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5 min read

An SMB Contractor’s Guide to the Program Evaluation and Review Technique

The CrewCost Team
Published Jan 8, 2024

Construction project management revolves around using the right tools for the job. Just like craft workers use specific tools to accomplish their work, the management team can make use of a variety of tools and methods to produce the highest quality, most profitable jobs.

When it comes to project scheduling, every method and tool offers certain advantages, and having a good understanding of them will help you complete a project efficiently and with minimal delay. There are several methods worth acquainting yourself with (and we go over them in another article), but in this article we will cover the Program Evaluation and Review Technique, commonly known as PERT.

Originally developed by the U.S. Navy in the 1950s for complex projects, PERT can be a game-changer for SMB contractors looking to streamline their processes. PERT focuses on really digging into the logic of the sequencing of the various events within the project (milestones) and scrutinizes the relationships of the activities needed to accomplish the events; PERT also has a creative way of dealing with uncertainties associated with durations of individual tasks.

Key Takeaways

  • PERT (Program Evaluation and Review Technique) is a useful project management tool for SMB contractors to improve planning, scheduling, time management, flexibility, and resource allocation.
  • PERT involves breaking down the project into tasks, estimating the optimistic, most likely, and pessimistic time durations, and creating a network diagram to visualize dependencies and critical path.
  • SMB contractors can simplify PERT by focusing on major phases, using project management software, and combining it with other methods like Gantt charts for a comprehensive schedule.

What is the Program Evaluation and Review Technique (PERT)?

PERT is a project management tool used to schedule, organize, and coordinate tasks within a project. It offers a graphical representation of a project’s timeline that allows contractors to identify the critical path of tasks necessary for project completion. This technique involves identifying the specific tasks that must be completed, estimating the time required for each, and then mapping out the most efficient sequence of activities to minimize delays.

The PERT method can be executed with scheduling software, or it can be hand drawn. It will have a series of nodes (events) with one-way arrows connecting them, with the arrows representing the activities that future nodes depend on in order to be accomplished. The activities can be further broken down into increasingly granular levels of understanding, but at a high level the PERT method is actually very similar to the Critical Path Method of scheduling. The one main difference is while CPM uses one estimate for durations of activities, PERT uses a combination of estimates for activity durations.

PERT uses a combination of three different approaches to estimate the duration of an activity. They are:

  • Optimistic time (O) – This assumes everything goes right leading up to the activity and it takes the minimum amount of time to complete.
  • Most likely time (M) – This accounts for likely delays, albeit not major setbacks, and reflects the realistic duration of the activity.
  • Pessimistic time (P) – This assumes the longest amount of time to complete the activity that it could possibly take, without any catastrophic schedule setbacks.

These three duration estimates are entered into a formula that weighs them and statistically averages them to produce the Expected Time, which is the duration the PERT method relies upon. This is the formula to derive the Expected Time:

Expected Time (duration) = (O + 4M + P) / 6.

Because PERT approaches uncertainty in activity durations using this statistical approach, it is an extremely useful tool for scheduling projects where there is a high degree of uncertainty with regards to how long specific activities will take to complete.

👉🏼 Read the full guide to construction scheduling.

Benefits for SMB Contractors

While PERT may seem like it applies to large projects and large contractors, the truth is that emerging contractors stand to gain numerous advantages by incorporating PERT as a tool in their repertoire of project management techniques. The adoption of PERT can bring numerous benefits to SMB contractors, including:

  • Improved Planning and Scheduling – PERT facilitates a deeper understanding of the project’s flow, helping identify key activities and timelines. It requires intense scrutiny of the relationship between different events and activities on the project, so by using PERT you will have a much more intimate understanding of how certain activities affect events later in the project and the overall completion of the project.
  • Enhanced Time Management – By estimating the minimum time needed for project completion, PERT allows for more effective time management. PERT is also complementary to the Critical Path Method, which also focuses on understanding the network of relationships between activities and how it affects the minimum time needed to complete the project.
  • Increased Flexibility – Contractors can anticipate and adjust to potential delays or changes in the project timeline. PERT allows you to see how future downstream activities or events will be affected by changes to activity durations that are currently happening, giving you insight and power to minimize future delays.
  • Better Resource Allocation – Understanding which activities affect the shortest possible duration of the project helps in allocating resources more efficiently where they are most needed. Understanding when and where to deploy your resources gives you a tactical advantage on project’s where there are competing priorities.

Adapting PERT for SMB Contractors

While PERT might seem more suited for large-scale projects, SMB contractors can adapt its principles for their benefit. Here are some of the ways using the PERT method can be simplified in order to be used on a project of any size:

  • Simplify the Technique – Instead of an extensive network of activities, focus on the major phases of your projects. For smaller projects, you won’t need to get as granular as you would on larger projects, because the activities are not as complex and intricate.
  • Use Available Tools – Leverage project management software that includes PERT chart functionalities tailored for small businesses. In particular, two software that I have used extensively for smaller projects are Smartsheet and Microsoft Project. Both softwares are easy to learn, easy to use, and provide robust schedules quickly.
  • Combine with Other Methods – Integrate PERT with other project management approaches like Gantt charts for a more comprehensive view. As previously stated, PERT goes hand-in-hand with the Critical Path Method due to both methods’ close scrutiny of the dependencies between activities.

Ultimately, while implementing the PERT method might seem intimidating, what it really means for your project is simply looking at the major phases of construction, breaking those down into smaller, more manageable chunks, and then taking a deep look into what activity has to happen in order for the following ones to be possible.

Using the example of a single-family home construction project, in order for the slab foundation to be placed, the earthwork, grading, and underground utilities must be installed first. Thus, placing the foundation is dependent on those activities occurring first. If they have not happened, then the slab cannot be placed.

How to Implement PERT in SMB Contracting

1. Define Project Scope and Breakdown
  • Start by clearly defining the project scope, deliverables, and milestones. This includes understanding the client’s expectations, building plans, and local regulations.
  • Break down the project into smaller, manageable tasks. This could involve foundation work, framing, plumbing, electrical, roofing, interior finishing, etc.
  • Identify dependencies between tasks. For example, roof installation can’t begin before the walls are up.
2. Estimate Task Durations
  • For each task, estimate three time durations:
    • Optimistic time (O): The shortest possible time to complete the task under ideal conditions.
    • Most likely time (M): The most realistic time to complete the task considering normal circumstances.
    • Pessimistic time (P): The longest possible time to complete the task due to unforeseen delays.
3. Create the PERT Chart
  • Use a visual representation like a network diagram to show the tasks, their dependencies, and durations.
  • Each task is represented by a node, and arrows show the flow of work (activities) and dependencies.
  • Calculate the expected duration of each path through the network using the formula: Expected Duration = (O + 4M + P) / 6.
4. Analyze and Optimize the Schedule
  • Identify the Critical Path, which is the longest path through the network with no slack (buffer time). Delays in any task on this path will delay the entire project.
  • Look for opportunities to reduce the critical path duration by parallel scheduling (overlapping tasks) or task splitting.
  • Monitor progress throughout the project and update the PERT chart as needed to reflect changes and delays.

Final Thoughts

Implementing PERT in SMB contracting offers a structured yet flexible approach to project management. It’s not just about following a rigid plan but adapting to the dynamic nature of construction projects. By embracing PERT, SMB contractors can enhance efficiency, reduce delays, and ultimately deliver successful projects with greater confidence.

For SMB contractors, the transition to structured project management techniques like PERT can be a significant step towards greater operational efficiency. While it may require a shift in approach and possibly an investment in new tools, the payoff in terms of project control, time management, and customer satisfaction can be substantial. Embracing PERT means not only keeping up with the “bigger guys” but also setting a new standard in SMB contracting.

Having taken practices used by larger contractors and successfully applied them to the SMB market in the past, I can say with full confidence that using tools like PERT is an easy way to impress clients, win repeat work, and fly past your competition. Owners on smaller projects typically have to accept less sophisticated management practices on construction projects, but showing them a level of organization and execution that they are unaccustomed to will solidify their perception of you as a best in class contractor.

The CrewCost Team

The CrewCost Team consists of men and women who have worked in the construction industry as project managers, general contractors, sub contractors and more. They share their decades of experience on our blog as a way to help other contractors grow healthier and more profitable businesses.

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