The Analysis of Project Schedule Uncertainty: Based on Monte Carlo Simulation

Abstract

The method of Program Evaluation and Review Technique (PERT) has been applied to the field of project management extensively. However, traditional PERT is still defective when used in schedule control. According to the principles of PERT and the hypothesis that the activity duration in PERT obeys Beta distribution, this paper points out the disadvantages of traditional method in determining critical path in PERT network program, proposes the concept of Critical Degree to describe the importance degree of paths in PERT network, then puts forward Monte Carlo Simulation (MCS) to analyze project schedule uncertainty. The Example shows that MCS can overcome disadvantages of the traditional PERT method. At last, through the sensitivity analysis of each critical activity, this paper points out the critical activities that should be selectively controlled. The construction process of engineering project, especially the middle and large scale engineering project, is extremely complicated. The project schedule, often influenced and restricted by various factors such as resource, capital and technical level, etc, faces up to the elevate of uncertainties of construction period and project cost. Therefore, the analysis of project schedule uncertainty is now increasingly being emphasized. Ever since PERT was first put forward by Malcolm (1959) and successfully applied in Missile plan, PERT network has been extensively used in the estimation of project duration and schedule uncertainty analysis for its simplicity and expedience. However, excessive assumptions in traditional PERT method oversimplified the reality, leading to defects in practical application of tradition PERT method. Based on discussing and analysing the principles of PERT, this paper puts forward Monte Carlo Simulation to take schedule uncertainty analysis. Finally the sensitivity analysis is performed on activities in critical path of a practical case.