HKH DFC USM Paper JCEM 2013

Uncertainty in Task Duration and Cost Estimates: Fusion of Probabilistic Forecasts and Deterministic Scheduling
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Homayoun Khamooshi, Ph.D. 1; and Denis F. Cioffi, Ph.D. 2
Abstract: A model for project budgeting and scheduling with uncertainty is developed. The traditional critical-path method (CPM) misleads because there are few, if any, real-life deterministic situations for which CPM is a great match; program evaluation and review technique
(PERT) has been seen to have its problems, too (e.g., merge bias, unavailability of data, difficulty of implementation by practitioners). A dual focus on the distributions of the possible errors in the time and cost estimates and on the reliability of the estimates used as planned values suggests an approach for developing reliable schedules and budgets with buffers for time and cost. This method for budgeting and scheduling is executed through either simulation or a simple analytical approximation. The dynamic buffers provide much-needed flexibility, accounting for the errors in cost and duration estimates associated with planning any real project, thus providing a realistic, practical, and dynamic approach to planning and scheduling. DOI: 10.1061/(ASCE)CO.1943-7862.0000616. © 2013 American Society of Civil Engineers.
CE Database subject headings: Estimation; Scheduling; Construction costs; Budgets; Probability; Project management; Simulation;
Uncertainty principles; Forecasting.
Author keywords: Estimate; Reliability; Scheduling; Cost; Budget; Probability; Contingency; Project management; Simulation.

Introduction and Background
Inaccurate estimation has long been identified as one of the major causes of project failure (Flyvbjerg et al. 2009; Chan and
Kumaraswamy 1997; Pinto and Mantel 1990), and Standish Group reports (1998, 2009) show more projects failing and fewer successful projects.

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