Teaching Note—Teaching Project Simulation in Excel Using PERT-Beta Distributions

Ron Davis - ron@mathproservices.com
College of Business, San Jose State University, San Jose, California 95192

Abstract

This paper presents the methodology for computing the correct general formulas for the PERT-beta distribution, and how they are used to carry out stochastic project duration simulations using the built-in tools available in Excel. A comparison with results obtained using the Excel add-ins Crystal Ball, @Risk, RiskSolver, and PopTools is included. Slightly different parameterizations are used by each application, so various forms of the formulas are shown for each case.

Key words
PERT, simulation, beta distribution, beta shape parameters, PERT-beta distributions, project analysis, project duration

History
Received: December 2006; accepted: May 2008. This paper was with the author 11 months for 3 revisions.

Download the PDF
10.1287/ited.8.3.139

Citation Information
Davis, R. 2008. Teaching Note—Teaching Project Simulation in Excel Using PERT-Beta Distributions. INFORMS Trans. Ed. 8(3) 139-148. Available online at http://ite.pubs.informs.org/.

DOI: 10.1287/ited.1080.0013