W24_YAW_Schedule Risk Analysis

1.    Problem Definition.

In W22 and W23 blog posting, it was explained the integrated cost/schedule risk analysis on one of our current project, namely the Advanced Process Control project (“Project”) [1], [2].

In this W24 and next W25 blog postings, it will be explained schedule risk analysis for the Project. If the final result of the integrated cost/risk analysis is the cost contingency, then the final result of the schedule risk analysis is the schedule contingency.

2.    Identify the Feasible Alternative.

The steps involved in assessing the risk of a schedule are as follows [3]:

• Create a complete and quality-checked CPM network.
• Develop three duration estimates (optimistic, pessimistic, and most likely) for each activity.
• Identify a duration distribution method for all activities.
• Compute the path distribution.
• Evaluate the result (completion date certainty and high risk paths)
• Initiate status monitoring

In compute the path distribution, there are two tools will be used, namely PERT and Monte Carlo simulation. This W24 blog posting will use PERT analysis, while the next W25 blog posting will use Monte Carlo simulation.

3.    Development of the Outcome for Alternative.

Table 1 contains the Project base schedule, and Figure 1 is its CPM network.

Table 1 Project Base Schedule

Figure 1 CPM Network Schedule

As shown in Figure 1, the Project duration is 175 days, with the critical path is activities CDFGHI. Beside critical path, there are two other paths, namely ABGHI and EFGHI.

Table 2 contains three duration estimates, where a, b and m are optimistic, pessimistic and most likely respectively.

Table 2 “Three Duration Estimates” of The Project.

By using PERT analysis, it has been obtained expected time, variance and standard deviation for Critical Path CDFGHI as shown in Table 3.

Table 3 Result of PERT Analysis for Critical Path CDFGHI

4.    Selection of Criteria.

It is necessary to look the result of above PERT analysis.

5.    Analysis and Comparison of the Alternative.

Table 4 contains comparison of schedule risk analysis using PERT for all paths.

Table 4 Comparison of Schedule Risk Analysis using PERT for all paths

6.    Selection of the Preferred Alternative.

By using management desired probability of P70, contingency for Schedule Risk using PERT analysis for all paths were obtained, as shown in Table 5.

Table 5 Schedule Contingency

Finally, we decided to use critical path contingency of 14 days as schedule contingency of the Project.

7.    Performance Monitoring and the Post Evaluation of Result.

It is necessary to conduct strict monitoring during implementation of the Project, to prevent the completion time exceed the schedule contingency.

References:

1. Wain Y.A. (2014). W22_ YAW_Integrated Cost and Schedule Risk Analysis. Retrieved from https://kristalaace2014.wordpress.com/2014/07/24/w22_yaw_integrated-cost-and-schedule-risk-analysis/#more-2083.
2. Wain Y.A. (2014). W23_ YAW_Integrated Cost and Schedule Risk Analysis (2). Retrieved from https://kristalaace2014.wordpress.com/2014/07/30/w23_yaw_integrated-cost-and-schedule-risk-analysis-2/#more-2114.
3. Humphreys, G.C. (2011). Project Management Using Earned Value, Chapter 17, page 325 to 346, Second Edition, Humphreys & Associates, Management Consultants.