Bayes Theorem for project managers | Eight to Late

Projects are fraught with uncertainty, so it is no surprise that the language and tools of probability are making their way into project management practice. A good example of this is the use of Monte Carlo methods to estimate project variables.  Such tools enable the project manager to present estimates in terms of probabilities  (e.g. there’s a 90% chance that a project will finish on time) rather than illusory certainties. Now, it often happens that we want to find  the probability of an event occurring given that another event has occurred. For example, one might want to find the probability that a project will finish on time given that a major scope change has already  occurred.  Such conditional probabilities,  as they are referred to in statistics,  can be evaluated using Bayes Theorem. This post is a discussion of Bayes Theorem using an example from project management.

All project managers want to know whether the projects they’re working on will finish on time. So, as our example, we’ll assume that a project manager asks the question: what’s the probability that my project will finish on time? There are only two possibilties here: either the project finishes on (or before) time or it doesn’t.  Let’s express this formally.  Denoting the event the project finishes on (or before) time by , the event the project does not finish on (or before) time by and the probabilities of the two by and respectively, we have:

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