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MGT 337-Project Management-Lecture 3

Operations Management

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28 views22 pages

MGT 337-Project Management-Lecture 3

Operations Management

Uploaded by

abid hridoy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Project Management

Lecture-3
DETERMINISTIC TIME ESTIMATES
The main determinant of the way PERT and CPM networks are
analyzed and interpreted is whether activity time estimates are
probabilistic or deterministic.
If time estimates can be made with a high degree of confidence
that actual times are fairly certain, we say the estimates are
deterministic. If actual times are subject to variation, we say the
estimates are probabilistic.
Probabilistic time estimates must include an indication of the
extent of probable variation.
Probabilistic time Estimate
The preceding discussion assumed that activity times were
known and not subject to variation. While that condition
exists in some situations, there are many others where it does
not.
Consequently, those situations require a probabilistic
approach.

3
Probabilistic time Estimate

01 02 03
1. Optimistic time: 2. Pessimistic time: 3. Most likely time:
The length of time The length of time The most probable
required under required under the amount of time
optimum conditions; worst conditions; required;
represented by to represented by tp represented by tm

4
Probabilistic time Estimate

The beta distribution is


generally used to
describe the inherent
variability in time
estimates.

5
Probabilistic time Estimate
Although there is no real theoretical justification for using the
beta distribution, it has certain features that make it
attractive in practice:
• The distribution can be symmetrical or skewed to either the
right or the left according to the nature of a particular
activity
• The mean and variance of the distribution can be readily
obtained from the three time estimates

6
Probabilistic time Estimate
Of special interest in network analysis are the average or
expected time for each activity, te, and the variance of each
activity time, σ2
to + 4tm + 𝑡𝑝
te =
6
Path mean = Σ of expected times of activities on the path

7
Probabilistic time Estimate
The standard deviation of each activity’s time is estimated as
one-sixth of the difference between the pessimistic and
optimistic time estimates.
We find the variance by squaring the standard deviation

𝑡𝑝 − 𝑡𝑜 2
σ2 =
36

8
Problem
A path in a network has three activities. Their standard
deviations are 1.50, 0.80, and 1.30. Find the path standard
deviation.

9
Solution
Standard deviations cannot be added, but variances can be
added. Square each standard deviation to obtain its variance,
and then add the resulting variances to obtain the path
variance.

Standard Deviation Variance


1.50 2.25
0.80 0.64
1.30 1.69

10
Solution
2.25+0.64+1,69 = 4.58 (path variance)
The square root of the path variance is the path standard
deviation:
√4.58 = 2.14 (path standard deviation)

11
Example

12
Example The network
diagram for a
project is shown
in the
accompanying
figure, with three
time estimates
for each activity.
Activity times are
in weeks.

13
Example
Do the following:
a. Compute the expected time for each activity and the
expected duration for each path.
b. Identify the critical path.
c. Compute the variance of each activity and the variance and
standard deviation of each path.

14
Example

15
Example

16
Example

17
Example
The path that has the longest expected
duration is the critical path. Because path

d–e–f has the largest path total, it is the


critical path.

18
Example

19
Example

20
Example

21
Thank You

22

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