Project scheduling with alternative technologies: Incorporating varying activity duration variability

Abstract

We look into project scheduling with expected-NPV objective and stochastic activity durations. Individual activities carry a risk of failure, and an activity's failure can cause the overall project to fail. More than one alternative may exist for reaching intermediate project deliverables, and these alternatives can be implemented either in parallel or sequentially. In this paper, optimal solutions to the scheduling problem are found by means of stochastic dynamic programming. We examine the impact of the variability of activity durations on the project's value. We also illustrate that higher operational variability does not always lead to lower project values, meaning that (sometimes costly) variance-reduction strategies are not always advisable.