Delphi, PEST and PERT for Management Concepts and Organization Behavior

A Comprehensive Study on
By
Fenin Samuel
NICHE
Delphi Techniques
1
PEST Analysis
2
PERT Analysis
3

Overview
Introduction
Definition
Steps
Working Principle
Applications
Advantages and Disadvantages
Delphi

Delphi Technique was developed by Olaf Helmer, Norman Dalkey
and Nicholas Rescher at RAND Corporation in the year 1950s,
originally to forecast the impact of technology on warfare for U.S.
Army Air Corps.
RAND is a non-profit organization that helps to improve policy and
decision making through research and analysis. The entire
financial support for this organization is carried out by the US
government and some other private organization too.
Delphi method entails a group of experts who anonymously reply
to questionnaires and subsequently receive feedback in the form
of a statistical representation of the "group response," after which
the process repeats itself.
Introduction
Delphi

The goal is to reduce the range of responses and arrive at
something closer to expert consensus.
This method is based on the belief that group judgments are
mature, well-considered and more valid than individual judgments.
The Delphi method has been widely used in the field of science
and technology forecasting to combine expert opinion on the
likelihood and impact of technological developments.
Introduction
Delphi

The Delphi method is defined as a unique way of
obtaining a consensus opinion by experts through
a process of thesis, antithesis and eventual
synthesis.
Definition
Delphi

• Choose a Facilitator
• Identifying Experts
• Define the Problem
• Round One Questions
• Round Two Questions
• Round Three Questions
• Act on Your Findings
Steps involved in Delphi Techniques
Delphi

Pivotal Role of the Facilitator
It is the facilitator's responsibility to distribute the questionnaires, collect the
responses and then study the individual reports to ascertain the areas of
commonality and the areas of divergence. Wherever consensus is missing, the
facilitator initiates a repeat of the process of thesis and antithesis, and strives to
create a synthesis for final acceptance by all.
Choose a Facilitator
Who is said to be a Facilitator ?
The person coordinating the Delphi method can be known as a facilitator.
Characteristics of Facilitator
The facilitator should be a 'neutral' person
The facilitator should be familiar with research and data collection.
The facilitator should avoid interjecting any personal bias, belief or principle of his or
her own into the process as this would taint the results.
Delphi

Identifying Experts
An expert is "any individual with relevant knowledge and
experience of a particular topic."
The Delphi technique relies on a panel of experts. This panel may
be your project team, including the customer, or other experts
from within your organization or industry.
Define the Problem
The experts need to understand exactly what they are
commenting on, so ensure you provide a clear and
comprehensive definition about the problem.
Delphi

Round One Questions
Ask general questions to gain a broad understanding of the views
of the experts about future events.
The questions may go out in the form of questionnaires or
surveys. Collated and summaries the responses removing any
irrelevant content and look for common viewpoints.
Round Two Questions
Based on the answers to the first questions, these questions
should delve deeper into the topic to clarify specific issues.
These questions may also go out in the form of questionnaires or
surveys. Again, collate and summaries the results removing any
irrelevant content and look for the common ground. Remember,
we are looking to build consensus.
Delphi

Round Three Questions
The final questionnaire aims to focus on supporting decision
making. Hence in on the areas of agreement.
(You may wish to have more than three rounds of questioning to
reach a closer consensus.)
Act on Your Findings
After this round of questions your experts will have, we hope,
reached a consensus and you will have a view of future events.
Analyze the findings and put plans in place to deal with future
risks and opportunities to your project.
Delphi

The Delphi Method communication structure
Delphi

Through the synthesis method, opposites will be reconciled to
deliver a new thesis. All participants will then be required to
concur with the new thesis and support it.
Working of Delphi Technique
The technique is believed to be based on the principle
advocated by Hegel that "Oneness of Mind" can be achieved
through a three step process of thesis, antithesis and synthesis.
Through thesis and antithesis, all experts will present their
opinions on a given subject, which will bring forth diametrically
divergent views.
Delphi

Thus, experts are encouraged to revise their earlier answers in
light of the replies of other members of their panel.
In Delphi technique, the experts answer questionnaires in two or
more rounds. Experts are usually expected to comment on their
own remarks as well as to comment on the views of others and on
the overall opinion of the whole panel
Experts are also provided with an opportunity to revise their earlier
opinions. After each round, a facilitator provides an anonymous
summary of the experts’ forecasts from the previous round as well
as the reasons they provided for their judgments.
Delphi

An interesting aspect is the names of participating experts are
never disclosed, even after the report is finalized. Knowing that
one's comments and assertions are being made anonymously
ensures that the participants feel free to express their true
thoughts and opinions without the fear of group pressure to
change or conform to another's point of view.
It is believed that during this process the range of the answers will
decrease and the group will converge towards the "correct"
answer. Finally, the process is stopped after a pre-defined stop
criterion (e.g. number of rounds, achievement of consensus, and
stability of results) and the mean or median scores of the final
rounds determine the results.
Delphi

This method is now being considered a tool in several areas
including health, education, and project management, and it is
used to forecast economic trends.
Application of the Delphi Technique
The Delphi method was used in the field of science and
technology for forecasting. Currently, the technique has been
widely practiced for forecasting in business circles and is said to
be more effective and precise than other known forecasting
approaches.
Delphi

Is conducted in writing and does not require face-to-face
meetings
Individuals from diverse backgrounds or from remote locations
to work together on the same problems
It is relatively free of social pressure, personality influence, and
individual dominance
Allows a number of experts to be called upon to provide a broad
range of views, on which to base
Is inexpensive.
Advantages
Delphi

Requires skill in written communication
Information comes from a selected group of people and may not
be representative
Requires adequate time and participant commitment.
Disadvantages
Delphi

Overview
Introduction
Meaning
Composition
Uses
PEST

How a new law in definite policies affects them
What technological changes that likes to help or hinter the
progress
However changes in people life style affect their product
offering
Introduction
When organizations develop their strategy there are dozens of
important factors they have to consider for instant:
These are all the things that can make an impact in organization
development
PEST

PEST is practiced in most of the organization world wide for
the past twenty years, but still there isn’t much information how
this technique has evolved.
Introduction
This is why using PEST analysis is of useful, going through this
analysis
how to avoid the action that like to fail the factors arise over
your control.
It also helps to spoke opportunity that you can take advantage
of :-
It describes a framework of macro-environmental factors used
in the environmental scanning component of strategic
management.
PEST

Meaning
What is PEST ?
PEST is a simple but important and widely-used tool that helps you understand
the big picture of the
Political,
Economic,
Socio-Cultural and
Technological
environment you are operating in. PEST is used by business leaders worldwide
to build their vision of the future.
PEST can also be known as PESTLE which includes other factors such as:
Legal
Environmental
PEST

Factors affecting Your Business
PEST

Political
Political factors include government regulations and legal issues
and define both formal and informal rules under which the firm
must operate.
Specifically, political factors include areas such as tax policy,
labour law, environmental law, trade restrictions, tariffs, and
political stability.
Political factors may also include goods and services which the
government wants to provide or be provided (merit goods) and
those that the government does not want to be provided (demerit
goods or merit bads).
Furthermore, governments have great influence on the health,
education, and infrastructure of a nation.
PEST

Economic
Economic factors include economic growth, interest rates,
exchange rates and the inflation rate. These factors have major
impacts on how businesses operate and make decisions.
For eg: Interest rate affect a firm’s cost of capital and there fore to
what extent a business grows and expands.
Similarly, Exchange rate affects the cost of exporting goods and
the supply and the price of imported goods in an economy.
Economic Factors also affect the purchasing power of potential
customers and the firm’s cost of Capital.
PEST

Social
Social Factors include the demographic and cultural aspects of
the external macro-environment.
These factors affect Customer needs and the size of potential
markets. Trends in social factors affect the demand for a
company's products and how that company operates. For
example, an aging population may imply a smaller and less-willing
workforce (thus increasing the cost of labor).
Furthermore, companies may change various management
strategies to adapt to these social trends (such as recruiting older
workers).
PEST

Technological
Technological factors include technological aspects such as R&D
activity, automation, technology incentives and the rate of
technological change.
They can lower barriers to entry, minimum efficient production
level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and
lead to innovation.
PEST

Environmental
Environmental factors include ecological and environmental
aspects such as weather, climate, and climate change, which may
especially affect industries such as tourism, farming, and
insurance.
Furthermore, growing awareness of the potential impacts of
climate change is affecting how companies operate and the
products they offer, both creating new markets and diminishing or
destroying existing ones.
PEST

Legal
Legal factors include discrimination law, consumer law, antitrust
law, employment law, and health and safety law.
These factors can affect how a company operates, its costs, and
the demand for its products.
PEST

How to use this tool ?
Firstly, you should brainstorm situations or issues that might
privilege to each of the six factors
Secondly, you should identify the information that applies to
these factors.
Thirdly, you draw conclusions from this information.
Using the tool is a three stage process:
PEST

By making effective use of PEST Analysis, you ensure that what
you are doing is aligned positively with the forces of change that
are affecting our world. By taking advantage of change, you are
much more likely to be successful than if your activities oppose
it.
Good use of PEST Analysis helps you avoid taking action that is
condemned to failure for reasons beyond your control.
PEST is useful when you start operating in a new country or
region. Use of PEST Analysis helps you break free of
unconscious assumptions, and helps you quickly adapt to the
realities of the new environment.
Uses of PEST Analysis
PEST

Advantages of PEST analysis
Provides an understanding of the wider business environment.
Encourages the development of strategic thinking.
May raise awareness of threats to an organization’s ongoing
profitability.
Can help an organization to anticipate future difficulties and take
action to avoid or minimize their effect.
Can help an organization to spot business opportunities and
exploit them successfully.
PEST

Disadvantages of PEST analysis
The change in society makes it increasingly difficult to anticipate
developments that may affect an organization in the future.
Collecting large amounts of information may make it difficult and
lead to "paralysis by analysis”.
PEST

Overview
Introduction
Meaning
Phases of Project Management
Construction of Project Network
Find the Expected duration
Find the Critical Path
Find the Expected Project Completion Time
PERT

PERT
Introduction:
PERT was developed primarily to simplify the planning and
scheduling of large and complex projects. It was developed for the
U.S. Navy Special Projects Office in 1957 to support the U.S.
Navy's Polaris nuclear submarine project.
PERT is applied as a decision-making tool designed to save time
in achieving end-objectives, and is of particular interest to those
engaged in research and development programs for which time is
a critical factor.

PERT
Introduction:
PERT takes recognition of three factors that influence successful
achievement of research and development program objectives:
time, resources, and technical performance specifications.
The concept of PERT was developed by an operations research
team staffed with representatives from the Operations Research
Department of Booz, Allen and Hamilton; the Evaluation Office of
the Lockheed Missile Systems Division; and the Program
Evaluation Branch, Special Projects Office, of the Department of
the Navy.

PERT
Meaning:
The Program (or Project) Evaluation and Review Technique,
commonly abbreviated PERT is a statistical tool, used in project
management, that is designed to analyze and represent the task
involved in completing a given project, especially the time needed
to complete each task, and to identify the minimum time needed
to complete the total project.

PERT
Phases of project management:
Project management has three phases:
Planning
Scheduling
Controlling
Planning: Planning phase has the following steps.
Dividing the project in to distinct activities.
Estimating time requirement for each activity.
Establishing precedence relationships among the activities
Construction of the arrow diagram (Network)

PERT
Scheduling:
Scheduling phase determines the start and end times of each and
every activity.
Controlling:
The control phase uses the arrow diagram for the continuous
monitoring and progress reporting.
Phases of project management:

An assembly is to be made from two parts X and Y. Both parts must be turned
on a lathe and Y must be polished where as X need not to be polished. The
sequence of activities together with their predecessors are given below.
From these data
A) Construct a project Network
B) Find expected duration
C) Find critical path
D) Find expected projected completion time
Activity Description Predecessors
Duration (Weeks)
O M P
A
B
C
D
E
F
G
H
Receive Work Order
Open Work Order
Get Material for X
Get Material For Y
Turn X on lathe
Turn Y On Lathe
Polish Y
Assemble X and Y
-
-
A
B
A
C, D
C,D,E
F
1
2
6
1
1
1
1
1
2
2
7
2
4
5
2
2
3
8
8
3
7
9
3
9
PERT

PERT
1. Construction of project Network:
Network Diagram: It is a diagram represented in the form of a
network for the purpose of analytical treatment to get solutions for
scheduling and controlling its activities.
Activity: It is a task or an item of work to be done in a project. An
activity consumes resources like time, money, labor etc.
An activity is represented by an arrow with a node (event) at the
beginning and a node (event) at the end indicating the start and
finish of the activity. And the name of the activity should be
mentioned above the arrow.
i j
A

PERT
1. Construction of project Network:
Node: A PERT chart presents a graphic illustration of a project as
a network diagram consisting of numbered nodes representing
events, or milestones in the project linked by labeled vectors
(directional lines) representing tasks in the project. Nodes are
denoted by circles and labeled using numbers inside the circle.
Dummy Activity: If the project contains two or more activities
which have some of their immediate predecessors in common
then there is a need for introducing what is called dummy activity.
1

PERT
Rules for network construction:
The starting event and ending event of an activity are called tail
event and head event, respectively.
The network should have a unique starting node (tail event).
The network should have a unique completion node (head
event).
No two activities should have the same starting node and the
same ending node.
Dummy activity is an imaginary activity indicating precedence
relationship only. Duration of the dummy activity is Zero.

A
G
C
E
F
H
D
B
1
2
3 4
5
6
7
Activity Description Predecessors
Duration (Weeks)
O M P
A
B
C
D
E
F
G
H
Receive Work Order
Open Work Order
Get Material for X
Get Material For Y
Turn X on lathe
Turn Y On Lathe
Polish Y
Assemble X and Y
-
-
A
B
A
C, D
C,D,E
F
1
2
6
1
1
1
1
1
2
2
7
2
4
5
2
2
3
8
8
3
7
9
3
9
PERT

PERT
2. Find Expected Duration:
The Expected Duration is the total span of active working time
expected for a task, ie the amount of time from the expected start
to expected finish of a task.
The Expected duration is calculated from the formula:
(O + 4M + P)
TE =
6
Where P is a Pessimistic time O is a Optimistic time
M is a most likely time.

PERT
2. Find Expected Duration:
Pessimistic time (P): the maximum possible time required to
accomplish a task, assuming everything goes wrong (but
excluding major catastrophes).
Optimistic time (O): the minimum possible time required to
accomplish a task, assuming everything proceeds better than is
normally expected.
Most likely time (M): the best estimate of the time required to
accomplish a task, assuming everything proceeds as normal.

PERT
The expected duration for the activity A is calculated as (P+O+4M)/6 = (3+1+4*2)/6 = 2
Similarly activity B is calculated using the formula (P+O+4M)/6 = (8+2+4*2)/6 =3
A
B
C
D
E
F
G
H
Time Duration (weeks)
P
M
O
Activity
Expected
Duration
2
2
7
2
4
5
2
2
3
8
8
3
7
9
3
9
1
2
6
1
1
1
1
1
2
3
7
2
4
5
2
3
Similarly the activity C,D,E,F,G,H are calculated respectively

PERT
3. Find the Critical path:
Critical path: A sequence of activities through a project network
from the start to finish, the sum of whose duration determines the
overall project duration. It is denoted by a double line or a dark
line, or
Forward Pass Method: (For Earliest Event Time)
In this method calculations begin from the initial event 1, proceed
through the network visiting events in an increasing order of event
number and end to the final event, say N.
At each event we calculate earliest occurrence event time (E) and
the earliest start and finish time for each activity that begins at that
event. It is calculated using the formula ESj = MAX [ESi + Tij]

PERT
3. Find the Critical path:
Backward Pass Method: (For Latest Allowable Event Time)
In this method calculations begin from final event N, proceed
through the network visiting events in decreasing order of event
numbers and end at the initial event 1. At each event , we
calculate the latest occurrence event time (L) for the
corresponding events, latest finish and start time for each activity
that is terminating at the event.
It calculated using the formula LCi = MIN [LCj – Dij]

PERT
A
B
C
D
E
F
G
H
Time Duration (weeks)
P
M
O
Activity
Expected
Duration
2
2
7
2
4
5
2
2
3
8
8
3
7
9
3
9
1
2
6
1
1
1
1
1
2
3
7
2
4
5
2
3
A
G
C
E
F
H
D
B
1
2
3 4
5
6
7
(
2
)
(4)
(2)
(3)
(5)
(
3
)
(2)
(
7
)

The critical path is A C F H
PERT
A
G
C
E
F
H
D
B
1
2
3 4
5
6
7
(
2
)
(4)
(2)
(3)
(5)
(
3
)
(2)
(
7
)
0
0
0
2
0
3
0
9
0
9
0
14
0
17
17
14
15
9
7
2
0

Step 4 : Find the Expected Project Completion Time
The Expected Project Completion Time can be calculated by summing up the
expected duration value’s from the critical path
Ie; A+C+F+H = 2+7+5+3 = 17
Thus the Expected Project Completion Time is 17 weeks
A
G
C
E
F
H
D
B
1
2
3 4
5
6
7
(
2
)
(4)
(2)
(3)
(5)
(
3
)
(2)
(
7
)
0
0
0
2
0
3
0
9
0
9
0
14
0
17
17
14
15
9
7
2
0
PERT

PERT
Advantages
PERT facilitates identification of early start, late start,and
slack for each activity,
Especially useful when scheduling and controlling large
projects
Straight forward concept and not mathematically complex
Useful in monitoring not only schedules but costs as well
Graphical networks help to perceive relationships among
project activities

PERT
Disadvantages
There can be potentially hundreds or thousands of
activities
and individual dependency relationships
PERT is not easily scalable for smaller projects

References
Text books:
Production and Operations Management by DR R.Panneerselvam
Resource Management Techniques by DR R.Panneerselvam
Websites:
www.mindtools.com
www.12manage.com
www.wikipedia.com
www.businessdictionary.com

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