Monte Carlo Simulation is easy!

Monte Carlo Simulation is easy!

We previously discussed the challenges of applying Monte Carlo Simulation (MCS) correctly, but the way it is commonly applied in project analysis is not just bad—it is ugly.

How (do not) to apply MCS in project delivery:

1. Take whatever project model is available. An Excel table or a CPM schedule created for progress tracking will do.

2. Assume all required resources will magically be available exactly when needed. Ignore material shortages, cash-flow constraints, physical-space limitations, access restrictions, and other real-world constraints. It is not your problem to solve.

3. Quietly assume that activity durations represent carefully developed “most likely” estimates based on expert judgement and extensive historical data. No need to verify this assumption.

4. Take whatever Monte Carlo tool is available.

5. Add a few obvious risks to a deterministic risk register (where each risk effectively has a single impact). Assess probability and impact by categories. No need to define them – everyone knows what each category means. Focus mainly on threats. Opportunities can wait.

6. Configure a risk matrix in the MCS tool! Not sure about the settings? Defaults must exist for a reason.

7. Import the schedule and risk register. Map risks to activities. Spend plenty of time selecting the “correct” probability distribution for every activity.

8. Manufacture duration uncertainty by applying ± % or ± days around deterministic durations. If uncertainty data was collected when the estimates were originally developed, ignore it. There is a good chance your MCS tool can’t import it properly anyway.

9. Select the number of iterations and run the simulation. Fewer iterations mean more visible variability and a faster analysis. Win-win.

10. Review the results. Adjust assumptions, distributions, model parameters, or risk attributes until the desired outcome appears.

11. Auto-generate an impressive QRA report. Make it look as though producing the report required weeks of sophisticated analysis.

12. Ignore contradictions with previous reports – the previous analysis was completed months ago, so there is a reasonable chance nobody will notice. If someone does, explain that the latest analysis is “more comprehensive” and includes “new risks”.

13. Do not even try to calculate the current probability of achieving previous targets. It might expose uncomfortable truths about the credibility of your analysis. Instead, establish new P80 or P90 duration/cost and present them as the latest risk-adjusted targets.

14. Proudly present the results as a quantitative assessment of project uncertainty.

15. (Bonus step) Present the findings and explain how advanced quantitative risk analysis improves decision-making at the next project management conference.

Alex Lyaschenko

PMO | Portfolio Planning & Delivery | PMP | P3O Practitioner | AgilePM Practitioner | Six Sigma

Artificial Project Periods

Artificial Project Periods

Project delivery is a continuous process.
Like an assembly line, work flows seamlessly: an 8:00 AM start follows a 5:00 PM finish the previous day, and Monday naturally continues where Friday ended.
However, not every activity can be interrupted.
You can’t start boiling water at 4:55 PM, stop at 5:00 PM, and expect to make tea at 8:00 AM the next morning. Some processes must start and finish within the same uninterrupted working period.
This leads to two important rules.

Rule #1: Model uninterrupted processes correctly

If a process cannot be interrupted, this constraint must be explicitly programmed in the project delivery model:

  • Some tasks require “immediately” after logic allowing a successor start no later than defined period (or without any delay).
  • Other activities should not be scheduled to start unless there is sufficient time for it to finish within the available working period.

Traditional CPM dependency types (FS, SS, FF and SF) cannot model this behaviour. They require additional project data modelling capabilities.
If these technological constraints exist but are not represented correctly, then both what-if analysis and Monte Carlo Simulation will produce unreliable results because the underlying delivery model does not reflect reality.

Rule #2: Avoid creating artificial project periods

Artificial working periods make projects slower.
Although organising work into predefined blocks usually simplify planning and control, it often introduces hidden delays between predecessor and successor activities. These delays may not immediately affect the delivery date, but they accumulate and consume valuable project float. When uncertainty inevitably occurs, that lost float is no longer available to absorb disruptions.
Common examples include:

  • Critical features planned to start at the next Agile sprint instead of commencing them immediately after enabling features are ready;
  • a four-hour task being allocated an entire working day simply because it is easier to plan;
  • features developed during an Agile sprint waiting for the next production release;
  • fixed review and approval periods that delay work for administrative rather than technical reasons.
    These are not technological constraints. They are programmed delays.

The RCPM approach

Effective project delivery requires project processes to be planned around real-world constraints. This is the foundation of the Resource Critical Path Method (RCPM), which focuses on accurate project data modelling. Rather than simplifying reality through unrealistic assumptions, RCPM enables project teams to model and manage complexity, resulting in more reliable planning, forecasting, and decision-making.

The Resource Critical Path Method (RCPM) addresses both challenges.

An RCPM delivery model represents project processes as it is can be executed. It introduces uninterrupted (“no-break”) periods only where they are genuinely required by technology or the nature of the work, while eliminating artificial time blocks that add no value.

The result is an optimised delivery model that more accurately reflects reality, preserves valuable project float, improves the reliability of scenario analysis and Monte Carlo Simulation, and ultimately enables faster and more predictable project delivery.

Alex Lyaschenko

PMO | Portfolio Planning & Delivery | PMP | P3O Practitioner | AgilePM Practitioner | Six Sigma

The AI Agent Iron Triangle

The AI Agent Iron Triangle

Generative AI has made remarkable progress over the last few years. However, as we move from simple chat interfaces to autonomous AI agents, a new optimisation challenge emerges.

Like project managers balancing scope, time, and cost, AI agents must balance three competing objectives:

Quality of Outcome

How well the agent achieves the desired objective.

Time to Outcome

How quickly the objective is achieved.

Token Cost

How much computation and AI usage is consumed along the way.

Why Agents Change the Problem

Traditional chatbots generate a single response.
AI agents execute a process.

They may:

  • Break a problem into smaller tasks
  • Search for information
  • Validate assumptions
  • Run multiple reasoning cycles
  • Use specialised tools
  • Coordinate with other agents

As a result, the quality of the final outcome depends not only on model intelligence but also on how much work the agent performs.

Quality vs Cost

A high-quality agent may:

  • Search multiple sources
  • Compare alternative solutions
  • Verify facts
  • Perform self-critique
  • Run several iterations before presenting a recommendation

The outcome is usually better, but token consumption increases significantly.
A cheaper agent may produce an answer after a single reasoning pass, reducing costs but increasing the risk of errors, hallucinations, or missed opportunities.

Quality vs Time

Suppose an agent is helping a project manager recover a delayed project. The fastest approach is to suggest the first recovery strategy it finds.

A higher-quality approach may:

  • Analyse the schedule
  • Identify resource constraints
  • Evaluate multiple recovery options
  • Simulate outcomes
  • Compare risks and benefits

The recommendation is likely to be better, but the decision takes longer.

Time vs Cost

An agent can often reduce delivery time by consuming more tokens.

For example:

  • Running several specialist agents in parallel
  • Performing multiple searches simultaneously
  • Using larger reasoning models
  • Conducting additional validation steps

The user receives an answer faster, but the computational cost increases

This is remarkably similar to project acceleration, where faster delivery often requires additional resources.

The Agent Manager’s Problem

Today, most discussions focus on model intelligence.

However, as AI agents become more autonomous, the real challenge shifts toward managing the agent itself.

Questions become:

  • How much validation is enough?
  • How many reasoning cycles should be allowed?
  • When should an agent stop searching and make a decision?
  • How much token budget should be allocated to a task?
  • Is the additional quality worth the additional cost and delay?

These are fundamentally management questions rather than technology questions.

A New Measure of Agent Performance

Many people evaluate AI systems by model capability alone.

For AI agents, a more meaningful measure may be:
Outcome Quality per Token per Unit of Time
The best agent is not necessarily the one that produces the most sophisticated answer.

It is the one that achieves the required outcome with the optimal balance of:

  • Quality of outcome
  • Time to outcome
  • Token cost

AI Agent vs people investment

However, there is a broader question beyond the AI Agent Iron Triangle.
Organisations do not simply decide how to configure an AI agent. They decide whether deploying AI agents is the right investment in the first place. The benchmark is not another AI system. The benchmark is the alternative use of the available resources.

For every dollar invested in AI agents, an organisation could instead invest in:

  • Training and developing existing staff
  • Hiring additional specialists
  • Improving processes and governance
  • Better project management methods and tools
  • Knowledge management and organisational learning

As a result, the key question becomes:

Is investment in AI agents the most effective way to improve organisational performance?

The answer is not always yes.

In many situations, the root cause of poor outcomes is not a lack of intelligence but a lack of capability, experience, methodology, leadership, or organisational maturity.

For example, a project organisation with weak planning practices may achieve greater benefits from developing planner competencies than from deploying AI scheduling agents. Likewise, a poorly governed organisation may gain more from improving decision-making processes than from automating them.

This creates a second optimisation problem:
Should the organisation invest in artificial intelligence or human intelligence?

Just as project managers must decide where to allocate limited resources, executives must decide whether the next dollar is better spent on technology or on people. In many situations, investment in people remains the rational choice. AI agents may accelerate existing capabilities, but they rarely replace capabilities that do not already exist.

In other words, before optimising the AI Agent Iron Triangle, organisations must answer a more fundamental question:

Is AI the best investment, or would developing human capability deliver a greater return?

This is remarkably similar to project management itself. Success is rarely achieved by buying better software alone. More often, it comes from finding the right balance between people, processes, methods, and technology. AI agents are simply the latest participant in that optimisation problem.

Alex Lyaschenko

PMO | Portfolio Planning & Delivery | PMP | P3O Practitioner | AgilePM Practitioner | Six Sigma

Beyond DCMA 14 points. Missing dependencies.

Beyond DCMA 14 points. Missing dependencies.

A project schedule can pass every DCMA assessment and still be unreliable.

It reflects a common misunderstanding in project controls: passing schedule health checks does not prove that a schedule is correct. It only demonstrates that certain quality criteria have been satisfied.

Necessary But Not Sufficient

In mathematics, there is a concept known as a ‘Necessary but not sufficient condition’.

A necessary condition is something that must be true for a desired outcome to occur. If the condition is not met, the outcome will definitely be negative. However, satisfying a necessary condition alone does not guarantee success. Other conditions may also need to be met.

This distinction applies directly to project schedule validation.

A widely accepted rule of thumb is that every activity should have at least one predecessor and successor. While there are exceptions, this is generally considered good scheduling practice.

Having predecessors and successors is a necessary condition for a quality schedule. It is not a sufficient condition. A schedule may satisfy this rule completely and still contain missing dependencies.

Schedule Compliance vs Schedule Correctness

Common Misconception

A schedule can achieve an excellent DCMA score and still have critical quality issues.

This is not a criticism of DCMA assessments. They were never intended to prove schedule validity. Their purpose is to identify basic scheduling and performance issues. Problems arise when compliance scores are mistaken for evidence that the schedule is complete, realistic, and feasible.

Missing Dependencies

Missing dependencies create unrealistic optimism. Activities appear able to start earlier than they can in reality, resulting in delivery dates that cannot be achieved. In a schedule, the absence of a single dependency can alter the resource-critical path and reduce project duration.  

Only one missing critical dependency may be enough to invalidate the entire schedule.

Technological Dependency Validation

Technological dependencies, sometimes referred to as process dependencies, should not be identified from scratch every time a schedule is developed or reviewed.

A more mature approach is to develop a library of standardised work packages known as fragnets. Each fragnet represents a proven technological process with activities, sequencing logic, required skills, productivity assumptions, and constraints already analysed and documented. The project schedule is then assembled using these validated building blocks rather than creating logic relationships from scratch for every project.

By comparing a schedule with approved fragnets, planners can more effectively identify missing or inconsistent technological dependencies. 

This approach requires mature classification structures for activities, deliverables, and WBS elements. Without standardisation, meaningful comparison becomes difficult.

.

Good Practice

Validated fragnets enable organisations to reuse proven delivery logic and reduce the risk of missing technological dependencies.

Resource Dependency Validation

Resource dependencies are fundamentally different. Unlike technological dependencies, resource dependencies are dynamic. They need to be amended due to ongoing changes and resource supply constraints.

Attempting to manually define every resource dependency is often impractical and sometimes impossible. However, ignoring resource dependencies is likely to cause a delay.

A network may be technologically correct while remaining operationally impossible because the required resources simply do not exist when needed. Traditional schedule quality checks rarely address this challenge adequately.

This is why resource-driven scheduling methods and Resource Critical Path analysis provide insights that traditional Critical Path Method schedules often miss.

Summary

Logic validation is a crucial part of schedule analysis and it is not sufficient to only check that each activity and milestone has at least of predecessor and successor. It is obvious and essential step but analysis should not stop at that step.

Alex Lyaschenko

PMO | Portfolio Planning & Delivery | PMP | P3O Practitioner | AgilePM Practitioner | Six Sigma