Contributed by Gareth Byatt and Zenhar Marolia
Purpose of this document
This paper is an overview of Quantitative Schedule Risk Analysis (hereon referred to as QSRA) – what it is, why it can be a valuable Risk tool for project teams, and some tips on how to use it to contribute towards achieving successful project outcomes.
Projects are risky by nature
All projects involve taking risk and managing uncertainty – some more than others.
Many project factors give rise to uncertainty. A common factor for many project uncertainties is that, if they occur, they will affect your schedule as they usually incur a time impact, and they may impact the sequence and duration of many activities. What we want to achieve with a project schedule is a realistic and feasible plan of action, one that can be changed as the situation changes, whilst having the right amount of risk contingency built into it – not too much, and not too little. It has to be adequate for any realistic risks (both threats and opportunities) that may occur. QSRA can help us to achieve this.
How QSRA can help us to manage project “time risk”
QSRA is a semi-quantitative tool that a project team can use to understand time risk in their project schedule. By understanding time risk with the help of QSRA, a team can decide what risks are tolerable and what risks needs to be managed with appropriate controls in place. Using the QSRA semi-quantitative approach, a mathematical model is applied to the schedule through an appropriate IT tool, which simulates how the project schedule could play out. The outputs of this risk analysis are a probabilistic risk-quantified schedule with calculated confidence factors to achieving activities, groups of activities and the schedule as a whole by their target dates. By reviewing this analysis, the project team can decide whether it should change parts of the schedule to lower or increase its risk level in order to achieve the project delivery timelines.
QSRA can help us to identify, analyse and evaluate the schedule risk that we face by applying statistical analysis to knowledge about schedule risks. By combining good team knowledge about the risks faced with statistical modelling, we can identify and evaluate what is, statistically speaking, most at risk, and most sensitive to change, in our schedule. The main aim of the QSRA is to aid intelligent decision making so that successful projects can be delivered on time.
Success factors for QSRA to be of value
For QSRA to be of value to the project team, the following factors must be in place:
A methodology for conducting QSRA
Assuming that the success factors are in place (leadership support, seen as part of project management, a good team culture, an independent facilitator et al), the starting point for conducting QSRA, prior to a QSRA workshop, is to review the project schedule logic, including running good practice schedule analytics on it, and that there is a sound understanding of the activities it is comprised of, and the “uncertainty that matters most” to these activities. This initial schedule review can be done as a precursor to the QSRA workshop. It is imperative to understand that the schedule itself must be robust and without considerable inaccuracies e.g. negative lags, excessive float, schedule activities without successors or predecessors etc. The reason being that most of the quantitative analysis is undertaken by checking pathways through the schedule itself and if it isn’t robust enough the confidence in the risk related results greatly diminish.
Using SQRA with Cost Risk Analysis
When a schedule has been produced with resource loading, a “Joint Confidence Level” or JCL can also be prepared through QSRA.
JCL = Joint Cost and Schedule Confidence Level
A JCL shows the probability that a given activity or project cost will be equal or less then the targeted cost AND the schedule will be equal or less then the targeted schedule date.
JCL is used in industries such as aerospace to review cost and time probability of success throughout the duration of a project. It can be a tool to evaluate whether the right level of cost and schedule risk is being taken.
In this example JCL scatter plot output, each dot represents a result from the simulation calculation (cost and schedule). The cross-hairs can be moved to a date and cost to obtain their joint confidence level.
Project teams need a project schedule that is realistic and feasible yet challenging, with the right amount of risk contingency built into it – not too much, and not too little. QSRA is a tool in your Risk toolkit to help you understand and manage schedule and cost risk, as part of an integrated approach to managing project risk.
By integrating QSRA into project activities, a project team can gain insights and information to help them decide which schedule risks to take, which ones to tolerate, and which ones to manage closely with the right controls in place. When QSRA is integrated into regular project activities, it can help a project team to make good risk-informed decisions to manage uncertainty in an appropriate way.
Don’t forget – we are hosting SiG events during 2018 across the UK (from Birmingham, London and Manchester to Bristol).
Check our IRM SiG webpage (under the Events section) for updates.