Page 205 - Untitled-1

184 USING AND MANAGING CONTINGENCY

are now able to obtain without deliberate bias. The traditional PERT formula, for
calculating task durations, is A + 4B + C over 6, where A is the pessimistic, B is
the most likely, and C is the optimistic.

Other advantages are: (1) we gain a range of task and project durations, (2) we
can adjust weight factors (in some programs) to generate schedules with higher or
lower confidence factors, and (3) we can evaluate the potential for achieving any
selected project end date. We also expand the capability for performing what-if
analyses. We can use this increased information about durations in our analyses of
the schedule, whether performed by simple observation or via computerized
probability analysis.

There is computer software available that supports the PERT approach. Many
of these execute a statistical analysis of the resulting schedules, which will provide
a confidence factor calculation for any projected end date. In my experience with
such programs, I have frequently found that the original calculated end date had
less than a 50 percent probability.

I don’t necessarily recommend these programs for everyone, or every proj-
ect. But when the basis for estimating task durations is weak, or meeting a
schedule date is important, and especially when there are dire consequences
from missing schedule deadlines, these programs will generate better esti-
mates and an understanding of the potential (or improved confidence) for
achieving the end dates.

The Critical Chain Method

This is a concept, documented by Eliyahu Goldratt, in his book Critical Chain. In
it, he codifies the concept of shared contingency and extends the approach well
beyond the simplified shared contingency that I (and others) had written about
several years earlier.

Goldratt has popularized this approach and has also developed a loyal group of
disciples, who extol the virtues of critical chain, shoot down any of its critics, and
champion the cause of this new scheduling elixir. The concepts of critical chain
deserve our attention. It makes absolute sense to move the inferred (but unde-
fined) contingency out of individual tasks and to grouped, calculated contingency
in a shared buffer.

In brief, Goldratt builds on the premise that project schedules are always too
long, due to the safety factors that are added to the task estimates. He claims that
estimates are usually based on a 90 percent confidence factor (rather than 50%).
In addition task durations are also padded unless the performer is assured that
everything needed to do the task will be ready at the start of the task (which is
usually not the case). To this, we generally add a collection factor whenever a