in 7 weeks, but there's a 99% confidence it will be done in 10 weeks, then that helps them plan accordingly. It also shows that you have made an effort to find the required 15% savings, but you've also calculated the reduction in confidence that this savings imposes on your project. You can return to the "iron triangle" negotiation if they want to increase the confidence in your optimistic estimates.

I apologize if I misunderstood the scenario. The bottom line is that in PERT analysis, your various estimates determine your percentages, not the other way around. Your company is not asking for a PERT analysis, they're asking for an exception to the laws of thermodynamics.

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