Many projects have risks that may be included in a Monte Carlo analysis. What is often needed, is a simple Schedule Risk Analysis (SRA) framework for prioritizing these risk events.
Monte Carlo simulation software, including Deltek Acumen Risk, provides schedule probability distributions based on activity duration uncertainty and risk events. This probability distributed SRA presents a significant improvement over the single point deterministic schedule analysis that also neglects risk. The Government Accountability Office (GAO) schedule assessment guideline includes a helpful and simple procedure for prioritizing schedule risk events.
This article briefly discusses a GAO recommended SRA Monte Carlo simulation analysis procedure for prioritizing schedule risk.
We have in Figure 1 our demonstration project.
This is a short 16-day Pipe Inspection & Repair project. In this schedule the pipe is first inspected for damage and wear. After inspection the material adapter components required for the repair are ordered. The order and delivery of these adapters requires efficiency because the project is ongoing throughout this procurement effort, and the adapters are essential for the repair.
We want to run a Monte Carlo analysis of this schedule to provide a probability distribution that is more accurate in predicting project completion than a mere single point deterministic analysis. We run this Monte Carlo analysis using Deltek Acumen schedule analysis software. In Deltek Acumen Risk we can include both duration estimate uncertainty and risk events in the Monte Carlo analysis. This provides a comprehensive risk adjusted analysis of project completion.
Deltek Acumen Risk has a risk register that supports the definition of project risks. Figure 2 displays the risk register and list of risks associated with the Pipe Inspection & Repair project.
The Delivery Delay risk has a medium probability of occurrence and a high impact on schedule. The cost of all risks is negligible. This is primarily a time constrained project. Schedule delays do not incur significant additional costs to the project, but time is very critical. Yes, procurement delays are a common and impactful project risk. And the adapters arriving on schedule is no guarantee of project success. The adapters may be the wrong size for our piping, and require a repeated procurement effort. Not good.
Inspector unavailability for the final quality assurance inspection is a probable risk, but with low expectation and impact. Another real risk is that the inspection may result in a check list of items requiring correction. This has a medium probability of occurrence and low schedule impact. It’s good that the rework required schedule impact is low, because this schedule comes with no contingency plan for inspection related schedule delays. So only minor pipe installation rework corrections can be absorbed by this project schedule.
Before proceeding with the Monte Carlo analysis let’s review the event impact template, Figure 3.
The schedule impact for very low, low, medium, high, and very high of risk events is 0, 2, 3, 4, and 6 days. This places the impact of risk events in a suitable range for our 16-day duration project. You may note that the costs in our project are all out of range, but, remember, costs are all negligible in our schedule; their impact is $0.
Let’s now take a look at the risk event mapping of our schedule. Figure 4 displays the risk register and the Delivery Delay risk event mapped to the Order & Delivery Adapters activity.
The adapter misfit risk event is correlated to the Pipe & Adapter Installation activity, Figure 5.
Finally, the Quality Assurance Inspectors Unavailable and Rework Required risk events are directly related to the Quality Assurance Inspection activity, Figure 6.
Great! Our risk events are all mapped to the appropriate schedule activities. In Figure 7 we set Deltek Acumen to run a Monte Carlo analysis including uncertainty and risk events.
No mitigation is included in our study.
The GAO recommends a procedure for prioritizing the schedule risk events. First run the schedule risk analysis (SRA) including all risk events. Record the finish date at the desired percentile. We choose 75th percentile to simplify our analysis; Deltek Acumen tabulates completion at the 75th percentile. Second remove a risk and run the SRA again. Compare this 75th percentile date with the date of the fully risk adjusted model. The difference is the expected contribution (or days saved) of the removed risk.
Continue this process of removing a risk and running the SRA, and, again, comparing the 75th percentile to the date from the full simulation. Calculate the impact of each risk in calendar days. Finally, prioritize risks by calendar days saved.
The Monte Carlo analysis of the fully risk adjusted schedule is displayed in in Figure 8.
And the Monte Carlo analysis results of all risk scenarios are displayed in Table 1.
The 75th percentile project completion of the fully adjusted model is May 3, 2020. Eliminating the Delivery Delay saves 2 calendar days. Making sure the correct adapters size are ordered saves up to 5 calendar days. The Quality Assurance Inspectors Unavailability has no impact, which is good. The inspection rework required is expected cost a day’s work.
Table 2 lists the risk events in ascending order of impact.
The biggest time saver is confirming the correct adapter size is ordered. Make certain the pipe fitter is consulted before ordering the adapters. Addressing delivery delays is next on the list of risks to address. Consider paying for expedited delivery. Inspection required rework is always an issue, but low impact. Make sure the installed piping system is fully tested and the work site cleaned up before final inspection.
Also, I’ve worked on projects where the quality of the pipe insulation was at issue. Make sure the pipe insulation is installed according to accepted practice. Finally, inspector availability is not a great concern. But make sure the keep the inspectors informed of schedule progress and tentative inspection dates.
Even small projects have risk events that can impact schedule completion. The GAO provides a framework for prioritizing these risks, accordingly. Consider first the fully risk adjusted schedule then remove individual risk events in separate analyses to examine their impact. In this way risks are prioritized according to impact. And prioritizing risks is important for strategizing risk mitigation efforts.
In Deltek Acumen Risk it is feasible to model both risk events and risk mitigation for a comprehensive risk analysis. Thus, the scheduler is able to provide the risk and mitigation adjusted schedule finish date at the desired percentile for prioritized risks, which provides more insight into the true schedule situation.