Project Management - Determining Path Probabilities

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Chapter17: Project Management

Operations
Management eBook
11/e
Content
Chapter Opener
Introduction
Project Life Cycle
Behavioral Aspects of ...
Work Breakdown Structure
Planning and Schedulin...
PERT and CPM
Deterministic Time Est...
A Computing Algorithm
Probabilistic Time Est...
Determining Path Pr...
Simulation
Budget Control
TimeCost Trade-Offs: ...
Advantages of Using PE...
Critical Chain Project...
Other Topics in Projec...
Project Management Sof...
Operations Strategy
Risk Management
Summary
Key Points
Key Terms
Solved Problems
Discussion and Review ...
Taking Stock
Critical Thinking Exer...
Problems
Case: The Case of the ...
Case: Time, Please
The probability that a given path will be completed in a specified length of time
can be determined using the following formula:
The resulting value of z indicates how many standard deviations of the path
distribution the specified time is beyond the expected path duration. The more
positive the value, the better. (A negative value of z indicates that the specified
time is earlier than the expected path duration.) Once the value of z has been
determined, it can be used to obtain the probability that the path will be
completed by the specified time from Appendix B, Table B. Note that the
probability is equal to the area under the normal curve to the left of z, as
illustrated in Figure 17.10.
If the value of z is +3.00 or more, the path probability is close to 100 percent
(for z = +3.00, it is .9987). Hence, it is very likely the activities that make up the
path will be completed by the specified time. For that reason, a useful rule of
thumb is to treat the path probability as being equal to 100 percent if the value of
z is +3.00 or more.
A project is not completed until all of its activities have been completed, not
only those on the critical path. It sometimes happens that another path ends up
taking more time to complete than the critical path, in which case the project runs
longer than expected. Hence, it can be risky to focus exclusively on the critical
path. Instead, one must consider the possibility that at least one other path will
delay timely project completion. This requires determining the probability that all
paths will finish by a specified time. To do that, find the probability that each path
will finish by the specified time, and then multiply those probabilities. The result is
the probability that the project will be completed by the specified time.
It is important to note the assumption of i ndependenc e. It is assumed that
path duration times are independent of each other. In essence, this requires two
things: Activity times are independent of each other, and each activity is only on
one path. For activity times to be independent, the time for one must not be a
function of the time of another; if two activities were always early or late together,
they would not be considered independent. The assumption of independent
paths is usually considered to be met if only a few activities in a large project are
on multiple paths. Even then, common sense should govern the decision of
whether the independence assumption is justified.
EXAMPLE 6
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Using the information from Example 5, answer the following questions:
a. Can the paths be considered independent? Why?
b. What is the probability that the project can be completed within 17
weeks of its start?
c. What is the probability that the project will be completed within 15
weeks of its start?
d. What is the probability that the project will not be completed within
15 weeks of its start?
FIGURE 17.10
The path probability is the area under a normal curve to the left of z
SOLUTION

a. Yes, the paths can be considered independent, since no activity is
on more than one path and you have no information suggesting
that any activity times are interrelated.
b. To answer questions of this nature, you must take into account the
degree to which the path distributions overlap the specified
completion time. This overlap concept is illustrated in the
accompanying figure, which shows the three path distributions,
each centered on that path's expected duration, and the specified
completion time of 17 weeks. The shaded portion of each
distribution corresponds to the probability that the part will be
completed within the specified time. Observe that paths a-b-c and
g-h-i are well enough to the left of the specified time, so that it is
highly likely that both will be finished by week 17, but the critical
path overlaps the specified completion time. In such cases, you
need consider only the distribution of path d-e-f in assessing the
probability of completion by week 17.
To find the probability for a path you must first compute the value
of z using Formula 17-8 for the path. For example, for path d-e-f, we
have
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Turning to Appendix B, Table B, with z = +1.00, you will find that the
area under the curve to the left of z is .8413. The computations are
summarized in the following table. Note: If the value of z exceeds +3.00,
treat the probability of completion as being equal to 1.000.
c. For a specified time of 15 weeks, the z values are
Paths d-e-f and g-h-i have z values that are less than +3.00.
From Appendix B, Table B, the area to the left of z = 1.00 is
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.1587, and the area to the left of z = +1.40 is .9192. The path
distributions are illustrated in the figure. The joint probability of all
finishing before week 15 is the product of their probabilities:
1.00(.1587)(.9192) = .1459.
d. The probability of not finishing before week 15 is the complement of
the probability obtained in part c: 1 .1459 = .8541.
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