A standard project schedule based on the CPM method (critical path method) is considered a static network of logically linked tasks that create a timeline estimate of when a project will complete. As with any type of estimate, the ability of the team to accurately estimate both the sequence of planned activities and the time required for each tasks contains numerous uncertainties similar to those that are seen during the project cost estimate process.
Many planners have gone through the process of dealing with “what-if” scenarios by the way of changing task durations in their network to recalculate a hypothetical project end date. What if you had the ability to perform over 2,000 “what-if” scenarios and then aggregate the results of that analysis to the project team? This simple concept of reiterating a calculation on a random sampling of data (in the case of schedule time) is a simple way to describe the Schedule risk analysis process by way of a Monte Carlo simulation method.
Types of Schedule Risk analysis
There are two primary types of risk analysis; qualitative and quantitative assessments.
- A qualitative assessment is an evaluation that does not make use of schedule iteration techniques as described above, but rather relies on the experience and knowledge of key project stakeholders to identify items that have the potential to impact the schedule. A qualitative assessment involves evaluating an order of magnitude of those impacts and assigning a probability of occurrence. This type of assessment is typically managed via the project risk management plan and risk register.
- A quantitative assessment makes use of probabilistic analysis techniques described above, like Monte Carlo simulation. The process requires building a logical activity network model where risks are identified from a variety of sources. The schedule model is subject to a simulation through multiple iterations performed with a random activity duration selected from a predefined distribution.
5 quantitative assessment benefits
As with any analysis, the output is only as good as the input. We cannot stress enough the importance of spending the time up front to develop a sound logic network with a good basis document. This will pay dividends at the end of the SRA process.
In our experience, running several schedule risk analysis on different types of projects, we have found there to be 5 valuable benefits to going through the quantitative risk assessment process.
1. Defining the Probability of Success
A schedule risk analysis helps to establish a confidence level among the team in the overall project execution plan.
2. Identify high risk areas
A risk analysis helps highlight the highest risk areas in the project schedule & execution plan. Typically this helps project management focus key resources where attention is needed.
The initial risk assessment provides a good list of high risk schedule areas. Once identified the process forces the project team to think ahead and develop mitigation plans to be monitored on an ongoing basis. The model also provides a platform which the planner can use to analyze the impact of the mitigation plans and execution changes in the future
4. On Going Risk Management
The time spent on building a good schedule risk model typically augments the existing project risk management plan. Building in periodic schedule risk reviews help the team continue to be involved in the risk management process and provides continued assessment of the overall confidence level in project success.
5. Improve Client Confidence
The process is a good way to leverage client confidence in the project schedule completion date and support business development needs. A proactive risk management plan helps assure clients that you are looking ahead and ready for any potential impacts.