3s-1: Calculate the probability of a project being completed on time.

There are several situations in which it is extremely difficult to estimate the durations of a project’s activities accurately. In situations such as these, it’s best to use the PERT probabilistic estimates based on optimistic, most likely, and pessimistic times for each activity. Applying the relevant formulas for expected time and variance allows us to calculate the most likely time for each activity as well as the expected completion time for the project. Finally, apply the Z transformation to estimate the likely probability of the project being completed on time.

3s-2: Calculate the cost of “crashing” a project and the amount of time a project can be accelerated.

Before crashing a project, first assess the costs associated with each of its activities. Be sure the tasks chosen to be accelerated will have the most impact on the schedule for the least cost. To determine how much could be gained by crashing a project’s activities, first determine the actual fixed and variable costs associated with each. Calculate various time–cost combinations for a project’s crash options by determining the slope for each activity using the formula:

Slope = crash cost – normal cost /normal time – crash time

3s-3: Calculate the earned value of an ongoing project to assess its current status throughout development.

The earned value management (EVM) method is valuable because it indicates how a project is truly performing. The method involves using a time-phased budget that is regularly updated—one that links the project’s schedule and costs with the work actually completed on it. The first piece of information needed is the planned value (PV), or budgeted cost, of the project. The PV should include all costs relevant to the project, the most important of which are personnel costs, equipment and materials, and the project overhead, which is sometimes referred to as the level of effort. Overhead costs (level of effort) can include various fixed costs that must be included in the project’s budget, including the costs for administrative or technical support, computer work, and the expertise of other staff (such as legal advice or marketing work). Establishing the project’s baseline requires just two pieces of data: the work breakdown structure and a time-phased budget for the project.

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