1. 1. REMINDER Check in on the COLLABORATE mobile app Schedule Risk Analysis What Could Possibly Go Wrong? Prepared by: Ian Nicholson, P.Eng. VP Solutions Emerald Associates, Inc. Lessons learned over many years of Schedule Risk Analysis Exercises Session ID#: 15431
2. 2. Introduction Session ID#: 15431
3. 3. Presenter Ian Nicholson, P.Eng. VP Solutions, Emerald Associates Oracle Primavera Risk Analysis trainer and consultant Conducted many Schedule Risk Analysis in many industries Started using Risk Analysis on cost estimates in construction projects Emerald is a Oracle Primavera Platinum Partner Specializing in Primavera One of two Oracle University Trainers for Risk Analysis in North America We started working with Risk Analysis as the Canadian Pertmaster reseller in 2001
4. 4. Why Conduct Risk Analysis? Helps projects teams and executives understand and manage risks to a project Gets project team discussing the challenges of the project Keeps the project team focused on the right issues Near critical paths that can come and haunt you Requirement of many companys gate approval process Project Risk Assessment is shown to significantly reduce project cost growth - COAA Alberta Construction Report, 2009
5. 5. The Minefield of Schedule Risk Analysis Session ID#: 15431
6. 6. What are the common failures encountered during Schedule Risk Analysis? There are six areas that we need to careful with: Schedule construction issues Political Issues Risk Register/documentation issues Project specific issues Risk model issues Results interpretation issues An mistake in any of them can lead to poor results
7. 7. Building a schedule suitable for Risk Analysis Session ID#: 15431
8. 8. Schedule construction issues Is the schedule poor mechanically? Bad logic/open ends High Level/LOE schedules linked SS or FF only Constraints Schedules that dont reflect reality Where did the estimates come from? Is it Optimistic/Pessimistic Was the schedule benchmarked before the RA? Too much detail/not enough detail conundrum When is the right level of detail? CLT and Correlation
9. 9. Schedule construction issues Schedule at different levels of development or from different authors Do you need to develop a schedule specifically for the risk analysis? Variance between deterministic models in different systems P6 and RA both come from Oracle but they dont schedule the same way! A schedule is garbage in, garbage out. A Risk Analysis is garbage in, toxic waste out! David Phillips
10. 10. Political Issues in the Schedule Risk Analysis Process Session ID#: 15431
11. 11. Political Issues Project team may hide issues that are politically sensitive Cant alter the schedule too late in the process to incorporate the results The results could kill the project! Mitigation strategies are not realistic or attainable External Influences not well mapped No details around permits/approvals Political Environment Project influencers
12. 12. Interview Issues/Risk Register Issues Session ID#: 15431
13. 13. Risk Register/Interview Issues Does the existing register capture all the risks? Agendas vs Information One on One vs Group interviews Does the PM keep everyone quiet? Three monkeys approach no interviews, or blinders Risk vs Opportunities Why do we call it Risk Analysis? Opportunity Analysis is just as important but often ignored
14. 14. Risk Register/Interview Issues Reviewer bias Who knows the project better than the project team? Yet the team may be blind to the risks Reviewer needs to be a facilitator Existing Risk register Is it valid? Does it contain schedule risks? Does it reflect schedule risk, cost risk, safety risk, reputation, etc. Mapping of the risks to the schedule
15. 15. Project Specific Challenges Session ID#: 15431
16. 16. Challenges of fast track projects Focus naturally falls on engineering, since that is where the detail is Not enough focus on Construction or C&SU even though that is where the majority of the risk is Engineering/Procurement use all the float If you have separate E-P-C schedules, make sure that they are linked and run the analysis one combined project if possible.
17. 17. Technology Risk Scale up risk New technology risks New process risk Non-project stakeholder risk C&SU and production ramp up delays Government incentive dates
18. 18. Other project specific risks TAs Resource availability/congestion Tight timeframes Pre-fab/Modularized Construction What happens when you dont control inventory Road closures, load limits Offshore Cost of on-boarding/off boarding Pharmaceuticals Approval windows Lump Sum or Design Build Are the contractors and owners risks the same?
19. 19. Building the Risk Model Session ID#: 15431
20. 20. Risk Model Issues Risk double dipping Risk Events vs Uncertainty Risk Register Advanced Modelling Probabilistic Branching/Links Task Existence Resource Risk Low Probability/High Risk Events Only affect P90-P100, yet can be fatal KISS Distribution shapes
21. 21. Risk Model Issues Levelling required Trying to do schedule risk in a spreadsheet Poor documentation All risks/uncertainties applied to the plan need to be documented If the results are not as expected, it can be hard to track down Probabilistic Branching and Existence cannot be transferred back to P6, so documentation is critical You may have to go back 6 months later and update the plan Risk analysis is not completed regularly, only when a gate review demands it
22. 22. Risk Model Issues Cost vs Schedule Risk Done separately Not combined at any point Yet are completely related On average, Alberta based projects experienced 19% project cost growth and 17% project schedule growth COAA
23. 23. Interpreting the Results Session ID#: 15431
24. 24. Results Interpretation Issues The results should not be a surprise! 80% of the value comes before the analysis is run Poor understanding of results Does it pass the sniff test? What is really creating the results Not using the analysis tools effectively Creating mitigation strategies Reduce the risk Mitigate the risk Transfer the risk Accept the risk Poor results should be considered an opportunity
25. 25. Summary Session ID#: 15431
26. 26. Summary Risk analysis is a great tool, but the process is more important than the software Risk Analysis to be properly executed Needs repeatable process see the PMI Risk Maturity Model Needs Management Buy-in Dont make it a check box on a form Acknowledgement: Special thanks to David Phillips of Emerald Associates and John Zhao of Statoil for their inputs and insights into this presentation
27. 27. Questions? iann@emerald-associates.com Session ID#: 15431
28. 28. Please complete the session evaluation We appreciate your feedback and insight You may complete the session evaluation either on paper or online via the mobile app