2. Agenda
• Introduction
• Part One
– Project Decision Framework
– Quantitative Analysis within Project Risk Management
• Part Two
– Practical Exercises
• Q and A
2
3. Introduction
Who is Intaver Institute?
• Formed 2002
• Group of risk, economic, and decision analysis experts
• All to some extent were involved in developing software tools for
these fields
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4. Problem
• Many IT projects were late or over budget
• No readily available tools for the analysis of project schedules,
the provided similar analysis as the ones they were
developing for other industries
• Decision analysis processes including quantitative analysis
widely used in many industries, but not project management
– Many project manager don’t believe in benefits of quantitative methods
– Most methods and tools remain relatively complex, require special training,
and expensive
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6. Part One: Project Decisions Framework and
Quantitative Analysis
• Project Decision Analysis
• Quantitative Project Risk Analysis and Management
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7. Project Decision Analysis
• Successful projects are the result of good decisions
• Structure decision analysis
– Well defined process founded in decision analysis science
– Applicable to project management
– Provides framework that will improve project decisions
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Decision Analysis vs. PMBOK
• Decision analysis not in conflict with PMBOK
• Can be easily integrated (as needed) into current PM
12. Risks or uncertainties?
• Use uncertainties in cases where you have historical data that
is both strong and analogous
• Use uncertainties in cases where you have some historical
data and strong expert opinion (experts have consensus)
• Use risk events when little historical data exists to back up
expert opinion
• Use risk events on higher risk projects
• You can use a combination of risk events and uncertainties
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13. Risk or uncertainties
• Risk events are less prone to the effects of human biases and
heuristics
• Easier to recall effect of risk events on projects
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14. Event Based Analysis
• Risk event estimates less affected by heuristics and biases
• Risk events estimates easier to obtain via relative frequency analysis
• Event based analysis of causes of project uncertainty
– Sensitivity analysis can be done to identify critical risks
– Uncertainties require additional root cause analysis to identify critical risks
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15. Modeling Risk Events
• Chance - % chance that the risk will occur
• Outcome – relative % or fixed (e.g. % cost increase, Fixed
delay)
• Result - 15%
• Example Fire: 20% Chance of a Fixed Delay of 14 days
• Risks can have mutually exclusive alternatives
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16. Monte Carlo Analysis
• Statistical sampling
• Runs many simulations of a project that produces probabilistic
distributions of particular results (cost, duration, finish time,
etc.)
• Gaining popularity as size and power of hardware and
software improve
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20. Results of Analysis
• Project outcomes with and without risks and uncertainties
• Sensitivity analysis
• Cost analysis
• Identifying critical risks and uncertainties
• Success rates
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22. Result Gantt Chart
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White bars represent
original project
schedule (no risks)
Blue bars represent
project schedule with
risks
Because of risks, project duration has
significantly increased
23. Detailed Results of Analysis
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Move the slider to determine the chance
that project will be within budget
Get detailed
statistical data You may export this data to
other software it graphic
or text formats
Detailed results can be shown for each tasks or
whole project for cost, duration, start time, finish
time, and income.
24. Cost Analysis
You may compare cash
flow with (blue line) and
without (red line) risks
Cash flow is generated based on fixed
and variables cost and income
associated with tasks and resources
25. Crucial Tasks
Crucial tasks have the
most affect on the project
schedule
Green bars represent tasks
uncertainties that have almost no
affect on the project schedule
Crucial tasks for project cost and duration can
be different
26. Critical Risks
Tornado chart shows the risks that
have the most impact on project costs
Critical risks need to be
mitigated first
27. Project Dashboard 3x3
3 most important project
parameters (cost, duration, and
finish time)
3 most crucial tasks
3 most critical risks
Project Dashboard 3x3 is a
condensed view for most
important results of
analysis
28. Risk Chart
The risk chart shows risk uncertainty for tasks versus duration or cost
This task has high cost and
risk
These tasks have balanced risk
versus cost ratio.
29. Success Rate
The deadline is causing
calculation of the task in 86% of
cases
A task can be canceled if it reaches a task or a project deadline or if it is affected
by risk with a “Cancel task” outcome.
This task is affected by one of many
risks with impact “Cancel task”
Success rate is calculated based on
number of times the task is not
canceled
30. Tracking
This task is 100% completed (green
bar)
For each task at any moment you may enter how much work has been completed
This task is partially completed
(yellow bar)
Risky project automatically adjust probability of
risks for partially completed tasks
31. Tracking Results
New project forecast is done each time actual project data is
entered
Original (baseline) project duration
Actual project duration
Low, base, and high
forecast
32. Intaver Institute
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Intaver Institute performs project risk management, risk
analysis, and decision analysis training and consulting
Download a trial version of RiskyProject at:
http://www.intaver.com/index-downloads.html (version 2.1)
White papers, presentations : http://www.intaver.com/index-
whitepapers.html
Courses: http://www.intaver.com/riskyproject_training.html
33. Additional Resources
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Project Think:
Why Good
Managers Make
Poor Project
Choices
Project Decisions: The
Art and Science
Introduction to
Project Risk
Management and
Decision Analysis
Project Risk Analysis
Made Ridiculously
Simple
Hinweis der Redaktion
Bring out parking lot questions
So what should we use.
Risks are separated from the schedule and cost. When we use distributions, we set “boundaries” on them.
Risk events less effected as we do not know the statistical outcome until Monte Carlo is run. Less conscious or unconscious “gaming” of estimates.