Schedule Risk: Why CPM Doesn't Work
Most companies begin their projects with a schedule of the tasks that must be completed on the project. Many companies will use a standard software package such as Microsoft Project to create their schedule. Such a package will allow the scheduler to describe the tasks, define the durations of the tasks, and link the tasks in a logical manner. The software will then calculate the overall duration of the project based on the durations and linkages.
One useful concept associated with this type of schedule is the critical path: the sequence of individual tasks that account for the total duration of the project. The Critical Path Method, or CPM, is the analysis of a schedule to determine which tasks are on the critical path, and which tasks are not. A task that is on the critical path will produce day-for-day changes in the project duration when the duration of that task changes: if the task finishes one day early, the project will finish one day early; if the task runs one day behind, so will the project. Microsoft Project and similar software packages will determine the tasks that are on the critical path. By knowing the critical path, the project manager then knows how to allocate his resources to ensure that the project finishes on schedule.
Unfortunately, project managers frequently find that their CPM analysis fails in practice: all of the tasks on the identified critical path may be completed within their scheduled durations, yet the overall project still runs late. There are many reasons that this can occur, but the fundamental reason is this: individual tasks in a schedule are given fixed (presumably, known) durations when, in practice, the duration of a task is rarely known exactly; usually the project manager only knows a possible range of durations for each task. As an example, a contractor may put into his schedule a duration of 50 days for framing a house. However, the contractor cannot know that it will take exactly 50 days to frame the house; under perfect conditions it may take only 40 days for the framing, and under the worst conditions (say, three weeks of steady rain) it may take 80 days for the framing. This uncertainty in the duration of the individual tasks translates into uncertainty in the duration of the overall project; by adding risk analysis to the CPM analysis the project manager can get a much more accurate picture of the critical tasks.
Among the results that come from adding risk analysis to CPM analysis are these:
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Some tasks that do not appear on the critical path in the CPM analysis will appear on the critical path when risk is included
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Some tasks that appear on the critical path in the CPM analysis will not appear on the critical path when risk is included
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When one task cannot start until two or more parallel tasks have finished (e.g., assembly cannot begin until part A and part B have both been machined), the later task will be biased toward starting late
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Even when the "most likely" duration is used for each individual task, the "most likely" duration for the overall project will usually be longer, sometimes much longer, than the duration calculated by the CPM analysis
For these reasons, CPM analysis usually leads to inaccurate estimates of the duration of a project, and innacurate assessments of the tasks critical to timely completion.
Let Risk Mitigation Associates help you in this area, and more.