Integrated Cost-Schedule Risk Analysis Using The Risk Driver Approach

Integrated Cost – Schedule Risk Analysis
Using the Risk Driver Approach
Qatar PMI Meeting

February 19, 2014
David T. Hulett, Ph.D.

Hulett & Associates, LLC
© 2014 Hulett & Associates, LLC

1
The Traditional 3-point
Estimate of Activity Duration Uncertainty
 Typical schedule risk analysis starts with the activity that is impacted
by risks
– Estimates the 3-point estimate for optimistic, most likely and
pessimistic duration
– Creates a probability distribution for activity duration
– Performs Monte Carlo simulation
 What causes the most overall schedule risk? These questions are
answered in the 3-point estimate approach by looking to the impacted
activities:
– Sensitivity to activity durations
– Criticality of activity durations

2
Some Problems with Traditional Approach
 Can tell which activities are crucial, but not directly which
risks are driving
 Makes poor use of the Risk Register that is usually available
 Cannot decompose the overall schedule risk into its
components BY RISK
– Ability to assign the risk to its specific risk drivers helps with
communication of risk causes and risk mitigation

3
Risk Drivers: Start with the Risks Themselves
 Drive the schedule risk by the risks already analyzed in the Risk
Register – Root Causes
 For each risk, specify:
– Probability it will occur
– Impact on time if it does
– Activities it will affect
 Starting with the risks themselves gives us benefits
– Links qualitative analysis to the quantitative analysis
– Estimates the impact of specific risks for prioritized mitigation purposes
– Correlations between activities happen automatically – never have to
guess at these coefficients again, never get impossible matrices

4
Simple Example of Risk Register Risks
 Use the Risk Factors feature in Pertmaster 8.7

– A few other simulation packages have this capability
 Collect probability and impact data on risks
 Load the risks
 Assign risks to schedule activities

5
Risk Factors Mechanics (1)
 The risk factor is assigned to one or several activities,

affecting their durations by a multiplicative factor
– E.g., the factor may be .90 for optimistic, 1.0 for most likely and
1.25 for pessimistic
– These factors multiply the schedule durations of the activities to
which they are assigned
 Risks can be assigned to one or more activities
 Activity durations can be influenced by one or more risks

6
Risk Factors Mechanics (2)
 Risk Factors are assigned a probability of occurring on any

iteration.
– When the risk occurs, the factor used is chosen at random from
the 3-point estimate and operates on all activities to which it is
assigned
– When not occurring on an iteration the risk factor takes the value
1.0, a neutral value
 When an activity is influenced by more than one risk, their
factors are multiplied together, if they happen, on any
iteration if they are specified to be in series

7
Risk Factor
Probability is 100%, Factor can be + or -
Entire Plan : Duration

100% 115
Here the For the examples

95% 111
400
90% 109
Ranges are we use an activity

85% 108
350
80% 106
based on 75% 105

with 100 days in
deviations + the schedule
300 70% 104
65% 104
and – from the
Cumulative Frequency
60% 103
250
55% 102
Plan.
Hits
50% 101
200
Probability is
45% 101
40% 100
100% 150 35% 99
30% 99
25% 98
100
20% 97
15% 96
50
10% 95
5% 94
0 0% 90
90 95 100 105 110 115
Distribution (start of interval)

8
Assigning a Probability Less than 100%
 The essence of a “risk” is its uncertainty in two dimensions:

– Uncertainty of its occurrence, specified by a probability
– Uncertainty of its impact, specified by a range of durations
 If the risk may or may not occur, we specify the probability
that it will occur
– The risk occurs and affects the activities it is assigned to on X% of
the iterations, chosen at random, the multiplicative factor used is
chosen at random from the range of data input by the user
– On (1 – X)% of the iterations, Factor takes 1.0 value

9
Assigning a Probability Less than 100%
Spike
Entire Plan : Duration Entire Plan : Duration
100% 130 100% 114
95% 123 95% 107

Spike
contains
2000
90% 120 90% 104
contains
3500
85% 118 85% 101
40% of
1800
80% 116 80% 100
1600 75% 114 3000 75% 100

70% of
the 70% 113 70% 100
1400 65% 111 65% 100

the
probability Cumulative Frequency
2500
probability
60% 110 60% 100
1200
55% 109 55% 100
Hits
Hits
50% 107 2000 50% 100
1000
45% 106 45% 100
40% 103 40% 100

800 1500
35% 100 35% 100
30% 100 30% 100

600
25% 100 1000 25% 100
20% 100 20% 100

400
15% 100 15% 100

500
200 10% 100 10% 99
5% 100 5% 97
0 0% 100 0 0% 90
100 105 110 115 120 125 130 90 95 100 105 110 115
Distribution (start of interval) Distribution (start of interval)

10
Assigning
More than One Risk to an Activity
 If more than one risk is acting on an activity, the resulting

ranges are the multiplication of the percentages
 This is reality – an activity is often affected by multiple risks
 Two cases are shown next:
– When both risks are 100% likely to occur
– When both risks are < 100% likely to occur
 In each case, the computer simulation creates the
uncertainty range on an activity’s duration – it is not
estimated

11
Parallel and Series Risks – Additive – used
with Risk Register
Risk 1 20 days
20 days for risk recovery
Risk 2 12 days
If these two risks are parallel, they can be recovered

simultaneously
Risk 1 20 days Risk 2 12 days 32 days for risk recovery
If these two risks are series, they can not be

recovered simultaneously so the duration is longer

12
Parallel and Series Risks – Multiplicative –
Used with Risk Drivers (RiskFactors)
Risk 1 1.2 factor Use 1.2 Factor, the
Risk 2 1.05 factor largest factor only
If these two risks are parallel, they can be recovered

simultaneously
Risk 1 1.2 factor Risk 2 1.05 factor Use (1.2 x 1.05 = 1.26)
Factor, multiply the two
If these two risks are series, they can not be
recovered simultaneously

13
Two Risks affect One Activity using Factors that
Occur 100% - placed in Series

100% 146
260
95% 131
240 90% 127
85% 124
220
80% 123
200 75% 121
Risks in
70% 119
180
65% 118
series, P80
160 60% 117
is 123 days
55% 116
140
Hits
50% 115
120 45% 114
40% 112
100
35% 111
80 30% 110
25% 109
60
20% 108
40 15% 106
10% 104
20
5% 102
0 0% 92
100 110 120 130 140

14
Two Risks affect One Activity using
Factors that Occur 100% - in Parallel
100% 130
95% 125
350 90% 122
85% 121
80% 119
300
75% 118
70% 117
250 65% 116
60% 115
55% 114
Risks in
Hits
200
50% 113
45% 112
parallel, P80 150

40% 111
is 119 days
35% 111
30% 110
100 25% 109
20% 108
15% 107
50
10% 106
5% 105
0 0% 100
100 105 110 115 120 125 130

15
Two Risks with Less than 100% Probability
Affecting one Activity – Risks in Series

1800 100% 144
The spike at 100

95% 123
90% 119
1600
days represents (1) 85% 116
the likelihood that

80% 114
1400
75% 112
neither risk occurs

70% 110
1200
65% 108
[60% x 50% =
60% 107
30%] plus (2) the

1000 55% 105
Hits
50% 103
chance that 100 800 45% 101
days is picked
40% 100
35% 100
600
when one or both 30% 100
occur.
25% 100
400
20% 100
15% 100
200
10% 99
5% 96
0 0% 90
90 100 110 120 130 140

16
Two Risks with Less than 100% Probability
Affecting one Activity – Risks in Parallel
100% 130
With one risk’s

95% 122
2200
90% 118
having a minimum 2000 85% 115
80% 113
range of 100%, it
1800
75% 111
70% 110
cannot be less than

1600
65% 109
1400 60% 107
100 days
55% 105
Hits
1200 50% 103
45% 101
1000
40% 100
35% 100
800
30% 100
600 25% 100
20% 100
400
15% 100
10% 100
200
5% 100
0 0% 100
100 105 110 115 120 125 130

17
Risk Factors Model How Correlation Occurs
Coefficients are Calculated (1)
Risk 1: Risk Probability = .5,
Range .95, 1.05, 1.15
Activity 1 Activity 2
Correlation = 100%

18
Scatter showing 100% Correlation

19
Risk Factors Model How Correlation Occurs
Coefficients are Calculated (2)
Risk 3: Risk Probability = Risk 1: Risk Probability = .5, Risk 2: Risk Probability =
.25, Range .95, 1.05, 1.15 .45,
Range .8, .95, 1.05 Range 1.0, 1.10, 1.20
Activity 1 Activity 2
Correlation = 37%
Correlation is modeled as it is caused in the project

Correlation coefficients are generated, not guessed

20
Scatter showing 37% Correlation

21
Sensitivity to the Risk Factors
Risk 1 is more
important since it
affects both Activity
A and Activity B

22
Integrated Cost and Schedule
Risk Analysis
Risk
Project Schedule Cost Risk
Risk
“Burn Rate” per day Time Independent Costs
Schedule Risk
Time-Dependent
Costs Project
Cost Risk
23
Use a Case Study to Illustrate the
Integration of Cost and Schedule Risk
 Case Study is a simplified schedule of an off-shore gas
production project including approval process, drilling,
fabrication of the jacket and the topsides (modules),
installation of same, and commissioning. Use Risk Drivers
approach
 Results include:
– Schedule risk and cost risk histograms and cumulative distributions
– Prioritizing risks to time and to cost
– Scatter diagram of cost and time
– Probabilistic cash flow

24
How the Impact Ranges work on Different
Resources to show Cost Risk (1)
 The resources are either time dependent or time independent

 Time Dependent resources such as labor and rented
equipment (barges, tower cranes) vary according to:
– Schedule risk multiplied by the burn rate per day
– Burn rate is uncertain if the risk exhibits a range
 So time dependent resources’ costs vary:
– By the duration uncertainty even if the burn rate is fixed
– By the uncertain burn rate even if durations are fixed
– By both uncertain duration and uncertain burn rate, a cross-product

25
How the Impact Ranges work on Different
Resources to show Cost Risk (2)
 Time-independent resources such as procured raw

materials and equipment, perhaps some subcontracts
 The total estimated cost is varied by the range on a risk with
its probability
 Time independent resources’ costs:
– May vary even if the duration of Fab and Deliver activities is fixed
– If they have no cost impact ranges they do not vary even if Fab
and Deliver activities’ durations are variable

26
Offshore Gas Production: Integrating
Schedule and Cost Risk Analysis

27
Resources and Cost
Total Project = $1,473 million
Resources are added to the

activities
PMT = Project Management
Team
Detail = Detailed Engineering
PROC = Procurement
FAB = Fabrication
DRILL = Drilling
INST = Installation
HUC = Hook-Up and
Commissioning
We could have LOE costs such as

PMT placed on a hammock in PRA

28
Inherent Variation and
Duration Estimating Uncertainty
The estimate is that durations
are underestimated
The range, on all activities, is
95% – 105% - 115% of the
estimated duration, indicating
some bias in the assumptions
and / or estimating
Different activity types could
have different reference ranges
for their inherent variation
Inherent variation is not
susceptible to risk mitigation – it
is always with us and must be
recognized

29
Schedule Risk with Inherent uncertainty
Offshore Gas Production Project
Entire Plan : Finish Date
100% 05 Aug 16
95% 05 Jul 16
700
90% 28 Jun 16
650
85% 23 Jun 16
600 80% 19 Jun 16
550
75% 15 Jun 16 Baseline schedule date is
500
70% 13 Jun 16
20MAR16
P-80 is 19JUN16
65% 10 Jun 16
450 60% 07 Jun 16
55% 04 Jun 16
400
Hits
50% 01 Jun 16
350
45% 30 May 16
300 40% 27 May 16
35% 25 May 16
250
30% 22 May 16
200
25% 19 May 16
150 20% 16 May 16
15% 12 May 16
100
10% 07 May 16
50
5% 29 Apr 16
0 0% 31 Mar 16
27 Apr 16 16 Jun 16 05 Aug 16

30
Cost Risk with Inherent Uncertainty
Entire Plan : Cost
100% $1,534,415.98
900 95% $1,518,027.49
90% $1,514,498.07
800 85% $1,511,661.44
80% $1,509,587.33
700
75% $1,507,756.29 Baseline cost is $1,473 million
70% $1,506,215.40
Cost at the P-80 is $1,509
million
65% $1,504,792.58
600
60% $1,503,339.04
55% $1,501,853.33
500
Hits
50% $1,500,395.02
45% $1,498,929.53
400
40% $1,497,468.96
35% $1,496,002.91
300
30% $1,494,469.13
25% $1,492,865.71
200
20% $1,491,069.27
15% $1,488,845.49
100 10% $1,486,309.87
5% $1,482,293.69
0 0% $1,465,837.51
$1,470,000.00 $1,480,000.00 $1,490,000.00 $1,500,000.00 $1,510,000.00 $1,520,000.00 $1,530,000.00

31
Risk Drivers Used
Schedule Cost Impact
Impact Ranges Ranges
Schedule Impact Ranges Cost Impact Ranges
Most Most
Risk Name Min Max Min Max Probability
Likely Likely
Company's Engineers may vary in
1 90% 110% 130% 95% 100% 110% 85%
Experience
2 MTO, Specs may not be ready for ITB 100% 105% 125% 100% 105% 110% 60%
3 May have trouble interfacing phases 100% 110% 120% 90% 105% 115% 40%
Subsea conditions may not be as
4 95% 100% 115% 95% 100% 110% 20%
expected
5 LLE suppliers may be busy 80% 95% 110% 95% 105% 115% 20%
Quality engineers at Fabricators may be
6 100% 100% 100% 100% 105% 110% 60%
inexperienced
Scope growth may be greater than
7 105% 110% 125% 100% 105% 110% 60%
expected
HUC resources may not be as
8 100% 115% 130% 95% 105% 115% 20%
experienced as needed
These data are derived during in-depth interviews with project participants and
others. The interviews focus on the Risk Register risks that are designated “high
risk” for time and cost. Use Primavera risk Analysis Risk Factor capability
32
Assignment of Risk Drivers to Activities
Risk Driver Activity Assignment
DETAIL FAB PROC INSTAL HUC DRILL PMT APPROVAL
Market Costs for Bulks/Equipment

X X X X
Volatile
Experienced HUC resources availability X
Company's Engineers' experience X X X X X X X X
Schedule Maturity X X X X X X X
MTO, Specifications may not be ready ITB X X X
Problems interfacing Phases X X X X
Cost Estimate inaccurate / immature X X X X X X X
Fabricators and Suppliers may be busy X X

Quality engineers may be scarce @ FAB,
X X
Suppliers
Scope Growth may be more than
X X
expected
33
Some Risks are Parallel and Some Series
If several risks are assigned to any task we

may put some in parallel (can be recovered
simultaneously) and some in series (recovery
will take all resources so cannot be recovered
simultaneously with other risks)
In this case, risks 6 and 7 have been placed in
series

34
Schedule Risk Analysis Results
Schedule Risk Analysis
Date Results for First Gas
Baseline Date 20-Mar-16
Risk Analysis Results P-5 P-50 P-80 P-95
2-Jul-16 4-Nov-16 6-Jan-17 14-Mar-17
Months from Baseline 3.4 7.5 9.6 11.8
Duration Results To First Gas
Days
Baseline Duration 1,906
Risk Analysis Results P-5 P-50 P-80 P-95
2,010 2,135 2,198 2,265
Percentage from Baseline 5% 12% 15% 19%

35
Risks and Inherent Uncertainty
Completion Date – First Gas
000005 - First Gas : Finish Date
First Gas 100% 19 Jul 17
95% 14 Mar 17
Baseline Date = 350 90% 14 Feb 17
20MAR16 85% 22 Jan 17
80% 06 Jan 17
300
75% 24 Dec 16
Date with 70% 11 Dec 16
Inherent
250 65% 30 Nov 16
60% 20 Nov 16
uncertainty was 200
55% 13 Nov 16
Hits
19JUN16
50% 04 Nov 16
45% 26 Oct 16
40% 17 Oct 16
150
P-80 with all 35% 08 Oct 16
30% 29 Sep 16
risks added is 100 25% 18 Sep 16
6Jan17 20% 06 Sep 16
9.5 months
15% 22 Aug 16
50
10% 31 Jul 16
5% 02 Jul 16
0 0% 22 Apr 16
27 Apr 16 05 Aug 16 13 Nov 16 21 Feb 17 01 Jun 17

36
Schedule Duration to First Gas
100% 2392
350
95% 2265
Baseline 90% 2237
Duration to
85% 2214
300
80% 2198
First Gas = 75% 2185
1,020 days
250 70% 2172
65% 2161
60% 2151
200 55% 2144
Hits
50% 2135
45% 2126
150
40% 2117
35% 2108
30% 2099
100
25% 2088
20% 2076
15% 2061
50
10% 2039
5% 2010
0 0% 1939
2000 2100 2200 2300 2400

37
Prioritize Risks that Cause Schedule
Contingency to the P-80
Explain the Schedule Contingency to the P-80
P-80 Date Take Risks Out:
Days
All Risks In 6-Jan-17 % of Contingency
Saved
Specific Risks Taken Out in Order
Company's engineers may vary in experience 14-Nov-16 53 18%
MTO, Specs may not be ready for the ITB 5-Oct-16 40 14%
Scope growth may be more than expected 1-Jul-16 96 33%
May have problems interfacing phases 24-Jun-16 7 2%
HUC resources may not be experienced 19-Jun-16 5 2%
Uncertainty
Duration Estimating 20-Mar-16 91 31%
Total Contingency 292 100%
The order of risks is the best order at each step in this table. However, because of
the schedule’s structure some “Days Saved” values show inversion.
38
Picture of
Taking Risks out in Priority Order
100%
90%
Variation:91 Variation:7
Variation:5 Variation:96 Variation:40 Variation:51
80%
70%
Cumulative Probability
60%
50%
40%
30%
Variation:58 Variation:3
Variation:5
Variation:19 Variation:35 Variation:50
20%
10%
0%
Mar 16 10 May 16 29 Jun 16 18 Aug 16 07 Oct 16 26 Nov 16 15 Jan 17 06 Mar 17 25 Apr 17 14 Jun 17

39
Summary Cost Risk Analysis Results
Cost Risk Analysis Total Project
$ millions
Baseline Cost 1,473
P-5 P-50 P-80 P-95
Risk Analysis Results 1,541 1,667 1,736 1,808
Dollars from Baseline 68 194 263 335
Percent from Baseline 5% 13% 18% 23%

40
Where is the Cost Risk – by Resource
Cost Contingency Breakdown by Resource
$ millions
Resource Baseline P-80 % Contingency
Project Management Team 31 43 39%
Engineering 70 96 36%
Installation 57 78 36%
Fabrication 300 399 33%
Hook Up & Commissioning 45 60 32%
Procurement 850 945 11%
Drilling 120 132 10%
TOTAL PROJECT 1,473 1736 18%
Cost Contingency Breakdown by Type of Resource

$ millions
Type Baseline P-80 % Contingency
Materials (Equipment, raw materials) 850 945 11%
Labor (including rented equipment) 623 797 28%

41
Cost Risk Analysis Results
Entire Plan : Cost
100% $1,945,224.66
Baseline Cost $1,473 400

95% $1,808,124.77
million 90% $1,776,809.05
350 85% $1,752,269.90
80% $1,735,644.11
With inherent 75% $1,719,274.56
uncertainty P-80 is
300
70% $1,707,918.39
$1,509 million
65% $1,695,182.86
250 60% $1,685,944.55
55% $1,676,312.18
Adding Risk Drivers

Hits
50% $1,666,546.42
200
P-80 Cost
45% $1,655,388.88
40% $1,645,807.52
$1,736 million 150

35% $1,635,534.18
18% contingency 30% $1,624,565.01
25% $1,612,911.88
100
20% $1,599,905.70
15% $1,585,976.57
50
10% $1,567,102.71
5% $1,541,499.20
0 0% $1,449,663.64
$1,500,000.00 $1,600,000.00 $1,700,000.00 $1,800,000.00 $1,900,000.00

42
Analysis of the
Sources of Cost Contingency
Source of Cost Contingency at the P-80
Total Cost Contingency
Total Cost All-Risks 1,736
Baseline Cost 1,473 262
Contribution to
Contingency
Take Out all Schedule Risks 1,631 105
Take Out all Cost Risks 1,581 155
Interaction of Cost/Schedule Risks 2
Total Contingency 262
40% of the risk to cost comes from risk to schedule, common finding

43
Priority Risks to Cost
Measured at P-80
Prioritize Risks to Cost at the P-80
$ millions
Total Project, All Risks 1,736
Baseline cost 1,473
$ millions
Take Out Risk Events one at a time: % of total contingency
saved
Scope Growth may be more than expected 1,685 51 19%
Company's Engineers' may be inexperienced 1,624 61 23%
MTO, Specifications may not be ready ITB 1,550 74 28%
Quality engineers may be scarce @ FAB, Suppliers 1,525 25 10%
Problems interfacing Phases 1,519 6 2%
LLE Suppliers may be busy 1,514 5 2%
Experienced HUC resources availability 1,511 3 1%
Subsea conditions may not be as expected 1,509 2 1%
Take out the 3-point estimates
Schedule duration estimate are uncertain 1,473 36 14%
262 100%

44
Graphical Effect of Taking the Risks out
One at a Time in Priority Order
100%
90%
Variation:$36,405.11
Variation:$1,591.31
Variation:$2,545.46
Variation:$5,243.00
Variation:$6,183.49
Variation:$24,925.51 Variation:$73,651.85 Variation:$54,652.75 Variation:$57,033.29
80%
70%
Cumulative Probability
60%
50%
40%
30%
Variation:$1,236.17
Variation:$596.69
Variation:$1,643.69
Variation:$3,382.76
Variation:$9,374.08
Variation:$33,986.87 Variation:$39,083.92
20%
10%
0%
$1,500,000.00 $1,550,000.00 $1,600,000.00 $1,650,000.00 $1,700,000.00 $1,750,000.00 $1,800,000.00 $1,850,000.00 $1,900,000.00

45
In this case study Cost and Schedule are
Correlated 51%
Deterministic Point Inside both limits Outside both limits
82%
11% 7%
$1,900,000.00
$1,850,000.00
$1,800,000.00
$1,750,000.00
82%
Entire Plan: Cost
$1,741,677.83
$1,700,000.00
$1,650,000.00
$1,600,000.00
PLAN $1,550,000.00
$1,500,000.00
70% 10 Jan 17 11%

$1,450,000.00
27 Apr 16 16 Jun 16 05 Aug 16 24 Sep 16 13 Nov 16 02 Jan 17 21 Feb 17 12 Apr 17 01 Jun 17
Entire Plan: Finish
70% of the risk is in lower-left quadrant

46
Probabilistic Cash Flow
Resource Flow for Cost
Filter: Entire Plan
Scheduled P80
2,000,000
1,800,000
1,600,000
Cumulative
terministic Cost: $1,473,445.00
1,400,000
1,200,000
Monthly Cash
Flow
Cumulative
Deterministic Finish: 20 Mar 16
- P-80
1,000,000
800,000
- Planned
600,000
400,000
200,000
0
13 Jan 13 23 Apr 13 01 Aug 13 09 Nov 13 17 Feb 14 28 May 14 05 Sep 14 14 Dec 14 24 Mar 15 02 Jul 15 10 Oct 15 18 Jan 16 27 Apr 16 05 Aug 16 13 Nov 16 21 Feb 17 01 Jun 17
Time

47
Analysis of a
Risk Mitigation Scenario
Risk Mitigation Scenario Schedule Impact Cost Impact First Project
Probabi Most Most Gas Cost ($
Low High Low High Date million)
lity Likely Likely
Risk to be Mitigated Before Mitigation
Company's Engineers may be 6-Jan-
85% 90% 110% 130% 95% 100% 110% 1,735
inexperienced 17
Proposed Mitigation: Increase Salaries
for company Engineers to competitive
levels
After Mitigation
Company's Engineers may be 14-Nov-
20% 90% 100% 110% 100 105 115 1,714
inexperienced 16
Improvement 53 21
Cost of proposed Mitigation 35
Net Improvement from Mitigation 53 -14
Spending $35 million for Engineers’ salary is assessed to reduce the probability of this risk
from 85% to 20%. Because the schedule slippage is 53 days less than before, there is $21
million we do not need to reserve and so the net cost impact of the mitigation at the P-80 is
offset by $21 million, for a net cost of $14 million. 48
NASA Joint Confidence Level (JCL) defined
For implementation of each major program segment, all space

flight and information technology programs are to be baselined
or rebaselined and budgeted in accordance with the following:
a) There is a 70 percent probability (or a different
probability that is approved by the decision authority) of
achieving the stated life cycle cost and launch schedule
b) Projects are to be baselined or rebaselined and
budgeted at confidence level consistent with the program’s
confidence level

49
JCL is determined by the joint distribution
of cost and schedule
 Integrated cost-schedule simulation is a perfect tool since it

provides a scatter diagram of time and cost pairs that are
consistent scenarios given the plan and the risks
 Find points where time and cost are jointly satisfied at P-70

50
JCL Results are on Indicated Contour Line
79%
$58,000,000 9% 12%
$56,000,000
$54,000,000
Joint time-cost
$52,000,000
probability = 70%
$50,000,000
$48,000,000
Entire Plan: Cost
$46,000,000 79%
$46,103,883
$44,000,000
$42,000,000
$40,000,000
$38,000,000
$36,000,000
$34,000,000
$32,000,000 70% 04 Jan 13 9%
02 Aug 12 21 Sep 12 10 Nov 12 30 Dec 12 18 Feb 13 09 Apr 13 29 May 13

Entire Plan: Finish
Time – Cost correlation is 69%

51
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52
Integrated Cost – Schedule Risk Analysis
Using the Risk Driver Approach
Qatar PMI Meeting

February 19, 2014
David T. Hulett, Ph.D.

Hulett & Associates, LLC

53

Integrated Cost-Schedule Risk Analysis Using The Risk Driver Approach

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Formatos disponibles

Integrated Cost-Schedule Risk Analysis Using The Risk Driver Approach

Cargado por

Copyright:

Formatos disponibles

Integrated Cost – Schedule Risk Analysis

Using the Risk Driver Approach

Qatar PMI Meeting

David T. Hulett, Ph.D.

© 2014 Hulett & Associates, LLC

© 2014 Hulett & Associates, LLC

© 2014 Hulett & Associates, LLC

© 2014 Hulett & Associates, LLC

 Use the Risk Factors feature in Pertmaster 8.7

© 2014 Hulett & Associates, LLC

 The risk factor is assigned to one or several activities,

© 2014 Hulett & Associates, LLC

 Risk Factors are assigned a probability of occurring on any

© 2014 Hulett & Associates, LLC

Entire Plan : Duration

Here the For the examples

Ranges are we use an activity

based on 75% 105

and – from the

100% 150 35% 99

© 2014 Hulett & Associates, LLC

 The essence of a “risk” is its uncertainty in two dimensions:

© 2014 Hulett & Associates, LLC

95% 123 95% 107

90% 120 90% 104

80% 116 80% 100

1600 75% 114 3000 75% 100

1400 65% 111 65% 100

40% 103 40% 100

30% 100 30% 100

20% 100 20% 100

15% 100 15% 100

© 2014 Hulett & Associates, LLC

 If more than one risk is acting on an activity, the resulting

© 2014 Hulett & Associates, LLC

If these two risks are parallel, they can be recovered

Risk 1 20 days Risk 2 12 days 32 days for risk recovery

If these two risks are series, they can not be

© 2014 Hulett & Associates, LLC

If these two risks are parallel, they can be recovered

© 2014 Hulett & Associates, LLC

Entire Plan : Duration

240 90% 127

200 75% 121

120 45% 114

© 2014 Hulett & Associates, LLC

350 90% 122

250 65% 116

parallel, P80 150

100 25% 109

© 2014 Hulett & Associates, LLC

Entire Plan : Duration

The spike at 100

days represents (1) 85% 116

the likelihood that

neither risk occurs

30%] plus (2) the

chance that 100 800 45% 101

when one or both 30% 100

© 2014 Hulett & Associates, LLC

With one risk’s

having a minimum 2000 85% 115

cannot be less than