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©2001 Plan B Systems Inc.
PBSi
Quantitative Cost/Schedule Quantitative Cost/Schedule Risk AnalysisRisk Analysis
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis• All risks have potential impacts on
– cost– schedule
• Impacts are rated in the RM process– dollars– months
• All risks are linked to– area (of program– WBS #
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
• Your plan has– cost– schedule
• allocated to plan elements– cost accounts– tasks
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
Risks WBS #
Cost Impacts
Budget
Time Impacts
Schedule
Map
©2001 Plan B Systems Inc.
PBSi
Impact TableImpact Table
WBS # CostBudget$M
ScheduleBudgetmonths
Costimpact$M
Scheduleimpactmonths
Risk #
2 3 03
0.5 4 23
001 10 7
1 2 47
1 1 09020 5 13
0.5 6 13
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
• NOW, interview risk managers
• Work with the impact table
• Determine three point estimates.– Best case no risks impact– expected case some risks impact– worst case all risks impact
• Use lots of common sense
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
Impacted Cost Estimates Impacted Schedule Estimates
WBS # Best Expected Worst Best Expected Worst
001 10 12 13.5 6 8 10
020 4 5 5.5 10 13 16
WBS # CostBudget$M
ScheduleBudgetmonths
Costimpact$M
Scheduleimpactmonths
Risk #
2 3 03
0.5 4 23
001 10 7
1 2 47
1 1 09020 5 13
0.5 6 13
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
• Note that the manager may already have some reserve in his plan.
• This needs to be taken into account in establishing the impacted estimates
©2001 Plan B Systems Inc.
PBSi
Quantitative AnalysisQuantitative Analysis
• Run Monte Carlo Simulation• Randomly combine the distributions• Run many different times (>100)
Best Expected Worst
Cost or Schedule for WBS #
ProbabilityProbability Distribution for cost /schedule of WBS#
©2001 Plan B Systems Inc.
PBSi
Qualitative AnalysisQualitative Analysis
• Outputs are– Cost Probability Distributions for project– Schedule Probability Distributions for
milestones
©2001 Plan B Systems Inc.
PBSi
Option1: Quantitative Cost Option1: Quantitative Cost Risk AnalysisRisk Analysis
Per Cent
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
11.00 11.20 11.40 11.60 11.80 12.00 12.20 12.40 12.60 12.80 13.00
Project Budget ($M)
Cum
ulat
ive
Per
cent
age
Cha
nce
Prudent Management Reserve
Prerequisite: Project Cost Breakdown by WBS
©2001 Plan B Systems Inc.
PBSi
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
01-Apr-97 10-Jul-97 18-Oct-97 26-Jan-98 06-May-98 14-Aug-98 22-Nov-98 02-Mar-99 10-Jun-99 18-Sep-99 27-Dec-99Time
Cu
mu
lati
ve P
ercen
tag
e C
ha
nce
1 Apr 98Phase 1
5 Oct 99Phase 3
7 Sep 98Phase 2
Option 2: Schedule Risk AnalysisOption 2: Schedule Risk Analysis
CumulativeProbability of
Meeting Schedule%
Set Date
Prerequisite: Project Logic Network/PERT
80%
50%
10%
Phase 2 Phase 3Phase 1
©2001 Plan B Systems Inc.
PBSi
Qualitative AnalysisQualitative Analysis
Provides assessment of:
• Adequacy of management reserves
• Achievability of critical milestones
Integrates risk management into project planning, not just project management
