Integrating risk into estimations of project activities' time and cost: A stratified approach

Time and cost estimations of project activities are challenging tasks for project managers and planners. As a result of the high level of risk and uncertainty present during the early stages of projects, the reliability of these estimations during project planning remains poor. This study argues that this reliability can be improved through using the ‘concept of stratification’. This concept considers a set of states and describes a system that receives inputs (associated with outputs), based on which the system transitions from one state to another. This provides a unique structure that is capable of considering uncertainty related to events that may occur during a project. This paper explains how the concept of stratification can be used to compute estimations of the time and cost of activities involved in a project. The method is illustrated with a construction project that has uncertain events. By determining specific activities’ estimated time and cost, the project's estimated time and cost can also be calculated. Thus, the proposed method increases the reliability of estimations of projects’ completion time and cost.