IDEAS home Printed from https://ideas.repec.org/a/ods/journl/v6y2017i4p231-236.html
   My bibliography  Save this article

Extending The PERT Model For Probabilistic Activity Direct Costs

Author

Listed:
  • Mihir Dash

    (Alliance University, India)

Abstract

One of the major sources of concern for project managers is project cost uncertainty. Higher cost uncertainty leads to higher probability of cost over-run. Thus, project cost uncertainty is a very important element in project cost control. The traditional project management methodologies of PERT/CPM only allow for probabilistic activity times, and consequently probabilistic project duration, which is associated with indirect project costs. In particular, PERT/CPM does not consider probabilistic activity direct costs; activity direct costs are assumed to be definite and known, while activity times are assumed to follow beta distributions, parametrized by the three time estimates (optimistic, pessimistic, and most likely times). This paper proposes an extension of the PERT/CPM model under the conditions of probabilistic activity direct costs and activity times. Further extensions of the model are also discussed.

Suggested Citation

  • Mihir Dash, 2017. "Extending The PERT Model For Probabilistic Activity Direct Costs," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 6(4), pages 231-236, November.
    • Handle: RePEc:ods:journl:v:6:y:2017:i:4:p:231-236
    as

    Download full text from publisher

    File URL: http://www.jami.org.ua/Papers/JAMI_6_4_2017_231-236.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florin Tache & Oana-Catalina Tapurica & Cristina-Elena Ispasoiu, 2013. "Innovative Monitoring Tool for Environmental Issues within Project Management," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 2(2), pages 102-108.
    2. Irina B. Аzarova, 2015. "An Analysis of Life Cycle of Projects in Housing Sector," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 4(1), pages 2-10.
    3. J. J. Martin, 1965. "Distribution of the Time Through a Directed, Acyclic Network," Operations Research, INFORMS, vol. 13(1), pages 46-66, February.
    4. D. R. Fulkerson, 1962. "Expected Critical Path Lengths in PERT Networks," Operations Research, INFORMS, vol. 10(6), pages 808-817, December.
    5. Gul Polat, 2012. "ANN approach to determine cost contingency in international construction project," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 1(2), pages 195-201.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Azaron, Amir & Fatemi Ghomi, S.M.T., 2008. "Lower bound for the mean project completion time in dynamic PERT networks," European Journal of Operational Research, Elsevier, vol. 186(1), pages 120-127, April.
    2. Azaron, Amir & Fynes, Brian & Modarres, Mohammad, 2011. "Due date assignment in repetitive projects," International Journal of Production Economics, Elsevier, vol. 129(1), pages 79-85, January.
    3. Gary Mitchell, 2010. "On Calculating Activity Slack in Stochastic Project Networks," American Journal of Economics and Business Administration, Science Publications, vol. 2(1), pages 78-85, March.
    4. Tetsuo Iida, 2000. "Computing bounds on project duration distributions for stochastic PERT networks," Naval Research Logistics (NRL), John Wiley & Sons, vol. 47(7), pages 559-580, October.
    5. Anatoliy G. Goncharuk, 2015. "Application of the Investment Theory in Research and Practice," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 4(2), pages 119-126.
    6. Fatemi Ghomi, S. M. T. & Hashemin, S. S., 1999. "A new analytical algorithm and generation of Gaussian quadrature formula for stochastic network," European Journal of Operational Research, Elsevier, vol. 114(3), pages 610-625, May.
    7. Azaron, Amir & Katagiri, Hideki & Sakawa, Masatoshi & Kato, Kosuke & Memariani, Azizollah, 2006. "A multi-objective resource allocation problem in PERT networks," European Journal of Operational Research, Elsevier, vol. 172(3), pages 838-854, August.
    8. Fatemi Ghomi, S. M. T. & Rabbani, M., 2003. "A new structural mechanism for reducibility of stochastic PERT networks," European Journal of Operational Research, Elsevier, vol. 145(2), pages 394-402, March.
    9. Azaron, Amir & Katagiri, Hideki & Kato, Kosuke & Sakawa, Masatoshi, 2006. "Longest path analysis in networks of queues: Dynamic scheduling problems," European Journal of Operational Research, Elsevier, vol. 174(1), pages 132-149, October.
    10. Moayyad Al-Fawaeer & Abdul Sattar Al-Ali & Mousa Khaireddin, 2021. "The Impact of Changing the Expected Time and Variance Equations of the Project Activities on The Completion Time and Cost of the Project in PERT Model," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(2), pages 1-22, September.
    11. R. Alan Bowman, 2003. "Sensitivity curves for effective project management," Naval Research Logistics (NRL), John Wiley & Sons, vol. 50(5), pages 481-497, August.
    12. Mathieu, Hervé & Colin, Jean-Yves & Nakechbandi, Moustafa, 2014. "Computing Dynamic Routes in Maritime Logistic Networks," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Blecker, Thorsten & Kersten, Wolfgang & Ringle, Christian M. (ed.), Innovative Methods in Logistics and Supply Chain Management: Current Issues and Emerging Practices. Proceedings of the Hamburg International Conferenc, volume 19, pages 187-200, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    13. Vanhoucke, Mario, 2010. "Using activity sensitivity and network topology information to monitor project time performance," Omega, Elsevier, vol. 38(5), pages 359-370, October.
    14. Amir Azaron & Hideki Katagiri & Masatoshi Sakawa, 2007. "Time-cost trade-off via optimal control theory in Markov PERT networks," Annals of Operations Research, Springer, vol. 150(1), pages 47-64, March.
    15. Song, Jie & Martens, Annelies & Vanhoucke, Mario, 2021. "Using Schedule Risk Analysis with resource constraints for project control," European Journal of Operational Research, Elsevier, vol. 288(3), pages 736-752.
    16. Ben-Yashar, Ruth & Khuller, Samir & Kraus, Sarit, 2001. "Optimal collective dichotomous choice under partial order constraints," Mathematical Social Sciences, Elsevier, vol. 41(3), pages 349-364, May.
    17. Xuan Vinh Doan & Karthik Natarajan, 2012. "On the Complexity of Nonoverlapping Multivariate Marginal Bounds for Probabilistic Combinatorial Optimization Problems," Operations Research, INFORMS, vol. 60(1), pages 138-149, February.
    18. Moayyad Al-Fawaeer & Abdul Sattar Al-Ali & Mousa Khaireddin, 2021. "The Impact of Changing the Expected Time and Variance Equations of the Project Activities on The Completion Time and Cost of the Project in PERT Model," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(2), pages 119-140, September.
    19. Elmaghraby, Salah E., 2000. "On criticality and sensitivity in activity networks," European Journal of Operational Research, Elsevier, vol. 127(2), pages 220-238, December.
    20. Song, Jie & Martens, Annelies & Vanhoucke, Mario, 2022. "Using Earned Value Management and Schedule Risk Analysis with resource constraints for project control," European Journal of Operational Research, Elsevier, vol. 297(2), pages 451-466.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ods:journl:v:6:y:2017:i:4:p:231-236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anatoliy G. Goncharuk (email available below). General contact details of provider: https://edirc.repec.org/data/dmonaua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.