Difference between Monte Carlo and 3 point estimate

Submitted by aliweb on Sun, 06/17/2012 - 13:42

Q1. What is the difference between Monte Carlo Analysis and Three Point Estimate? They both look same to me.

Q2. When we make network diagram to find out critical path, do we not consider leads and lags of each activity? None of the examples I have seen shows lead and lag. 

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aghatak

Sun, 06/17/2012 - 17:15

1. MC is used in probability for what if analysis, example in nuclear simulation projects etc. 3 point uses pert using 3 dimensions of estimates ie optimistic, likely , presimistic.

2. You need to add the duration and the longest path is in critical path.

I advise you may consider the book PMP Mathematics by TMH  if you are still finding these concepts tough. All the best.

aliweb

Mon, 06/18/2012 - 06:37

 1. In Rita's 7th edition it is written as follows:

Monte Carlo Analysis This technique uses computer software to simulate the outcome of a project, based on the three-point estimates (optimistic, pessimistic, and most likely for each activity and the network diagram.

2. Yes I know about duration and critical path but my question is what if a network diagram shows leads and lags for each activity. How are you going to calculate critical path then? Are you going to add/subtract them from activity duration or ignore them?

Because in all examples where critical path is calculated, they just show that for e.g. activity A will take 4 days to complete and doesn't tell whether it also involves lead or lag.

aghatak

Mon, 06/18/2012 - 07:44

I would suggest below sources for more information-


1. MC Analysis - You refer the defination in PMBOK. If you really need more inputs you may check ASQ Manual for 6 sigma Green belts.


2. You may try sample exercises from Head First lab for more clarity and parctise. I think its a free download on headfirst site.


For Crtical path its enough if you sum the duration. Some questions have lead/lags which may not be needed to answer what is critical path. If this is still not clear post the original question or diagram.

saket_pmp

Mon, 06/18/2012 - 08:56

For PMP exam this much is sufficient:


1. Basic difference:
Monte Carlo Analysis is based on “What-if Scenario”, its purely assumption based and hence its would not give accuracy in terms of closeness.
Three-Point Estimate uses optimistic, most likely, and pessimistic scenarios that may provide more accuracy as the “most likely” factor has the biggest weightage in its considerations.


2. The critical path represents the set or sequence of predecessor/successor activities which will take the longest time to complete as per the estimates you plan for each activity. Precedence relationships (leads, lags) are constraints which are already considered while estimations and hence you do not see lead/lag explicitly.


Regards,
Saket, PMP
 

aliweb

Mon, 06/18/2012 - 10:18

 Regarding point number 2, so basically when a diagram shows duration for each activity like the one below, it means leads/lags are already there? I mean this duration has been calculated taking into account both leads and lags?

i.imgur.com/qOBnp.jpg

saket_pmp

Mon, 06/18/2012 - 10:36

Now, point 2 is beyond PMP for you.


It depends upon where the critical path has been shown i.e. network diagram or Gantt chart. In PMBOK and PMP exam emphasis is more on network diagram.


It’s not that you cannot put lead/lag in network diagram, you can. In the Network diagram, the only thing you would see are the shapes/boxes shown for each task, and the linkages (dependencies) between each task. Most of the software are designed for the same purpose i.e. show network and relationship and nothing else. Here say in an activity A the actual execution time is 6 units and lag of 1 unit, so you can make the activity A with 7 units. Understand the motive of network diagram i.e. network and relationship.


Gantt chart is much better suited for showing lead/ lag and other timing constrains. What you have in mind, you can easily do in Gantt chart, that’s why its called “Gantt”.


Hope this helps.


Saket, PMP

aliweb

Mon, 06/18/2012 - 12:38

 Thanks for clarifying. Now it is much clear to me that the activity duration include/exclude lag/lead.

Why was it confusing for me because when in "Sequencing Activities" process the network diagram shows leads and lags along with activity duration but when you come to project schedule phase, the network diagrams just shows activitiy duration and no leads/lags.