COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter
Presenter
Page 1
COLLABORATE 2014 — OAUG Forum
An Introduction...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter
Presenter
Page 2
Introduction – What does Primavera Risk Analy...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 3
Primavera Risk Analysis - Integration with Primavera P6...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 4
Primavera Risk Analysis - Example Reports and Output
Sc...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 5
Risk Histogram Report - Schedule
Display the results of...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 6
Activity Tornado Chart - Criticality
Display the activi...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 7
Risk Tornado Chart – Schedule and Cost
Display the risk...
COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 8
Risk Scatter Plot Diagram – Schedule and Cost
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An introduction to primavera risk analysis - Oracle Primavera P6 Collaborate 14

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An introduction to primavera risk analysis - Oracle Primavera P6 Collaborate 14

  1. 1. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Presenter Page 1 COLLABORATE 2014 — OAUG Forum An Introduction to Oracle’s Primavera Risk Analysis Paul Monaghan - Presenter. 1st Milestone Ltd. Abstract: Primavera Risk Analysis is an ‘add-on’ module to Primavera P6. It allows the user to build task uncertainties (three point estimates for task duration and cost) and project risks (risks you would typically hold in a risk register) into a Primavera P6 schedule. These items are then applied to the project plan and simulated during a ‘Monte Carlo’ risk analysis. Simulating the impact of risks on a project and understanding the results. Comparing both pre and post mitigation scenarios and results. Objective 1: Provide an understanding of the principles of Monte Carlo risk analysis. Objective 2: Provide an understanding of Primavera Risk Analysis - How it works and what it does. Objective 3: Explain the output of a risk analysis - Understanding the results. About Milestone UK 1st Milestone Ltd (Milestone) is a UK based specialist project and performance management solutions company. We enable organizations to maximize their operational efficiency through a range of cutting- edge project management solutions and services. By building innovative, progressive solutions, we fulfill the evolving needs of project-based organizations throughout the UK regardless of size or complexity. Through a unique combination of technology and services, Milestone is able to provide an end-to-end solution for project and program management needs including contract management, estimating, cost management, risk management, scheduling and resource planning. The software solutions we offer include Oracle’s Primavera P6 EPPM and PPM (Project and program management), Oracle’s Primavera Risk Analysis (Schedule risk analysis), Deltek Acumen Fuse (Schedule checking and forensic analysis), Legare (Primavera integration with Excel and ERP systems), Hard Dollar (Cost estimating) and LoadSpring (Primavera application hosting). Milestone is the largest Oracle Primavera specific training provider in the UK. We offer the full range of Oracle University Primavera courses, plus consulting and implementation services for Primavera P6 EPPM, Primavera Risk Analysis and associated products. Milestone is the only UK based Oracle Primavera ‘Platinum’ partner, a measurement by Oracle of the level of expertise a services provider has.
  2. 2. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Presenter Page 2 Introduction – What does Primavera Risk Analysis do? In summary, Primavera Risk Analysis predicts the likelihood of a project being delivered on time and on budget, highlights the key areas where the project might fail and evaluates the effectiveness of mitigation. Primavera Risk Analysis (formerly known as Pertmaster) is a ‘Monte Carlo’ risk analysis tool with a built-in risk register. The tool allows the input of project uncertainty and project risks and links these items to a Primavera P6 schedule, to simulate the impacts and likely project outcomes, using a Monte Carlo risk analysis. Primavera Risk Analysis provides the following capabilities and benefits to help meet the requirements of project driven organizations: Direct integration with Primavera P6 scheduling tools Able connect directly to the Primavera database using usual Primavera login credentials, or simply import an XER file and analyse that. Also integrates with MS Project. Input of task uncertainties (variance) E.g. Three point estimates for duration and cost (min, most likely and max estimates). Quickly input three point estimates across many activities at the same time using ‘quick risk’ functions and templates. Input risks in a risk register E.g. Risk number, description, cause/effect, probability, impact on time and cost etc. Link the risk register to the project, allowing the impacts to be simulated in the correct areas of the schedule, to determine the overall impact on the project. Plan mitigation actions and associated costs and dates. Monte Carlo risk analysis Simulate the impact of risks and uncertainties and combinations of them. Simulate all risks from the register or just specific ones. Run a Monte Carlo risk analysis to compare results of pre and post mitigated scenarios, to judge the value mitigation actions bring and whether such actions are cost effective. Primavera ‘Histogram’ report Displays the likelihood of completing the project by specific dates and budgets and provides a confidence rating e.g. 80% confidence in achieving date ‘X’ and 70% confidence of achieving budget ‘Y’. Confidence statistics are available for any item in the project e.g. the project end date, milestones and activities. Primavera ‘Tornado’ report Display which risks and tasks are causing the most delay and budget to increase. Determine how critical specific activities are, if they are always critical, or if they move on and off the critical path during analysis. Combined Schedule and Cost Analysis Establish both schedule and cost confidence. Scatter plot reports provide the ability to compare schedule and cost data and the budget required to meet specific end dates.
  3. 3. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 3 Primavera Risk Analysis - Integration with Primavera P6 and P6 EPPM Primavera Risk Analysis supports integration with both the Primavera P6 Client (the traditional Primavera client/server or standalone scheduling tool) and full enterprise implementations of Primavera P6 EPPM which incorporate Primavera’s web/intranet based technologies and risk management system. Direct integration with Primavera P6 scheduling tools Able connect directly to the Primavera database using usual Primavera login credentials, or simply import an XER file and analyse that. Integration with P6EPPM From Release 8 onwards, Primavera P6 EPPM contains a risk register within the P6 Web management portal. This risk register tracks equivalent data to the risk register held within the Primavera Risk Analysis application, but is instead embedded within the Primavera project management system itself, thus providing a central repository for schedule/cost/risk data. This risk data can then be used by the Primavera Risk Analysis module to perform risk analysis simulations. What is a Monte Carlo risk analysis on a Primavera schedule actually doing? Monte Carlo simulation is a mathematical method that allows project managers and risk analysts to account for uncertainty and risk in Primavera schedules. The technique is used across many different industries to predict the likelihood of projects finishing on time and on budget. During a Monte Carlo analysis, the Primavera P6 project is put through a simulator. It uses a range of values rather than specific values e.g. a task can be estimated at between 20 and 30 days duration, rather than specifically being 25 days. Project risks are given a % chance of occurring and a likely impact if they do. This creates a ‘probabilistic’ model of the project based on the probable ranges, which is different from the ‘deterministic’ model of the schedule (based on single point estimates) developed in Primavera P6. The project is simulated many hundreds of times during the Monte Carlo risk analysis, often thousands of times, to calculate the many different outcomes that could take place. During each simulation, task duration is applied randomly (or can be controlled) from within the specified range. Risks and their impact may occur based on their probability in the register. This simulation produces a range of finish dates and likely outcomes i.e. the earliest the project is likely to finish, the latest it is likely to finish and dates in between. In other words, the project is not shown to finish on a specific date (deterministic schedule), it is shown to finish within a range of probable dates (probabilistic schedule). The result is a selection of graphics where dates are given a % confidence to show how likely the project is to be delivered by a specific date e.g. 80% confidence of completing by 31st January, or 50% confidence in 1st January. This explains how realistic the P6 deterministic schedule actually is. The same exercise can be performed on a cost model, or schedule and cost together. Results then display which activities and risks are causing the project duration and cost to increase, so the user can focus on these areas. The concept of using Monte Carlo simulation was developed during World War 2 by engineers and scientists developing the atomic bomb. It is named after Monte Carlo, the town in Monaco known for its gambling and casinos.
  4. 4. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 4 Primavera Risk Analysis - Example Reports and Output Schedule Check Report Primavera Risk Analysis can run a schedule check report and ideally this should be done prior to running a risk analysis model. The report checks for potential errors such as missing logic links between activities. Or items such as constraints, where having too many, can hinder the results of a risk analysis. Built-In Risk Register Inside the Primavera Risk Analysis tool itself, you may build a qualitative risk register, the impact of which is then simulated on the P6 schedule. Create the register by logging the project risk, risk number, description, risk details such as cause and effect, owner, % probability of impact and an estimation of the schedule and cost impact. A log of mitigation actions and their potential impact is also done here. Risks are then assigned to the activities or elements of the project for simulation during a risk analysis. Primavera P6 EPPM Risk Register From Release 8, Primavera P6 EPPM contains a built-in risk register as part of its Web/Intranet based project management dashboard. Risk data entered here can be exported to Primavera Risk Analysis to run risk simulations and produce risk results.
  5. 5. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 5 Risk Histogram Report - Schedule Display the results of a risk analysis and the likelihood of finishing a project on time or a specific date. Iterations: The number of times the project has been simulated during the Monte Carlo analysis. Minimum: The best case scenario end date for the project. Maximum: The worst case scenario end date for the project. Deterministic: The end date predicted in a Primavera P6 schedule based on single point durations only (no three point estimate uncertainty data or risks from a risk register included). ‘P-Dates’: The dates shown on the ‘Y’ axis have a specific % confidence next to them. This is the confidence rating for achieving that specific end date. Activity Tornado Chart - Schedule Display the activities that drive the project duration and are therefore most likely to cause a delay. These are the key activities to focus on during what-if scenarios and mitigation strategies.
  6. 6. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 6 Activity Tornado Chart - Criticality Display the activities in terms of their criticality i.e. whether they are always critical during all risk simulations, or whether they fluctuate on and off the critical path. Sometimes key driving activities can be ‘sub-critical’ (critical most of the time but not always, say 90%) and these need particular attention. Risk Histogram Report - Cost Display the results of a risk analysis and the likelihood of finishing a project on budget or a specific cost. Iterations: The number of times the project has been simulated during the Monte Carlo analysis. Minimum: The best case scenario cost for the project. Maximum: The worst case scenario cost for the project. Deterministic: The cost predicted in a Primavera P6 schedule based on single point costs only (no three point estimate uncertainty data or risks from a risk register included). ‘P-Costs’: The costs shown on the ‘Y’ axis have a specific % confidence next to them. This is the confidence rating for achieving that specific budget.
  7. 7. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 7 Risk Tornado Chart – Schedule and Cost Display the risks that drive the project duration (pre or post mitigated state) and are therefore most likely to cause a delay, or risks that drive the project cost and are therefore most likely to cause an overrun. These are the key risks to focus on during what-if scenarios and mitigation strategies. ‘Re-use previous design work’ has a negative figure, which indicates it is an opportunity, rather than a risk. Distribution Analyzer - Schedule and Cost - Pre Mitigated Vs Post Mitigated Compare pre and most mitigated scenarios to judge the value of mitigation i.e. is the mitigated scenario delivering the project earlier, and if so, for how much additional cost.
  8. 8. COLLABORATE 14 Copyright ©2014 by Paul Monaghan - Presenter Page 8 Risk Scatter Plot Diagram – Schedule and Cost Display the confidence rating of achieving both specific project end dates and projects costs e.g. a 33% probability of achieving a budget of £26,252,210 and a corresponding finish date of 6th May. Iterations: The number of times the project has been simulated during the Monte Carlo analysis. The Dots: 1000 simulations produces 1000 red, green or black ‘dots’ to display on the screen. Green Dots: The number of simulations delivering by a specified time and budget. Red Dots: The number of simulations exceeding the specified time and budget. Black Dots: Simulations achieve one but not the other i.e. on time but over cost, on budget but delayed. Yellow Dot: The deterministic point i.e. the date/cost predicted in a Primavera P6 schedule based on single point estimates only (no three point estimate uncertainty data or risks from a risk register included). Primavera Risk Analysis - Conclusion In summary, Primavera Risk Analysis shows the likelihood of delivering a project on time and on budget, highlights the most important tasks and risks affecting the schedule and the effectiveness of mitigation. This leads to increased accuracy of Primavera schedules, reduced exposure to risk for more successful project execution and gives greater confidence in project delivery.

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