A two-level decision-making model for controlling stochastic projects

We consider projects with a high level of uncertainty comprising; activities of random time duration and both random and deterministic alternative outcomes in key nodes. A two-level control model is developed. On the upper level decision-making centers on choosing an optimal outcome direction at every deterministic alternative node which is reached in the course of the project's realization. On the lower level (between two adjacent decision-making nodes) the problem of controlling a project is, in essence: (a) Calculating periodically and examining the probability of meeting the project's due date on time; (b) Redistributing, if necessary, the project's budget among the activities to minimize the project's average remaining time duration. Heuristic procedures to solve this stochastic optimization problem are presented. A numerical example is given.