project risk management basics: cost and schedule impacts · 2011. 11. 17. · endeavor’s success...
TRANSCRIPT
![Page 1: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/1.jpg)
1
Project Risk Management Basics:Cost and Schedule Impacts
CSVA 2011 ConferenceToronto, OntarioNov 14 -16, 2011
Robert E. Rocco
![Page 2: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/2.jpg)
Contents
• Background
• Fundamentals
• Process
• Tools/Supporting Documentation
• Risk Register
• Introduction to Quantitative Analysis
• Contingency Management
• Questions
![Page 3: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/3.jpg)
Risk Management Background
![Page 4: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/4.jpg)
What is Risk?
• A risk is something that may happen, and if it does, will have either apositive or negative impact on the project
• Risk is an uncertain event that, if it occurs, has an effect on at leastone project objective (e.g., time, cost, scope, quality – PMI 2004)
Consideration: There are one or more active conditions that influence the risk’sprobability of occurrence and one or more response conditions that influencethe risk’s impact
![Page 5: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/5.jpg)
What is Risk Management?
• An intuitive process
• A “good management practice” tool to enhance the chances for anendeavor’s success
• A systematic, disciplined process that satisfies strategic objectivesthrough management of life cycle risks
![Page 6: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/6.jpg)
Experienced Project Manager
• Risk Management?
• I’ve Always Done That!
• What do they want me to do differently?
![Page 7: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/7.jpg)
Benefits of Risk Management
• Prioritizes risks for Senior Managers to focus
• Provides managers with the means to decide where best to invests theprogram’s time and money
• Complies with owner’s and funding agency’s requirements,(e.g.: validating funding requirements)
• A rational method for calculating realistic and defendable contingencybudgets (cost and schedule)
• Forces the team to think collectively and collaboratively in mitigatingrisks, proactively
• Ensures that procurement and contract terms and conditions reflect theclient’s risk appetite and project objectives
![Page 8: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/8.jpg)
Core to AECOM Program Management
• AECOM’s Risk Management practice is guided by:– “Practice Standard for Project Risk Management” Project
Management Institute (PMI)– ISO 31000:2009 “Risk Management - Principles and Guidelines”– Practical experience managing over 200 capital programs with total
Capex of over US$340 billion
• AECOM has applied Risk Management to capital programs with Capexvalues of approximately US$100 billion.
![Page 9: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/9.jpg)
Risk Management Experience in Capital Programs
Program Value (US $ millions)Second Avenue Subway, New York, USA $16,000PATH Permanent World Trade Center Terminal, New York, USA $2,000Dallas Area Rapid Transit Airport Extension, Dallas, USA $300Dallas Area Rapid Transit Extension-Rowlett, Dallas, USA $300Lincoln Center Redevelopment, New York, USA $750San Diego International Airport Terminal Expansion, San Diego, USA $1,000Amtrak Vent Structures, New York, USA $100Central Corridor Light Rail Transit, Minneapolis, USA $1,000Route 9A West Reconstruction, New York, USA $100Tappan Zee Bridge Environmental Review, New York, USA $5,000Central Subway, Phase 2, San Francisco, USA $1,500Water Improvement Program, PUC, San Francisco, USA $4,500National Network of Highways Program, Trinidad and Tobago $4,000Afghanistan Infrastructure and Rehabilitation Program, Afghanistan $150Doha Port Qatar, Qatar $7,000Capital District Infrastructure Project, Abu Dhabi, UAE $20,000Saadiyat Island Cultural District, Abu Dhabi, UAE $20,000Abu Dhabi Metro, Abu Dhabi, UAE $5,000
![Page 10: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/10.jpg)
The Fundamentals
![Page 11: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/11.jpg)
The Fundamentals
DECISIONSACTIVITIES
FAVORABLEOUTCOMES(Opportunities)
UNFAVORABLEOUTCOMES
(Risks)Exposure to loss
SuccessfulProject
MAXIMIZEOPPORTUNITIES
MINIMIZERISKS
![Page 12: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/12.jpg)
DECISIONSACTIVITIES
FAVORABLEOUTCOMES(Opportunities)
UNFAVORABLEOUTCOMES
(Risks)Exposure to loss
SuccessfulProject
MAXIMIZEOPPORTUNIT
IESMINIMIZE
RISKS
The Fundamentals
MAXIMIZEOPPORTUNITIES
MINIMIZERISKS
–– Within Budget
– Within Schedule
– Meets QualityObjectives
– No SignificantAdverse Reaction
–– Meet PoliticalObjectives
– Contribute toEconomic Growth
– Meet TransportationNeeds
– Satisfy EnvironmentalObjectives
![Page 13: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/13.jpg)
The Process
![Page 14: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/14.jpg)
Risk Management Process
IDENTIFY RISK
ESTABLISHLIKEHOOD
&CONSEQUENCE
(Assessment)
RANK RISKS(Evaluation)
ESTABLISHMITIGATION
PLANS &OWNERSHIP(Allocation)
MANAGE RISK- Mitigate
- Assess Efforts- Measure Progress
- Status- Reset Priorities, goals
![Page 15: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/15.jpg)
Two Approaches to Risk Assessment
• Qualitative– May be used initially to set up a Project
Risk Program
• Quantitative– Necessary to provide contingency
requirements (cost and schedule) andisolate individual risk contributions
![Page 16: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/16.jpg)
Supporting Elements of RM Process
Guidance
RiskPlan
![Page 17: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/17.jpg)
Guidance
RiskPlan
Process
RiskManagement
Training,Processes,Procedures
Initial Activities
Supporting Elements of RM Process
![Page 18: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/18.jpg)
Guidance
RiskPlan
Process
RiskManagement
Training,Processes,Procedures
Initial Activities
RiskAssessmentCommittee
(RAC)
Ongoing Activities for Project Life
Workshops
Brainstorming
Supporting Elements of RM Process
Identify, Assess,Mitigate Plans,
Ownership
EvaluateMitigation Effort,
Focus, Goals,Priorities
![Page 19: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/19.jpg)
Supporting Elements of RM Process
Guidance
RiskPlan
Process
RiskManagement
Training,Processes.Procedures
Initial Activities
RiskAssessmentCommittee
(RAC)
Ongoing Activities for Project Life
Workshops
Brainstorming
AssessmentGroup Reports• MeasuredReduction ofRisk
• Action Items
• Cost/ScheduleConfidence Levels
• Cost Contingencyand schedule floatmanagement
Output
![Page 20: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/20.jpg)
POTENTIALRISKS
ASSESSMENT
EVALUATION
MITIGATION PLANS
STRATEGIC TECHNICAL COST/SCHEDULE
Means To Execute- Project
Understanding- Business
Practices- Organization- Resources- Viability- Precondition
Project Execution- Design- Construction- Construction
Management
Cost and ScheduleMeasure
- Confidence Level- Cost Contingency- Schedule Float
RISK REGISTER
Risk Identification
MANAGEMENT
![Page 21: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/21.jpg)
Tools for Risk Identification
• Interviews
• Project Team workshops
• Brainstorming
• Project documents review
• Risk Breakdown Structure
• Check lists
• Cause and effect diagrams
• Questionnaire
• SWOT analysis
• Industry knowledge base
• Influence diagrams
• Post-project review / lessonslearned / historical information
• Root-cause analysis
• Force field analysis
• List of assumptions andconstrains
• Delphi technique (anonymouspolling)
![Page 22: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/22.jpg)
Risk Assessment
• The objective here is to communicate the “expected impact” that willhappen if no proactive mitigation plan is implemented in theprogram/project. And the steps are as follows:– Select impacted variable per risk factor
(e.g.: cost, schedule, quality, etc.)– Calculate expected consequences per risk factor
Expected Value (EV) = Likelihood x Consequence
![Page 23: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/23.jpg)
Risk Assessment
LIKELIHOOD DESCRIPTION OF FREQUENCYOF EVENT
PROBABILITY SCALEVALUE
Almost CertainEvent occurs many times duringperiod of project or single event hashigh likelihood of occurrence
>70% 5
OftenEvent occurs several times duringperiod of project or single event hasmoderate likelihood of occurrence
40 – 70% 4
Likely Event could occur during period ofproject
20 – 40% 3
Possible Event is unlikely to occur, but it ispossible during period of project
10 – 20% 2
RareEvent is so unlikely that it can beassumed not to occur during periodof project.
0 – 10% 1
![Page 24: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/24.jpg)
Risk Assessment
CONSEQUENCE
DESCRIPTION OF EFFECT OF EVENTCOST
(INMILLIONS)
SCHEDULE SAFETYPROJECT PERCEPTION/POLITICAL REACTION
SCALEVALUE
Catastrophic Adds up to$250
Adds 12months
Multiple publicaccidents
Public perception very poor.Project seriously jeopardized.Serious political consequence to-- Owner
5
Major Adds up to$100
Adds 6months
Single publicaccident andmultiple workforceaccidents
Project jeopardized. Requiresconsiderable effort to regrouppublic/political support
4
Moderate Adds up to$50
Adds 4months
Single publicaccident ormultiple workforceaccidents
Some concern for projectviability. Some politicalconsequence experienced byOwner. Moderate effort requiredto re-establish viability.
3
MinorAdds up to
$25Adds 2months
Single workforceaccident
Minor concern for projectviability and effect on Ownerpolitically
2
Insignificant Adds up to$10
Adds 1month
Little possibility ofaccident
Little or no concern for projectviability and effect on Ownerpolitically
1
![Page 25: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/25.jpg)
Traditional Practice of Risk Ranking
CONSEQUENCE
PROBABILITYINSIGNIFICANT
(1) MINOR (2) MODERATE(3) MAJOR (4) CATASTROPHIC
(5)
RARE (1) 1 2 3 4 5
POSSIBLE (2) 2 4 6 8 10
LIKELY (3) 3 6 9 12 15
OFTEN (4) 4 8 12 16 20
ALMOST CERTAIN (5) 5 10 15 20 25
![Page 26: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/26.jpg)
Risk Allocation
• Mitigate
• Transfer (e.g.: Share, Insurance)
• Accept
• Avoid
Identify party best able to implement the allocation
![Page 27: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/27.jpg)
Manage Risk
• Primary Risk MitigationThis is the risk mitigation accomplished by implementing the riskmitigations placed in the Risk Register.
• Secondary MitigationThese are the items identified in advance by the project aspossible areas in which to reduce scope in an effort to savemoney or time to replenish contingency (cost and/or schedule)that is being used more rapidly than planned.
![Page 28: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/28.jpg)
Tools/SupportingDocumentation
![Page 29: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/29.jpg)
Risk ManagementPlan
Risk Identification• Workshops
• Informal process
Risk Assessmentand Evaluation
Risk ManagementRisk Mitigation Meetings
Risk Assessment Committee• Approve Allocations• Direct, evaluate mitigations• Change L,C• Secondary Mitigations
Risk Register• Risks• Mitigation Strategies• Allocation
- Mitigate- Transfer- Accept- Avoid
• Status
Risk: OwnershipMitigation Strategies
Allocations
Risk MitigationReport
Risk Mitigation Status logsSupporting documentation
Risk Program Documents
ContingencyManagement
• Reporting• Remedies
![Page 30: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/30.jpg)
Risk Mitigation Meetings
• Risk Mitigation Meetings
– Regular interval (monthly)
– Includes key project personnel
– Establish priority risks and place on the agenda
– Minutes capture essential risk / mitigation discussions
![Page 31: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/31.jpg)
Sample Risk MitigationMeeting Minutes
![Page 32: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/32.jpg)
Risk Mitigation Status Log
![Page 33: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/33.jpg)
Assessment CommitteeMeeting
![Page 34: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/34.jpg)
Risk Register
![Page 35: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/35.jpg)
Sample Risk Register
![Page 36: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/36.jpg)
Quantitative Analysis
![Page 37: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/37.jpg)
Risk Analysis
• Provides confidence level for cost estimate and schedule
• Rational approach to establish cost contingency and schedule float
• Means to manage contingency and float
• Addresses oversight agency requirements
![Page 38: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/38.jpg)
Risk Analysis Input
1.Cost Estimate
a. Contractor Costs (pre-Award Contingency)– Labor– Material– Equipment– Indirects– Profit– Risk
b.Owner Costs
2.Risk Events (post-Award Contingency)
3.Schedule
![Page 39: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/39.jpg)
Cost Estimate Uncertainties Matrix
![Page 40: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/40.jpg)
Risk Events
![Page 41: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/41.jpg)
Risk Events
![Page 42: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/42.jpg)
Risk Analysis Output
$800,000,000 $900,000,000
Distribution (start of interval)
0
50
100
150
200
250
300
350
Hits
0% $810,627,650
5% $840,271,115
10% $846,859,238
15% $850,794,197
20% $854,591,438
25% $857,802,894
30% $860,865,828
35% $864,141,857
40% $867,547,188
45% $870,261,462
50% $873,195,250
55% $876,545,038
60% $879,671,838
65% $883,051,476
70% $887,757,789
75% $892,516,291
80% $898,605,014
85% $905,911,420
90% $913,495,632
95% $926,525,787
100% $978,143,363
Cum
ulat
ive
Freq
uenc
y
CCLRT ProjectEntire Plan : Cost
2200 2400 2600
Distribution (start of interval)
0
50
100
150
200
250
300
Hits
0% 2194
5% 2280
10% 2292
15% 2302
20% 2313
25% 2322
30% 2330
35% 2340
40% 2350
45% 2363
50% 2375
55% 2389
60% 2404
65% 2420
70% 2435
75% 2462
80% 2494
85% 2523
90% 2557
95% 2606
100% 2763
Cum
ulat
ive
Freq
uenc
y
CCLRT ProjectEntire Plan : Duration
![Page 43: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/43.jpg)
Risk Analysis Output
7%
8%
9%
10%
10%
13%
14%
16%
20%
91%CC 65701 - CCLRT Project Schedule
0780 - SCC 70 Light Rail
0630 - SCC 40 Materials
0450 - SCC 10 Materials
0770 - SCC 60 ROW
0710 - SCC 50 Materials
0790 - SCC 80 Owner Cos ts
0550 - SCC 30 Labor
0700 - SCC 50 Labor
0750 - SCC 50 Risk
CCLRT ProjectCost Sensitivity
![Page 44: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/44.jpg)
Increase confidence of$3.833 billion estimate by18%. (from 59% to 77%)
Reduce P90 by $160million. (from $4.18 to
$4.02 billion)
Mitigation & Effect
Unmitigated
![Page 45: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/45.jpg)
Contingency Management
Contingency Management Includes:
• Recording actual values of remaining contingency on a month bymonth basis
• Forecasting contingency values into the future based on possibleopportunities and risks
• Identifying options to address any significant variations in contingencyusage
• Implementing the options to restore contingency usage to plannedlevels
![Page 46: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/46.jpg)
472.495
515.371492.150
$200
$250
$300
$350
$400
$450
$500
$550Q
1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2010 2011 2012
Cost Contingency Drawdown Forecast
Planned Drawdown Minimum Contingency Buffer Actual Drawdown
Updated PlannedCurve
Contingency Management
![Page 47: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/47.jpg)
472.495
515.371492.150
$200
$250
$300
$350
$400
$450
$500
$550
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2010 2011 2012
Cost Contingency Drawdown Forecast
Planned Drawdown Minimum Contingency Buffer Actual Drawdown
Hold Point90% Bid
50%Constructed
Q1 2012 $220M
Forecast
Contingency Management
![Page 48: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/48.jpg)
Tools and Resources
• Software– @RISK
• A Palisade Corporation Windows-based tool, which is an ‘add-on’ toMicrosoft Excel
• It is AECOM Standard software for conducting cost risk analysis andmodeling
– Oracle Primavera Risk (Formerly PERTMASTER) / @RISK forProject• Oracle Primavera Risk Analysis (Formerly PERTMASTER) or @RISK for
Projects are both AECOM standard tools used for conducting schedulerisk analysis and modeling
• References– (2009) “Practice Standard for Project Risk Management” published
by the Project Management Institute (PMI)– ISO 31000:2009 “Risk Management-Principles and Guidelines”
![Page 49: Project Risk Management Basics: Cost and Schedule Impacts · 2011. 11. 17. · endeavor’s success • A systematic, ... • Ensures that procurement and contract terms and conditions](https://reader035.vdocument.in/reader035/viewer/2022071509/612d298a1ecc515869420488/html5/thumbnails/49.jpg)
Optional Presentation TitlePhoto Slide
Presenter’s Name
Project Risk Management Basics: Questions and Answers