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Project Management

Lecture- VIII
Project Scheduling with probabilistic activity
Uncertain Activity Durations

For each activity in the project three time estimates are obtained
- Optimistic time, a
- Most likely time, m
- Pessimistic time, b
PERT Time Estimates

• Mean of activity duration = (a + 4m + b) / 6

• Variance of activity duration = [b-a/6]2

• Standard deviation of activity duration =


=b-a/6
BETA Distribution

• [ a,b are the location parameters and c,d are the shape parameters ]
Why choose BETA ?

• The beta distribution is bounded on both sides with non-negative intercepts.

• It is a uni-modal distribution. (single modal)

• Permits flexibility of shapes by suitable choice of location and shape parameters.

• Intuitive appeal.

• Easy approximations to mean and variance


Other possible distributions

• UNIFORM

• TRIANGULAR

• EXPONENTIAL

• NORMAL

• DISCRETE
UNIFORM DISTRIBUTION
TRIANGULAR DISTRIBUTION
EXPONENTIAL DISTRIBUTION
NORMAL DISTRIBUTION
DISCRETE DISTRIBUTION
Basic PERT Procedure
• Compute mean and variance of all jobs.

• Conduct forward and backward pass on the project network with expected times of all
activities.

• Identify the Critical Path.

• Obtain variance of critical path by adding variance of activities.


• Obtain the distribution of the Project Duration.

• Make probability statements about the project


- Chances of meeting the target date.
- Probability of exceeding a given ceiling date.
- Probability that the project duration is confined to an interval of time.
An Example
Sample Network (A-O-A)
FORWARD & BACKWARD PASS
CRITICAL PATH
Distribution of the Project Duration
CONFIDENCE INTERVALS

• Chances that the project is completed within


- mean +/- 1 sigma 68% (29.41 -- 34.11)
- mean +/- 2 sigma 95% (26.76 -- 36.56)
- mean +/- 3 sigma 99% (24.31 -- 39.01)
PROBABILITY STATEMENTS

• Probability of meeting a Target Date,say 36 days.

• Z (Standard normal deviate) = (36 - 31.66)/2.45 = 4.34/2.45 = 1.77

• Area from normal tables = 0.9616

• Probability of exceeding a ceiling, say 28 days

• Z (Standard normal deviate) =(28 - 31.66)/2.45 = -3.66/2.45 = - 1.49

• Area from normal tables = 0.0681

• Probability of duration lying in an interval, say 28 to 36 days


Area from normal tables = 0.9616 - 0.0681 = 0.8935
Standard PERT Assumptions

• The activities are independent.

• The critical path contains a large no. of activities so that we can invoke the Central Limit
Theorem.

• All activities not on the critical path are ignored.

• Activity times follow a Beta distribution.

• The mean and variance of the activities are given by (a+4m+b)/6 and [(b-a)/6]2.