PMI-RMP · Question #380
A regional vendor for custom manufactured steel oil derricks, is awarded a contract to design, manufacture, and install 40 offshore oil platforms. Installation of these derricks requires precision…
The correct answer is B. The commercial product that performs the Monte Carlo simulations is the best option, because a. While PERT (Method of Moments) is a time-proven technique, it has well-known statistical limitations when applied to complex project schedules. The Method of Moments assumes that activity durations are added linearly across a simple path, relying on the Central Limit Theorem…
Question
A regional vendor for custom manufactured steel oil derricks, is awarded a contract to design, manufacture, and install 40 offshore oil platforms. Installation of these derricks requires precision placement and stable seas for the transport and installation ships to property install the deep water structure. There are several schedule and cost incentives for early completion, and the project manager asks the project risk coordinator to perform an analysis, which will predict the probability of meeting the incentive dates. While researching methods that could be used for performing this analysis, the risk manager realizes that there are readily available spreadsheets within the organization. The risk manager is considering performing a Method of Moments (PERT) analysis with software already owned, or the other option is to buy a commercial risk analysis software suite that will perform Latin Hypercube Monte Carlo simulations at a cost of US$975. What would be the best analytical option for this probability assessment?
Options
- ASchedule based Method of Moments analysis is a time proven, highly accurate method for
- BThe commercial product that performs the Monte Carlo simulations is the best option, because a
- CBecause a schedule risk assessment involves multiplication and division of schedule durations
- DSince a schedule risk assessment involves multiplication and division of schedule durations
How the community answered
(40 responses)- A5% (2)
- B68% (27)
- C18% (7)
- D10% (4)
Explanation
While PERT (Method of Moments) is a time-proven technique, it has well-known statistical limitations when applied to complex project schedules. The Method of Moments assumes that activity durations are added linearly across a simple path, relying on the Central Limit Theorem. However, real project networks involve path convergence (merge bias), non-linear interactions, and - critically - operations like multiplication and division of durations when calculating critical path percentages. These conditions violate PERT's assumptions and cause it to underestimate schedule risk. Monte Carlo simulation, by contrast, iterates thousands of scenarios across the entire network model, correctly capturing merge bias, correlation between activities, and non-normal distributions. For a high-stakes, incentive-driven offshore installation project where prediction accuracy is critical, Monte Carlo simulation provides a far more statistically reliable probability estimate for meeting specific completion dates, justifying the use of commercial simulation software over available PERT spreadsheets.
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