1. Problem Recognition, Definition, and Evaluation
Activities and duration estimate base on productivity and volume of work for earth work job as shown on table 1.
Risks for those activities are identified and quantitative as shown on table2.
Need to develop schedule contingency refer to risk identified, percentile desired is 90%.
2. Development of the Feasible Alternative
Need to develop schedule prior develop schedule contingency. US GAO (2005) recommendation for establishing the duration of all activities in schedule:
Confirmed by US GAO (2005), “Schedule contingency should be calculated by performing a schedule risk analysis and comparing the schedule date with that of the simulation result at a desired level of certainty” (p. 113).1
In this blog, desired level of certainty is 90%.
3. Development of the Outcomes and Cash flows for Each Alternative
3.1 Schedule Development
Follow recommend best practices, to develop schedule, break the activities until duration max. 2 working month
Then develop schedule with total duration 197.75 day as shown below:
3.2 Calculate Schedule Contingency
– Using PERT method to defined te (Expected Time), σ (Standard Deviation) and σ2 (Variance).
– Using Standard Normal Distribution to defined Percentile 90% (P90)
z = (P90 – te) / σ
From table standard normal distribution, got z = 0.8159
P90 = z * σ + te
Plot duration P 90 to schedule, with duration 256.03 day:
4. Selection of Criterion (or Criteria)
Schedule duration is 197.75 days. To have probability 90% completed on time (within 197.75 days), need to have contingency:
Contingency = P90 – P50
= 256.03 – 197.75
= 58.28 days
5. Analysis and Comparison of the Alternative
Schedule contingency may appear as a single activity just prior to finish milestone or it may dispersed throughout the schedule as multiple activities prior to main milestone1.
6. Selection of the Preferred Alternative
In what percentile applied as contingency on the schedule is management decision, it depend on factor such as contract type, project type and technology maturity1
7. Performance Monitoring and Post Evaluation of Result
Even with a well-disciplined risk analysis, management may make bad decision with good information and bad result can happen even from good decision3.
8. References :
- GOA Schedule Assessment Guide (2012), United States Government Accountability Office. Retrieved from: http://www.gao.gov/products/GAO-12-120G
- Standard Normal Distribution Table (2005), Texas A&M University, Department of Statistics. Retrieved from: http://www.stat.tamu.edu/~lzhou/stat302/standardnormaltable.pdf2
- Humphrey and Associates (2012), Project Management Using Earned Value, Chapter 17. Pp. 325 – 334, Second Editions, Humphreys & Associates, Inc.
- John K. Hollman (2012), Total Cost Management Framework, Section 7.6 pp. 163-176, 1st edition revised, AACE International.
- Scott, Dr. Amos, PE (2012). Skills and knowlage of Cost Engineering, chapter 31 pp 31.1 – 31.8, 5th edition, AACE International, Createspace.
- Sullivan W.G., Wicks E.M., Koelling C.P, (2012), Engineering Economics, Chapter 3 pp. 92 – 93, 15th edition, Prentice Hall.