QRA throughout the project lifecycle - Val Jonas, Risk Decisions

QRA throughout the

project lifecycle

Val Jonas

Risk Decisions Group

11th February 2016

© Risk Decisions 2016, Predict!™

Agenda

Calculate the project budget

Cost QRA

Schedule QRA

Set baseline targets and performance measures

QRA throughout the project lifecycle

Baseline risk tracking

Summary


Agenda


Cost QRA

Schedule QRA




Summary


Cost QRA

Schedule QRA




Summary


Distributed +

Undistributed Budget

Negotiated Cost 610k

Emergent risk

Baseline (Work)

Risk budget held at programme level

(on behalf of the project)

Project risk budget

Project level

Identified risk

The project budget

Management Reserve (MR) is an amount of budget set aside to handle risks (proactively and reactively)


Schedule Reserve

Completion date

Budg

et

Identified risk

Baseline

(work)

X

0

12,000

24,000

36,000

48,000

60,000

72,000

84,000

Emergent risk

Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018 Jul 2018 Aug 2018 Sep 2018 Oct 2018

Schedule

uncertainty

Schedule

reserve

Contract

milestone

buffer


(Note the tail)

Baseline setting: Cost QRA

+ Uncertainty

+ Risk factors &

events

Actions +

=

Cost model (work)


Baseline setting: Schedule QRA Project schedule e.g. MS Project, Primavera P6

+ Clean up the schedule

+ Task

Uncertainty

Actions +

+ Risk factors &

events

(Two major

risk scenarios)


Understand Risk Management focus

Baseline your risk register and establish responsibility

– risk events (threat & opportunity), risk scenarios, risk factors …

… mitigation and response actions


QRA is an iterative process

First pass usually results in an “unacceptable” result

Management pressure to reverse engineer

Reality that cost/time/scope must be traded

Have opportunities been considered?

Involves involvement from multiple disciplines

Accumulate sound risk information

Create a representative model to combine the data

Allow repeat ‘what-if’ scenarios to be evaluated


Agenda


Cost QRA

Schedule QRA




Summary


The decision making process

Business case and approvals

Present possible outcomes and scenarios

Consider alternative options

Reality check

What is the organisation’s risk appetite?

Does the project fit within the business portfolio?

Managers make final decision


Baseline the residual risk position

Approve an action to

mitigate a threat,

exploit an opportunity

or recover from

realised risk

Transfer work

and budget

into the baseline

Baseline

(work)

Time

Cost

Realise an

opportunity, reject

a risk


Set the Contract Budget Baseline…

…based on

QRA results

informed by

Risk Appetite

Time

Cost

Residual risk

position: depends on

how aggressive you

set your baseline

(how much

measured

uncertainty and risk

you decide to ‘take’

Baseline

(work)


Set specific (monitoring) targets

Deterministic: 28th March

Working:14th May (50% confidence)

Contract: 31st July (90% confidence)

!!! Watch this

scenario


Agenda


Cost QRA

Schedule QRA




Summary


Project progress: How well are you doing?

Monitor MR usage

Identified risk

Emergent risk

Understand your significant risks

Review existing and identify emergent risk

Track confidence via regular QRA

Working target (e.g. at 50% confidence)

Contract deadline (e.g. at 90% confidence)


Tracking over time

Q1: 50% 90%

Q2: 40% 89%

Q3: 34% 90%

Q4: 14% 90%

Q6: 8% 81%

Q7: 0% 34%

Q5: 13% 87%

Q8: 0% 0%

28th Mar 31st Jul

Q9: Complete

25th Sep 2018

14th May


Keep reviewing Risk Management focus

Have the key risks changed … continue to review the ongoing

threat to the project …



Track how confident you are of achieving the

working date

contract date

Are you confident that you have sufficient budget?

Are you keeping a watch on key risk events and drivers

Repeat QRA to evaluate changes


Agenda


Cost QRA

Schedule QRA


QRA through the project


Summary


Project lifecycle QRA – the benefits

Early warning system

Timely corrective action

Increased management and customer confidence

Continually re-assess the most important risks

Focus mitigation activity on most beneficial areas

Understand the impact of emergent risk

Understand change (risks happen / are retired)

Return Management Reserve to margin / other projects


Summary

QRA is for the whole project lifecycle

(not just bid / business case stage)

Set & trace performance targets

(working and contractual)

Use systems to ensure consistent risk information is

available for regular QRA modelling

Keep it simple … make it repeatable


Questions

www.riskdecisions.com

[email protected] +44(0)7831 881297

[email protected] +44(0)7595 206805

Contact details:

http://www.riskdecisions.com/


Interfacing Risk & Earned Value Management

ISBN- 10: 1-903494-24-9 ISBN- 13: 978-1-903494-24-0

https://www.apm.org.uk/InterfacingRisk

https://www.apm.org.uk/InterfacingRisk

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QRA throughout the project lifecycle - Val Jonas, Risk Decisions

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