Quantitative Methods in Project Management
This book combines theoretical and practical applications and takes project managers through the most important quantitative methods, integrates them, and illustrates interrelationships.
TABLE OF CONTENTS Quantitative Methods in Project Management
Probability Distribution Statistics
Most often we do not know every value and its probability. Thus we cannot apply the equations we have discussed to calculate statistics directly. However, if we know the probability distribution of values, or can estimate what the probability function might be, then we can apply the statistics that have been derived for those distributions. And, appropriately so for project management, we can do quite nicely using arithmetic approximations for the statistics rather than constantly referring to a table of values. Of course, electronic spreadsheets have much better approximations, if not exact values, so spreadsheets are a useful and quick tool for statistical analysis.
Three-Point Estimate Approximations
Quite useful results for project statistics are obtainable by developing three-point estimates that can be used in equations to calculate expected value, variance, and standard deviation. The three points commonly used are:
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Most pessimistic value that yet has some small probability of happening.
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Most optimistic value that also has some small probability of happening.
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Most likely value for any single instance of the project. The most likely value is the mode of the distribution.
It is not uncommon that the optimistic and most likely values are much closer to each other than is the pessimistic value. Many things can go wrong that are drivers on the pessimistic estimate; usually, there are fewer things that could go right. Table 2-5 provides the equations for the calculation of approximate values of statistics for the most common distributions.
Copyright J. Ross Publishing, Inc. 2004 under license agreement with Books24x7
