82, NETWORK TECHNIQUES: PERT (ADM) AND CPM(EDM) 365 Itis simple to correct the calculation of variance for this error. Consider the 95 percent estimates. Referring to Table 8-5 we can find the Z associated with .95 of the area under the curve from a’ to ©. For .95, Z is approximately —1.645. (Of course, this applies to the normal distribution rather than to the beta distribution, but this heuristic appears to work quite well in practice.) Similarly, Z = 1.645 for the area under the curve from —% to b’ ‘The range between b and a’ represents 2(1.645)- = 3.290, rather than the 6cr used in the traditional estimate of the variance. Therefore, when estimating a" and b’ at the 95 percent level, we should change the variance calculation formula to read oF = (b' - a'V3.29)? For estimates at the 90 percent level (a and bin Figure 8-26), Zis approximately 1.28 and the variance calculation becomes oF = ("= a"V2.56)* In order to verify that this modification ofthe traditional estimator forthe variance of a beta distribution gave good estimates ofthe true variance, we ran a series of trials using Statistical Analysis Systems’ (SAS) PROC IML for beta distributions of different shapes and estimated 4zand b at the 95 and 90 percent levels, We then compared these estimates of @ and b with the true variance of the distribution and found the differences to be quite small, consistently, ‘under 5 percent. It is important to repeat that some managers do not have confidence in making estimates at the 99 percent level and prefer the 90 or 95 percent levels, If estimates are made at these levels, however, use of the traditional calculation for variance ({[b — a}/6}2) will result in a serious underestimation of path variances and introduce considerable error into estimates of the probabilities of completing projects by specific dates, But again, we caution readers that nothing will help the PM manage risk if the input data ar biased or carelessly developed. Planning and implementing a national conference for @ society that will draw about 1000 attendees is a major project. The tasks involved in hosting such an event are ‘considerable and involve selecting a program committee, choosing a theme, contacting exhibitors, making local arrangements, planning the program, and on and on Pittsburgh was selected as host city/chapter for the 1992 Project Management Institute's annual September seminar/symposium. The objectives forthe ‘event were three: (1) to deliver a high-quality, value- added program that would be useful and last for years to come, (2) to offer a social and guest program that ‘would reflect well onthe host city, and (3) to mect strict financial criteria. The first task after selecting the city and hotel facilities was to put together the project team and chaigperson, This included managers in charge of each of the tracks, the social program, the local arrangements, and all the other details, The project {cam was organized using a functional approach. Pits burgh PMI Chapter officers had most of the primary responsibilities, with members from nine other chap- {ers assisting in other duties. Next was the development of the work breakdown structure, shown in Figure A, and the Gantt chart of activity schedules, shown in Figure B, As seen in the Gantt chart, scheduling all the work for a major conference such as this is an overwhelming effort, In the WBS, the major task was the development of the technical program, For PMI "92, the technical pro- ‘gram offered 22 workshops composed of 70 technical366 CHAPTER § / SCHEDULING WORK BREAKDOWN STRUCTURE AND TASKS SIS Project Management Recruit Project Team Establish Organizational Procedures Establish CAO Support Levels and Budget Issue Reports to VP-Tech and Board of Directors Develop S/S Goals and Develop S/S Theme Steategize Tracks and SIGs Recruit Technical Program, ‘Team Develop Selection Process Procedures Interface with Education ‘Committee on Workshops Plan and Issue Call for Costs Schedule for Presentations Select Printer Plan and Issue Abstract Books and Proceedings Organize Awards for Speakers’ Breakfasts Figure A. ‘The work breakdown structure papers, special panel discussions, and case studies ‘The technical tacks included engineering and con- struction, pharmaceuticals, utilities, software, automo- live, RAD. defense, education, and manufacturing. ‘The workshops included sessions on preparing for the PML centfication examinations, learning about Tagu- ‘chi concepts of statistical quality control, and future practice in project management. All of these also roquited careful scheduling. "The vendor program included exhibits by dozens of vendors and a large number of showcase sessions Identify Audio/Visual Requirements Develop and Issue Post-S/S ‘Technical Report Social Guest Program Establish Objectives dentify Available Activities Analyze Cost-Benefit Identify Candidates and Related Benefits and ‘Make Recommendations and Obtain Approval Complete Contracts Maintain Periodic Contact Host Speakers Video Production Promotional Materials entifcation and Approval ‘Advertising: PMI, Public and ‘Trade Media Releases Regional Newsletter Articles Finance Initiate Code of Accounts Develop Procedures of Financial Operation Develop Independent ‘Auditing Procedure Initiate Separate Banking ‘Account Develop Cash Flow Objectives Tdentify Recommendations Bstimates/Projections Assemble and Issue Post- ‘Complete Contracts Develop and Issue Standard SIS Report Recruit Stall Reports Interact with CAO on, ‘Technical Program Speakers Account Reconciliation Develop and Issue Post-S/S Financial Report Corporate Sponsorship Establish Participation Philosophy ‘Target Prime Corporations Solicit Participation Recognition apers/Panel Discussion __Publicity/Promotion Recruit Invited Papers! ‘Theme Establishment and Facilities Vendor/CAO Panel Discussions Approval Support Recruit Moderators Logo Development and ‘Contract with Host and Develop and Issue Master Approval Backup Hotels Stall Recruiting (Details to Be Hdentified and ‘Scheduled with PMI Exeotive Director and Events Manager) for in-depth demonstrations of their wares. The social program included a golf tournament, numerous social activities to meet with colleagues, tours of Pittsburgh's attractions, and a wide variety of entertainment ‘opportunities. ‘All in all, a conference such as PMI's is as diff- ccult a project as many firms face in their competitive markets Source: PME Stat, “Catch the Spin PM et work, Vo 6 a Pitsburg8.3 RISK ANALYSIS USING SIMULATION WITH CRYSTAL BALL® 367 na Sunn DCO HOES FN Jax, Figure B) Gantt chart |) 83. RISK ANALYSIS USING SIMULATION WITH CRYSTAL BALL®* ‘As we have emphasized often in this book, life with projects is characterized by uncertainty. ‘The time required to carry out an activity, the cost and availability of a resource, the success ‘of a research experiment, the wishes of the client, and the actions of a competitor, as well as “Occasionally, particular sections wil be shaded, meaning tat they canbe skipped witout los of contin