Risk Management and Scheduling:

Estimating completion
times
Week 9 Supplement: explaining the statistics
09-01

Activity Completion Time

Estimates
Definition
Activity times follow a Beta probability distribution
Optimistic and pessimistic times are lower/upper bounds
Completion times will be clustered around most likely time

Activity completion time estimate Activity

a 4m b
Duration = TE
6

Most likely (m):

Most pessimistic: Time to complete < (b), probability = 0.99
Most optimistic: time to complete > (a), probability = 0.99

Activity completion time variance

Completion times should fall within +/- 3 standard deviations of

average completion time

Therefore acceptable standard deviation (s) equals 1/6 of
range of times
2
The range is (b-a); therefore s =(b-a)/6
b a
2
Activity
Variance
=
s

Variance is defined as s2

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

Probability Distribution of Activity

Asymmetrical (Beta)
Distribution for Activity Duration Estimation
Completion
Times
Optimistic time

Most likely time

Activity TE

Pessimistic time
Activities complete in times
greater than the pessimistic
time with p=0.01

Activities complete in times

less than the optimistic
time with p=0.01

TE

Since the activity durations are skewed towards pessimistic durations the activity duration Time Estimate (TE) will be
slightly greater than m, the most likely activity completion time
Activities will complete sometime between times a and b, with p = 0.98
Activities will complete in time greater than Activity TE with p = 0.5, and complete in time less than Activity TE with p = 0.5
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

09-3

Project Completion Time Estimates

Definition
Project completion times follow a Normal probability

distribution
Variations in activity completion times can affect project
completion time
Completion times will be clustered around most likely time
Project completion time estimate (TE)
Sum of the completion times of activities on the critical path
Ignores activities not on the critical path: a simplifying

assumption
Project completion time variance
Sum of the variances in completion times, for activities on the

critical path
Project completion times should fall within +/- 3 standard
deviations of average completion time: 99.7% of completion
times
4
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Project
Pearson
Standard
Education, Inc.
Deviation
Publishing as
=Prentice Hall

Probability Distribution of Project Completion

Symmetrical (Normal) Distribution for Project Duration Estimation
Times
Probabilities of project completion times see chart on next page for derivations
68.3% will be within +/- 1 standard deviation
of expected completion time
95.6% within 2 std dev of expected
99.7% within 3 std dev of expected
Z = Standard Deviation coefficient
for example, if Z= 2;
then Z * S = Z * 2 std dev
Projects will complete in
greater time than the
predicted TE with p=0.5

Projects will complete in

less time than the
predicted TE with p=0.5

TE; Z =0
Since the activity Time Estimates (TEs) are skewed towards pessimistic durations, and because the project Time Estimate
(TE) is the sum of the TEs for activities on the critical path, the project TE will be slightly greater than the most likely time for
project completion. Since the individual project TE has already accounted for the skew in activity completion times, the
09-5
Copyrightofproject
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distribution
is symmetrical.

 The Pearson P 349 table

is one-tailed; it can also
be interpreted for twotailed distributions
For Z = 1; p=0.8413; the
probability to the right of
the mean is
0.8413 0.5 = 0.3413
Therefore, the
probability that a project
will complete within +/- 1
std dev of TE, is
2 X 0.3414= 0.683
For Z= 2; p = 0.9772
P (complete in +/- 2 std
dev of TE) is
2 X (0.9772-0.5) = 0.956
For Z= 3; p = 0.9987
P (complete in +/- 3 std
dev of TE) is
2 X (0.9987-0.5) = 0.997
http://www.six-sigma-material.com/Normal-Distribution.html

Probability Distribution of Project Completion

Symmetrical (Normal) Distribution for Project Duration Estimation
Times
Example:
Determine the completion time for
which you are 95% confident
Probability is 0.95 that project will
complete within this time
P= 0.05 that it will complete
outside
P (early) = 0.025
P (late) = 0.025

2.5%

0.975

= 1-0.95 = 0.05
1- /2 = 1- 0.05/2 =
0.025
From the Normal
Distribution table
Z 1-0.25 = Z 0.975 = 1.96

2.5%

95%
-Z

0.975

P = 0.95 that completion time falls within the range of TE +/- Z times S
Since Z = 1.96, then completion time falls within the range of TE +/- 1.96 * S

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

09-7

 If p = 0.95 that
project will
complete within a
certain time
This is equivalent
to p = 0.975 that
project will
complete by a
certain time; or
p (late) = 0.025
For p =0.975
we find Z= 1.96

http://www.six-sigma-material.com/Normal-Distribution.html

Expected Project Completion time, and Variance in Project Completion Time

Activity

Optimisti
c (a)

Most
Likel
y
(m)

Pessi
misti
c (b)

A
A

3
3

4
4

11
11

Expected

Expected
time of
critical path
activities

5
5

Activity time
Variance
[(b-a)/6]
(

= 1.78

B
2
5
8
5
1.00
B
2
5
8
5
1.00
C
3
6
9
6
6
1.00
C
3
6
9
6
6
1.00
D
8
12
20
12.7
13
4.00
D
8
12
20
12.7
13
4.00
E
3
5
12
5.8
2.25
E
3
5
12
5.8
2.25
F
2
4
7
4.2
4
0.69
F
2
4
7
4.2
4
0.69
G
6
9
14
9.3
1.78
G
6
9
14
9.3
1.78
H
1
2
4
2.2
2
0.25
H
1
2
4
2.2
2
0.25
Projec
Projec
Expected project completion time: 30 Sum of expected activity30
completion times = 30
t
30
Variance
in
project
completion
time:
7.72
;
and
standard
deviation
= 7.72 = 2.78
t

Variance of
critical path
activities
only

1.78
1.78
1.00
1.00
4.00
4.00
0.69
0.69
0.25
0.25
7.72
7.72

Individual activities are independent of each other. Add the variances for activities on the Critical Path A-C-D-F-H = 7.72.
Variance in completion time for activities not on critical path, would not contribute to variances in project completion time
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

Probability that project completes within 32

weeks?
Example shows TE= 30 weeks, with s = 2.78 weeks
Need to compute Z, the standard deviation coefficient.
Deadline = 32 weeks, or
2 weeks after expected completion

50% of projects will be

early, 50% will be late

Z as a proportion of S:
2 / 2.78 weeks = 0.72
Look up Z = 0.72 in Pearson
P. 349, to find p= 0.7642

Probability of Completion by a
specified time = p
Determine p based on Z
statistic

Therefore, 76% probability

project will complete
within 32 weeks;
24% after 32 weeks

Z=0
Time inWeeks
30
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2013 Pearson Education, Inc. Publishing
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Hall

Z = 0.72
09-10

From
Z= 0.72
We find
p = 0.7642

http://www.six-sigma-material.com/Normal-Distribution.html

11

Probability of Project Completion

(contd)
Project Standard Deviation () =
Project Standard Deviation () =
Project Standard Deviation () = 2.78 weeks
Z = the number of standard deviations on the

target date = (32 30)/2.78 = 0.72 (Due date

given of 32weeks)
Looking at Appendix A 0.72 indicates a
probability 0.7642 (76.42%) of meeting the
deadline.
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

12

Probability of Project Completion

(contd)
To determine the due date to achieve a

certain probability of a project finishing by a

certain date
Due Date = Expected date of completion + (Z x
)
To ensure a 95% likelihood of completing on
time Z = Due Date would have to be
weeks.

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13

When will project complete, with probability

of
0.95?
Example
shows TE= 30 weeks, with s = 2.78 weeks
Need to compute Z, the standard deviation coefficient.

To find Z, look up p = 0.95 in

Pearson P. 349; and Z = 1.65

Completion time = TE + Z *S
= 30 weeks + 1.65 * 2.78 weeks
= 34.59 weeks

50% of projects will be

early, 50% will be late

Probability of Completion by a
specified time = p
Determine p based on Z
statistic

Z=0
Time inWeeks
30
34.59
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2013 Pearson Education, Inc. Publishing
as Prentice
Hall

Z = 1.65
09-14

We find
Z= 1.65

From
P = 0.95

http://www.six-sigma-material.com/Normal-Distribution.html

15

Probability of Project Completion

(contd)
To determine the due date to achieve a

certain probability of a project finishing by a

certain date
Due Date = Expected date of completion + (Z x
)
To ensure a 95% likelihood of completing on
time?
Determine (from P 349 Pearson) that Z = 1.65
Due Date would have to be + 1.65*
30 + 1.65*2.78 = 34.59 weeks.
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

16