How Primavera Can Help You in Managing

Risks in Project Intensive Industry?

Syed Ali Hasan

Collaboration Management & Control Solutions

Let us try to understand what we mean by Schedule Risk

Analysis?

Single-Path Schedule

CPM schedule finishes on December 10,

relies on combinations of durations that equal 70 days

Likelihood of the 10th December?

Likelihood of the 10th December?

How Much Confidence You Have In Your Project Plan?

This project also completes on December 10

Parallel paths account for this risk

Likelihood of Dec 10th finish?

Likelihood of the 10th December?

The PRM Solution

• Risk Policy and Processes

• Risks That Could Affect Our Project

• Identify Top Priorities Risks

• Likelihood To Finish On Time/Within Budget

• Response Actions We Need To Take

Risk Methodology What Is Our Company Policy In Managing Projects Risks

Project Risk Management Methodology

Risk Planning

Risk Identification

Risk Assessment

Risk Response

Risk Reporting

Describing A Risk

CAUSE

• Bureaucracy in the Owner’s organization have usually resulted in long approval processes as well as

• they feel that the personnel involved in the approval process are incompetent

RISK

• Owner’s delaying the approval of suppliers

IMPACT

• Delay in placing orders,

• delay in project supplies, and

• slippage in the project schedule and may be incurring liquidated damages for the delay

Risk Breakdown Structure

Risk

Technical

Higher performance

goals Technology shifts

Platform changes New industry

standards

Complex technology

Unproven technology

Project Management

Schedule Budget

Quality Scope

Resources Project team

Communication

Organizational

Weak infrastructure

Unclear organizational

objectives

Intra-organizational

resource conflicts

Shifting funding availability

External

Legal challenges

Shifting customer goals

Natural disasters

Legal shifts

Impact Of Risk On Project Objectives

What Project

Objectives Matter Most

To Us?

Schedule

Scope

Others?

Budget

Quality

Performance

Create Common Language: Impact Levels On Project Objectives,

Probability and Tolerance For Risk

Risk Register What Risks Could Affect Our Project Objectives

Risk Register

Threats & opportunities

Top Cost Related Risks

Tight project schedule

Design variations

Variations by the client

Unsuitable construction program planning

Occurrence of dispute

Price inflation of construction materials

Excessive approval procedures in administrative government departments

Incomplete approval and other documents

Incomplete or inaccurate cost estimate

Inadequate program scheduling

Top Time Related Risk

Tight project schedule

Design variations

Excessive approval procedures in administrative government departments

Variations by the client

Incomplete approval and other documents

Unsuitable construction program planning

Inadequate program scheduling

Bureaucracy of government

High performance or quality expectations

Variations of construction programs

Top Quality Risks

Tight project schedule

Inadequate program scheduling

Unsuitable construction program planning

Incomplete or inaccurate cost estimate

Low management competency of subcontractors

High performance or quality expectations

Variations of construction programs

Unavailability of sufficient amount of skilled labor

Design variations

Lack of coordination between project participants

Top Environment Risks

Tight project schedule

Variations of construction programs

Unavailability of sufficient professionals and managers

Excessive approval procedures in administrative government departments

Variations by the client

Inadequate or insufficient site information (soil test and survey report)

Low management competency of subcontractors

High performance or quality expectations

Inadequate program scheduling

Serious noise pollution caused by construction

Top Safety Risks

Tight project schedule

Low management competency of subcontractors

Unsuitable construction program planning

Variations of construction programs

General safety accident occurrence

High performance or quality expectations

Design variations

Lack of coordination between project participants

Excessive approval procedures in administrative government departments

Unavailability of sufficient amount of skilled labor

Unavailability of sufficient professionals and managers

Risk Qualitative Analysis What Risks That Requires Action

Assessing Risk Exposure

Likelihood

Impact

Risk Exposure

Low Impact

But High Likelihood

High Impact

and High Likelihood

Low Impact

and Low Likelihood

High Impact

But Low Likelihood

23

Risk Register: Priority List

Focus attention based on qualitative assessments

Sort by score

Choose which risks you want to simulate

Risk Quantitative Analysis How Risks Are Affecting Our Project Schedule and Budget

Risk Simulation

Usually using Monte Carlo technique

A model translates the uncertainty at the detail level into their potential impact on objectives

that are expressed at total project level

Will perform the project plan many times to provide a statistical distribution of the calculated

results.

Monte Carlo Simulation Will Help In Answering

What is the chance of finishing the project on time?

What chance do I have of finishing the project on the required completion date?

What chance do I have of finishing the project within the approved budget?

What date can I be 80% confident that the project will finish on?

What activities are most likely to cause project delay?

What activities are most likely to cause project overrun?

How Does Monte Carlo Simulation Works?

Schedule/ Cost Estimate Uncertainty

Duration/Cost

?

Task Existence Uncertainty

?

Probabilistic & Conditional Branching

Outcome C

Outcome A

? Outcome B

Linking Risks to Schedule

Map the risks to the

activities they impact

Running the Analysis

Confidence in Project Delivery Date

Tornado Chart – Duration Sensitivity

Displays schedule

drivers

(sensitivity analysis)

Drivers can be

schedule uncertainty

or risk events

Confidence in delivering the project within budget

Tornado Chart – Cost Sensitivity

Displays cost drivers

(sensitivity analysis).

What are the most

cost sensitive areas in

the project

Probabilistic Cash Flow

Shows the difference between

what was planned and what is

probable

Shows the impact of

risk on cash flow and

resources Probabilistic spend

curves

Risk Response Actions What We Need To Do To Lower Risk Exposure

Risk Response Actions:

The Objective Is To Eliminate or Reduce Risk Exposure

ELIMINATE Cause

Likelihood Impact Risk

Exposure

Cause REDUCE

Likelihood

REDUCE

Impact

Risk Exposure

Cause Likelihood Impact

TRANSFER

Risk Exposure

The Objective Is To Reduce The Risk Exposure

SIGNIFICANT

MANAGE MODERATE

MINOR

LOW MEDIUM HIGH

LIKELIHOOD

ACCEPT

AVOID, MITIGATE

OR TRANSFER

IMP

AC

T

Risk Register - Mitigation plans

Risk Register – Mitigation Planning

Pre-Mitigation:

Current

assessment of the

risk

Mitigation: What

can be done to

reduce the impact

the risk

Post-Mitigation:

Assessment of the

risk after

mitigation

Target Position After Mitigation

Where We Are Now Where We Can Be Cost Of

Getting

There

Scenario Analysis

Compare the impact

of risk and the effects

of mitigation

The PRM Solution

• Risk Policy and Processes

• Risks That Could Affect Our Project

• Identify Top Priorities Risks

• Likelihood To Finish On Time/Within Budget

• Response Actions We Need To Take