The value of quantitative risk analysis - 11 February 2016. Conference Agenda
The APM Risk Management Specific Interest Group (SIG) Annual Conference 2016 will take place on Thursday 11th February in London.
With a theme of the value of quantitative risk analysis (QRA) we are excited to announce the following agenda for the day (please note, subject to change)
|8:30||Registration, networking, coffee|
|9:30||Ken Evans (Chair)||Opening address|
|9:35||Keith Gray||Introduction to the morning's topics and speakers|
|9:40||David Hillson||How risky is your project?|
|10:45||Egan Naidoo||Lessons learned in adopting a QRA capability|
|11:25||Val Jonas||Using QRA throughout the project lifecycle|
|13:00||Peter Simon||Introduction to the afternoon's topics and speakers|
|13:05||Roger Garrini||How QRA is used in industry|
|13:45||Simon White||User-friendly QRA|
|14:50||David Hulett||Unknowns, Systemic Risks and Risk Prioritization in Schedule Risk Analysis|
|15:45||All speakers||Panel discussion with all speakers|
|16:30||Ken Evans||Final remarks, networking|
“How risky is your project? And what are you doing about it?” The answers to these two vital questions will not be found in your project Risk Register or risk reports. The overall riskiness of your project is more than the sum of a list of individual threats and opportunities.
Leading risk management standards include a definition of something called “overall project risk” which is different from individual risks. But what does it mean and how do we manage it?
The concept of overall project risk is overlooked in the project risk management approach adopted by most organisations. This means that our risk processes focus exclusively on individual risks and we fail to identify or proactively manage the overall risk exposure associated with our projects.
This presentation clarifies the concept of overall project risk, explains its importance, and outlines how it can be identified, assessed and managed. Only by broadening our risk approach to include this aspect can we know how risky our project is, and decide what to do about it. (back to top)
Project managers (PMs) face major dilemmas when presented with uncertainties, especially within the project schedule. How will these uncertainties affect the project and where do they distribute constrained resources to lower these uncertainties? Is there a way to identify identifying how these uncertainties will affect the project and where is the optimal area to allocate contingencies?
The capability that best offers the project a truer insight into the effect of uncertainty on the schedule and to assist PMs in assessing where resources can have the biggest impact on reducing uncertainties is QRA.
This presentation looks at the lessons learned by an African Energy Utility that has very recently adopted QRA. The utility has been facing major challenges where demand for energy has outweighed supply. These challenges are being met by constructing additional power generating facilities. Many of these “Mega” construction projects are being seen as failures as they are behind schedule and over budget. The organisation has acquired the QRA capability to assist in gaining a more realistic view of the project schedule.
This presentation focusses on the challenges, success, and areas for improvement identified from implementing QRA on four diverse projects at different stages of the project life cycle. (back to top)
Most project organisations that now use some form of Quantitative Risk Analysis (QRA) do so to calculate confidence and contingency during business case preparation and the competitive tendering stage of their projects. However, few use QRA to its full extent throughout the project lifecycle.
Projects are not only missing out on a valuable technique which provides an early indicator of where things are going wrong (and the most cost beneficial areas to direct management attention and corrective action). They are also failing to take advantage of the increased confidence QRA brings, allowing the project to take calculated risk and incorporate more opportunity into their plans. Ongoing QRA results in and increased ability to return risk contingency to the business, in the form of unused budget, early milestone delivery, enhanced reputation and capacity/ability to win new business.
This presentation provides an overview not only of the method for calculating schedule and cost risks, but also how to use QRA it to support the management of your project to time and budget from initiation to closure. (back to top)
This presentation will show how Quantitative Risk Analysis is used in an industrial context. It will provide examples of use during Bids and Tenders including how this is iterative leading to the vetting stages.
By using both cost analysis and schedule risk analysis the project managers gain greater insight into their projects and the difficulties for achieving delivery.
They can also, by presenting ranges of values for risk, have a calm discussion with senior managers about likely contingencies commensurate with the profile of the project and with their teams. It will show how the use of QRA often alters the thinking of the project managers as they realise the importance of mitigation planning
The presentations will go on to show the use during contracts with real examples and how it helps the project managers deal with an apparent crisis in the project schedule by explaining the schedules the risks and being able to discuss these with customers. (back to top)
In this talk I will discuss my experiences of QRA and how I’ve been able to add value for project teams I’ve worked with. I’ll share some aspects of my approach that they appreciate, and I will use a risk management tool to show the underlying concepts.
Much value arises from carrying out any risk assessment: the discussions, organised thought, agreement and commitment to “paper”, taking ownership of specific risks and mitigation actions, and demonstrating active risk management. But with QRA, we can ask specific questions like: given the risk as we have expressed it, how valuable is mitigation x? How much overall contingency is likely needed? Where is it likely needed? And when? What’s our biggest risk at P50? At P90? What contractual incentivisations are appropriate?
In discussing how we answer these questions, I will focus on two particular challenges that anyone carrying out a QRA faces (both of which are caused by the relationship between independence and uncertainty), and will show innovative and meaningful solutions to both of them.
Above all I will show how, with a clear and practical approach to QRA, we can do better than just saying “we don’t know”. (back to top)
Unknown’s come in several flavors including unknown knowns, which are those risks that are inconvenient for the project to discuss even in risk workshops. The Risk Registers are always incomplete, since the individual, confidential risk interviews with project participants always uncover some of these unknown unknowns and unknown knowns. Interviews produce higher-quality and more candid information than typical risk workshops because they protect the participants from cultural, organizational and hierarchical pressures to conform.
Monte Carlo simulation (MCS) based risk analysis has been criticized for not being able to handle systemic risks and for producing unrealistically optimistic estimates that are out of touch with actual project results. History of large projects’ actual results includes some projects that are extremely overrun, even if most are not. The inclusion of systemic risks as Risk Drivers in MCS that exhibits these tendencies is shown. MCS using Risk Drivers can identify these systemic risks, put them in with the right probability for a project and prioritize them.
Risk prioritization is important for guiding risk mitigation. A prioritization method is shown that gives management information, days saved at the P-80 level of confidence, data which can be used in benefit / cost analyses of mitigation proposals. (back to top)