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Schedule and Cost Buffer Sizing: How to Account for

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Abstract

Bias in project performance causes schedule and cost to overrun baseline estimates (your model). Bias is the one-sided tendency of actual schedule or cost to overrun the model. The PMBOK ® Guide and supporting literature recommend estimating the variability for all project time and cost estimates, and sizing appropriate schedule or cost buffers (also known as contingency or management reserve) using Monte-Carlo analysis or PERT. Critical Chain Project Management (CCPM) uses a similar approach to size buffers (the square root of the sum of the squares, or SSQ method). These techniques pool the variance from individual task estimates. Statistical pooling of variance does not account for sources of bias in the estimates; i.e., systematic reasons that the estimates may be high or low. [The one exception to this can be applying Monte Carlo to the schedule. It can account for merging bias, if performed using the network.] This paper describes a number of sources of bias in performance of projects to schedule and cost estimates, and provides recommendations to size buffers that ensure your projects come in under your baseline schedule and budget

Topics: buffer, contingency, management reserve, PERT, Monte Carlo, critical chain, CCPM
Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.196.7293
Provided by: CiteSeerX
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