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CHAPTER 6.3

SOME COMPUTER-BASED APPROACHES
TO SCHEDULE RISK ANALYSIS

In Chapter 6.2, we illustrate several nonstatistical approaches toward schedule
and cost risk avoidance and management. These included practical, nonmathe-
matical, common sense approaches, such as time contingency, earned value
analysis, and management reserve (cost contingency). When I have written on
this topic before, several of my colleagues, who are defenders of traditional statis-
tical methods, wrote to challenge some of my claims. One distinguished expert in
this area noted that my claim of a 50 percent probability for traditional CPM cal-
culations was highly optimistic. This was fully borne out by my experiments with
the risk analysis software. In fact, the CPM calculated finish, in one test model,
was shown to have less than a 5 percent probability, when run through a popular
PERT-based risk program.

Further support for risk management came from a consulting firm specializing
in project control and risk management methodologies, for IS and high-tech
manufacturing. They report continued success in helping firms to set realistic
schedule and cost targets and then to meet those targets, using a homegrown
methodology called Risk Averse Project Management Process. The process cen-
ters on improving estimates and “having the good common sense to create Man-
aged Contingencies and Risk Reserves.” This sounds just like what we talked
about in the previous chapter.

There exists a volume of evidence in support of multiestimate, statistical-based

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