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Insight

How to Take the Gamble out of a Project Schedule

Abe Nejad Senior Project Controls Specialist
Design-build projects can stay on track by using stochastic modeling to account for risks and uncertainties.

Most project owners or key decision makers would agree that having the opportunity to not only recognize schedule risks and uncertainties, but also prepare and proactively plan for them ahead of time is an ideal proposition, especially on complex design-build projects. With advanced scheduling methods, this is a sure bet. Design-build contractors using the stochastic modeling technique offer owners the opportunity to recognize and quantify project risks and make proper decisions to meet their overall project objectives with a new level of confidence and control. Here are a few things owners and contractors should consider when using advanced scheduling on their next design-build project.

Shuffling the Traditional Project Schedule Provides a Better Understanding of Costs and Timelines

Traditional critical path method (CPM) project schedules are deterministic meaning that they show one possible way to plan and execute the project. The process starts by first identifying the project work breakdown structure and tasks, planning and sequencing work depending on which activities should come first, and finally developing a logic-based CPM schedule model utilizing a project management software such as Primavera P6. The limitation to deterministic schedules is that the duration of tasks is just a forecast and represents single-point duration estimates. Unknown risks and uncertainties could easily affect the original plan and lead to schedule and cost over-runs.

The stochastic modeling technique shakes up the traditional project schedule by using Monte Carlo simulation to determine and manage schedule and cost variables. Identified risks and uncertainties along with their probability distributions are added to the schedule using a comprehensive risk assessment software such as Primavera Risk Analysis (PRA), with additional data such as three-point duration estimates (Min, Most Likely, Max), inclement weather calendars (using National Oceanic and Atmospheric Administration or NOAA historical data), resource uncertainties, and qualification and quantification of risks from the project’s risk register. Building upon the deterministic schedule created in Primavera P6, the added Monte Carlo simulation conducts random sampling of the identified risks and uncertainties with respect to their probability of occurrence and distributions and a probabilistic model is then produced showing the outcome for both schedule and cost.

Next, the mitigation analysis and scenario planning helps to examine several different outcomes, depending on whether certain things occur, and to choose a proper response strategy to achieve desirable results.

Monte Carlo Simulation Example

The model creates thousands of potential schedule and cost outcomes by randomly selecting task durations, which are based on the probability distribution and likelihood of occurrence for the added risks. Once the Monte Carlo simulation is complete, the distribution graph is produced showing a statistical breakdown of schedule duration and completion forecast generated during the analysis. This analysis helps our team to optimize our planned schedule sequence and risk mitigation strategies as needed to have a higher probability of delivering the project within budget and on schedule. 

The stochastic modeling technique gives the power back to the owner by allowing them to determine the best approach for their design-build project.
Abe Nejad, PMP, PSP, CCM, LEED AP Principal, Senior Project Controls Specialist
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Prepar­ing for the Best Hand Begins Before the Ground­break­ing

The best way for owners and con­trac­tors to succeed at advanced sched­ul­ing is to plan early, align ex­pec­ta­tions and consider all possible risks and un­cer­tain­ties in­clud­ing those that are not part of the design-build scope of work, which could influence the delivery of the project. It is prudent that owners fully and clearly define project scope and expected allocation of the project risks and un­cer­tain­ties along with a well-defined responsibility matrix, within the initial request for proposal. Owners should consider uti­liz­ing advanced sched­ul­ing and sto­chas­tic tech­niques to properly de­ter­mine and allocate adequate time and budget con­tin­gen­cies to their projects.

Putting A Stake in a Master Schedule Provides Better Control During Project Ex­e­cu­tion

Another key com­po­nent to making advanced sched­ul­ing work and main­tain­ing control through­out the project is by in­cor­po­rat­ing all scope and tasks into one master schedule for all project stake­hold­ers. The master schedule should also assign re­spon­si­bil­ity to the various stake­hold­ers involved to hold each party ac­count­able for timely ex­e­cu­tion of their project tasks. Schedule updates for fore­cast­ing purposes should also be com­mu­ni­cated reg­u­larly to ensure that all parties are informed of the project status and aware of upcoming project mile­stones and dead­lines. The master schedule will serve as great leverage to the owner in making sure their ob­jec­tives are being met. 

Owners Can Avoid Playing Roulette with their Project Schedule

Ul­ti­mately, the sto­chas­tic modeling tech­nique gives the power back to the owner by allowing them to de­ter­mine the best approach for their design-build project. If schedule is the driver for com­plet­ing the project, the owner can identify which risks and un­cer­tain­ties can most likely affect meeting their dead­lines and de­ter­mine the best path forward. Likewise, if cost is a driver, any high-prob­a­bilis­tic outcomes that lead to in­creased costs can be clearly iden­ti­fied in a stochastic model, giving the owner the opportunity to make alternative decisions better suited to their bud­get­ing needs. 

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