What is Joint Cost and Schedule Confidence Level (JCL) Analysis?
Joint Confidence Level Analysis is one of the valuable measures that we can obtain from an integrated cost and schedule risk analysis and is the chance that both cost and schedule meet a certain confidence level. NASA defines JCL analysis as “a process that combines a project’s cost, schedule, and risk into a complete picture”. If cost, schedule, or both are below a defined confidence level, the management team must make decisions in regards to risk mitigation measures and/or changing the project scope.
JCL analysis is one of results of integrated cost and schedule Monte Carlo project risk analysis. At the finish of an iteration of a Monte Carlo simulation, the project cost, duration, and finish times are calculated. This information can be shown on a Joint Confidence chart.
Each point of the chart shows cost and finish time or duration of project for each iteration. This chart makes it possible to visualize the chance that both cost and schedule objectives will be met. The crosshair can be moved to a date and cost to obtain their joint confidence. The example below shows joint cost and schedule confidence level chart based on duration. Yellow point shows deterministic results.
Example: How to Perform Joint Confidence Level Analysis
Let us take a simple example project file to see how this might work using a integrated cost and schedule Monte Carlo schedule risk analysis. In this simple example, we have four activities in the schedule. Each activity has start and finish time, duration, fixed costs, and resources with an hourly rate assigned to them.
We then can create the risk model by adding the following uncertainties and risks to the activities:
- Uncertainties: Low and high estimates for each activity with triangular distribution; Low and high estimates for fixed cost with statistical distributions (Beta, BetaPert, Uniform, and Triangular)
- Risks with probability and schedule and cost impacts. Impacts are either fixed or relative.
We now have a project plan that includes all elements for an integrated cost and schedule risk analysis: schedule, costs, resources, uncertainties, and risks. When we run a Monte Carlo simulation, it will generate statistical distributions and provide levels of certainty for schedule (duration and finish times) and cost. Traditionally each of these will are generated using histograms and cumulative probability plots to look at the results for cost and schedule separately. However, using a scatter plot, we can take the results of the Monte Carlo simulation and generate the JCL scatter plot. This plot is shown based on project finish time. Gaps between points are appeared because on non-working time.
Benefits of Joint Confidence Level Analysis
The value of the joint confidence level analysis is that it provides several insights into the project and drive the decision making process. First, as mentioned in the introduction, it provides project managers a single holistic view of the project in terms of possible outcomes given it’s level of risk and uncertainty. Not only does it provide insight to the chance that the project will meet cost and schedule goals, but it also provides insight into the correlation between cost and schedule. JCL charts typically appear oblong tilted up to the right and is sometimes referred to as the “football chart” due to its resemblance in shape to an American football. The interesting thing is that the shape provides instant insight into the relationship between cost and schedule. The more highly correlated cost and schedule the narrower the shape becomes. In the example, because we have assigned resources we can see that cost is strongly correlated to schedule.
Project teams are facing increasing pressure to bring projects in on budget, but this can done in isolation of schedule. The JCL provides a powerful tool to understand the relationship between cost and schedule and create and manage credible project plans.