Monte Carlo Simulation 6

[simmantix]

Hi all of you out there..

I am currently inverstigating putting together a little spreadsheet in Excel or similar that will do Monte Carlo simulation's for projects.

This means that you find the critical path of the project and input ideal, optimistic and pessimistic duration for each task and the spreadsheet will then 'simulate' any number of possible total project durations and give you a analysis at the end for example - project is 95% likely to take X days, etc.

Is this of any interest to anyone, has it been done before and is it worth my time?

Yours input and/or suggestions would be appreciated.

S

 

[BernardErtl]

simmantix, I have not looked at the Excel program that you have authored, but it seems that you are describing a PERT calculation and not a Monte Carlo calculation (which requires iterative schedule calculations through the logic network). In any event, I thought the following excerpt might be instructive for the unfamiliar:

[ul]11.2 Scheduling with Uncertain Durations

The most common formal approach to incorporate uncertainty in the scheduling process is to apply the critical path scheduling process ... and then analyze the results from a probabilistic perspective. This process is usually referred to as the PERT scheduling or evaluation method. ... the duration of the critical path represents the minimum time required to complete the project. Using expected activity durations and critical path scheduling, a critical path of activities can be identified. This critical path is then used to analyze the duration of the project incorporating the uncertainty of the activity durations along the critical path. The expected project duration is equal to the sum of the expected durations of the activities along the critical path. Assuming that activity durations are independent random variables, the variance or variation in the duration of this critical path is calculated as the sum of the variances along the critical path. With the mean and variance of the identified critical path known, the distribution of activity durations can also be computed.

...

While the PERT method has been made widely available, it suffers from three major problems. First, the procedure focuses upon a single critical path, when many paths might become critical due to random fluctuations. For example, suppose that the critical path with longest expected time happened to be completed early. Unfortunately, this does not necessarily mean that the project is completed early since another path or sequence of activities might take longer. Similarly, a longer than expected duration for an activity not on the critical path might result in that activity suddenly becoming critical. As a result of the focus on only a single path, the PERT method typically underestimates the actual project duration.

As a second problem with the PERT procedure, it is incorrect to assume that most construction activity durations are independent random variables. In practice, durations are correlated with one another. For example, if problems are encountered in the delivery of concrete for a project, this problem is likely to influence the expected duration of numerous activities involving concrete pours on a project. Positive correlations of this type between activity durations imply that the PERT method underestimates the variance of the critical path and thereby produces over-optimistic expectations of the probability of meeting a particular project completion deadline.

Finally, the PERT method requires three duration estimates for each activity rather than the single estimate developed for critical path scheduling. Thus, the difficulty and labor of estimating activity characteristics is multiplied threefold.

As an alternative to the PERT procedure, a straightforward method of obtaining information about the distribution of project completion times (as well as other schedule information) is through the use of Monte Carlo simulation. This technique calculates sets of artificial (but realistic) activity duration times and then applies a deterministic scheduling procedure to each set of durations. Numerous calculations are required in this process since simulated activity durations must be calculated and the scheduling procedure applied many times. For realistic project networks, 40 to 1,000 separate sets of activity durations might be used in a single scheduling simulation. ...

...

The disadvantage of Monte Carlo simulation results from the additional information about activity durations that is required and the computational effort involved in numerous scheduling applications for each set of simulated durations. For each activity, the distribution of possible durations as well as the parameters of this distribution must be specified. For example, durations might be assumed or estimated to be uniformly distributed between a lower and upper value. In addition, correlations between activity durations should be specified. For example, if two activities involve assembling forms in different locations and at different times for a project, then the time required for each activity is likely to be closely related. If the forms pose some problems, then assembling them on both occasions might take longer than expected. This is an example of a positive correlation in activity times. In application, such correlations are commonly ignored, leading to errors in results. As a final problem and discouragement, easy to use software systems for Monte Carlo simulation of project schedules are not generally available. This is particularly the case when correlations between activity durations are desired.[/ul]

Project Management for Construction by Chris Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon University

http://www.ce.cmu.edu/pmbook/11_Advanced_Scheduling_Techniques.html

Bernard Ertl
www.interplansystems.com
- eTaskMaker Project Planning Software
- ATC Professional Turnaround Management Software

 

[simmantix]

If anyone still wants this I will put it on a new website??

Anyone interested?

Jim

Simmantix
---------
Phases of a Project:
Exultation, Disenchantment, Search for the Guilty, Punishment of the Innocent, Praise for the Uninvolved...

 

[zeusfaber]

Another useful commercial product:

D-Risk from Frazer-Nash Consulting

http://www.fnc.co.uk/downloads/Drisk/DRisk Info Sheet v1.pdf

This one's only been on the market since July, so I guess its stability isn't as well proven as some of the alternatives - nonetheless, I haven't seen any real problems in the several months I've been playing.

Comes as a straight plugin to MS Project, with output direct to MSP too, so fairly painless to use. I quite like it.

A.

 

[IRstuff]

simmantix, sure, I'll bite ;-)

TTFN

 

[simmantix]

OK then.. You should find everything you need here:

http://www.elsl.co.uk/assets/files/mcsim.zip

Please do me the kindness of posting or e-mailing me if you take a copy so I can issue updates if neccessary..

Thanks

Jim

Simmantix
---------
Phases of a Project:
Exultation, Disenchantment, Search for the Guilty, Punishment of the Innocent, Praise for the Uninvolved...

 

[IRstuff]

and no Alex Trebek?

TTFN

 

[simmantix]

sorry??

Simmantix
---------
Phases of a Project:
Exultation, Disenchantment, Search for the Guilty, Punishment of the Innocent, Praise for the Uninvolved...

 

[IRstuff]

Who is the famous Canadian host of a popular game show?

TTFN