quantitative project risk analysis- methodologies, work flows, and tools_lev virine

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Quantitative Project Risk Analysis:Methodologies, Workflows, and Tools

Lev Virine, Ph.D.President

Intaver Institute Inc.

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3

Input Parameters Output Parameters

Calculation

Engine

Critical Path

Scheduling

Engine

(

)

Task durationcost, finish time,etc.

cost, finish time,etc.

Project duration

Technology Pushor

Industry Need

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4 5 6321 7 7 82 3 654 1 4 5 632 7

8 9 10 11 12 13 14 15 16

1

2

3

4

5

6

7

Task 1

Task 2Task 3

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Statistical distribution ofproject duration and cost

Crucial tasks

Success rate

Probabilistic and conditionalbranching

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Takes into an account only schedules-related uncertainties

What distribution should be used?

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Activity 1

Activity 2 Event 3

Event 2Event 1

Activity 3

Event chain

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Event Methodology allows to determinecritical risks in addition to results of„classic‟ Monte Carlo Simulations

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Reliable historical data

Experienced experts and established

 judgment elicitation processActual project performance tracking

Otherwise use EventChain Methodology

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Can be implemented based on Multi-

Criteria Decision Making Methodologies,for example

Multi-attribute utility theory (MAUT)

Simple multi-attribute rating technique(SMART)

Analytical Hierarchy Process (AHP)

Outranking approach

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NASA initiates the use of MCDA methods specifically theanalytical hierarchy process for the selection of projects atKennedy Space Center

USA and Russia evaluate plutonium disposition optionsusing multi-attribute utility theory

IT industry uses analytic hierarchy process for projectportfolio management, particular to build cross-prioritizedportfolio lists

Computer manufactures are using multi-criteria decision-making methodologies and tools for advanced project

portfolio management 

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RiskCategories

Risk

Outcomes

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Pair-wise comparison matrix:

Importance of the

category

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Risk fromrisk register

Probabilities and

outcomes formutually exclusive

alternatives

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One risk may belong to different categories.For example, delay in financing may affect

quality and scheduleNon-schedule risks will be assigned asglobal. Project schedule is not required if allrisks are global

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Calculated impact

for all categories

Calculated risk

probability

Score = Probability *

Outcome

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Baseline is asnapshot of

the schedule

Baselines and be

create based onoriginal (deterministic)schedule or results of

calculation

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Pre-mitigationprobability, impact

and score

Post-mitigationprobability, impact, and

score

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Lady Washington, Seattle, USA

HMS Interceptor

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Ship selection

Ship transportation from Grays Harbor, WA:40-day voyage beginning December 2, 2002, arriving onlocation on January 12, 2003

Crew training

Actual shooting

Voyage back

Phases of the project:

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Takes into an account schedule or non-schedule risks using different weights

Easy to use analysis of mitigation efforts

Event-based and distribution-baseduncertainties

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Questions/Comments

24

“PMI” is a registered trade and service mark

of the Project Management Institute, Inc.

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Contact Information

25

Name  Lev Virine

Title Quantitative Project Risk Analysis: Methodologies,Workflows, and Tools

Company  Intaver Institute Inc.

Email Address  lvirine@intaver.com

Phone Number +1 (403) 692-2252

“PMI” is a registered trade and service mark