David.hulett

How the Risk Register Drives the Schedule
Risk Analysis

David T. Hulett, Hulett & Associates, LLC (USA)
Waylon T. Whitehead, ConocoPhillips (USA)

NASA PM Challenge
Daytona Beach, FL
February 26-27, 2008

© 2007 Hulett & Associates, LLC

Agenda
• Risk Register identifies high-priority risks
• Explain “Risk Factors” approach
– Risks have probability, impact
– Risks are assigned to activities
• Compute Monte Carlo simulation results
• Estimate sensitivity and net effect of key risks
• Apply Risk Factors to simple space vehicle
development schedule as an example
• Collecting risk data for the model
• How results are used to manage project risk


Limitations with the Traditional
3-point Estimate of Activity Duration
• Typical schedule risk analysis starts with the
activity that is impacted by risks
– Estimates the 3-point estimate for optimistic, most
likely and pessimistic duration
– Creates a probability distribution for activity duration
– Performs Monte Carlo simulation
• Which risks cause the most overall schedule
risk? These questions are typically answered by:
– Sensitivity to activity durations
– Criticality of activity durations
– NOT sensitivity to the risks themselves


Some Problems with Traditional
Approach
• Can tell which activities are crucial, but not
directly which risks are driving
• Makes poor use of the Risk Register that
is usually available
• Cannot decompose the overall schedule
risk into its components BY RISK
– Ability to assign the risk to its specific risk
drivers helps with communication of risk
causes and risk mitigation


We Propose a Different Approach:
Start with the Risks Themselves
• Drive the schedule risk by the risks already analyzed
in the Risk Register
• For each risk, specify:
– Probability it will occur
– Impact on time if it does
– Activities it will affect
• Starting with the risks themselves gives us benefits
– Links qualitative analysis to the quantitative analysis
– Estimates the impact of specific risks for prioritized
mitigation purposes


Simple Example of Risk Register Risks

• Use the Risk Factors module in Pertmaster 8
• Collect probability and impact data on risks
• Load the risks
• Assign risks to schedule activities


Risk Factors Mechanics (1)
• The risk factor is assigned to one or several
activities, affecting their durations by a
multiplicative factor
– E.g., the factor may be .90 for optimistic, 1.0 for most
likely and 1.25 for pessimistic
– These factors multiply the schedule durations of the
activities to which they are assigned
• Risks can be assigned to one or more activities
• Activity durations can be influenced by one or
more risks


Risk Factors Mechanics (2)
• Risk Factors are assigned a probability of
occurring on any iteration.
– When the risk occurs, the factor used is chosen at
random from the 3-point estimate and operates on all
activities to which it is assigned
– When not occurring on an iteration the risk factor
takes the value 1.0, a neutral value
• When an activity is influenced by more than one
risk, their factors are multiplied together, if they
happen, on any iteration


Risk Factor
Applied to a 100 day Task (1)

0 0 1 0 - C o n s tr u c tio n : D u r a tio n
1 0 0% 11 5
2 50
9 5 % 1 11

Here the 9 0 % 1 09

8 5 % 1 08
For the
Ranges are 2 00
8 0 % 1 06

7 5 % 1 05
examples we
based on 7 0 % 1 04 use an activity
6 5 % 1 04
deviations + with 100 days

Cumulative Frequency
6 0 % 1 03
1 50

and – from 5 5 % 1 02
in the
Hits

5 0 % 1 01

the Plan. 4 5 % 1 01

4 0 % 1 00
schedule
1 00
Probability 35% 99

30% 99
is 100% 25% 98

50 20% 97

15% 96

10% 95

5 % 94

0 0 % 90
90 95 10 0 1 05 1 10 11 5
D istrib u tio n (sta rt o f in te rva l)


Risk Factor
Applied to a 100-day Task (2)

0 0 4 0 - T e c h n o lo g y D e s ig n : D u r a tio n
100% 130

95% 125
200
90% 122

85% 121
180

Here the 80% 119

75% 118
160

Plan is the 70% 117

140 65% 116
Optimistic

60% 115

Value. 120 55% 114
Hits

50% 113

Probability 100
45% 112

40% 111
is 100% 80
35% 110

30% 109
60
25% 109

20% 108
40
15% 107

20 10% 105

5% 104

0 0% 100
100 110 120 130
D istrib u tio n (sta rt o f in te rva l)


Assigning a Probability Less than 100%

• The essence of “risk” is the uncertainty
– Uncertainty of its occurrence, specified by a
probability
– Uncertainty of its impact, specified by a range of
durations
• If the risk may or may not occur, we specify the
probability that it will occur
– The risk occurs and affects the activities it is assigned
to on X% of the iterations, chosen at random
– On (1 – X)% of the iterations, the plan value is used


Assigning a Probability Less than 100%

0010 - Construction : Duration 0040 - Technology Design : Duration
100% 115 100% 130

Spike 95% 107 95% 123

contains
90% 103 1200 90% 120
Spike
85% 101 85% 118

70% of
2000
80% 100 80% 116 contains
the
75% 100

70% 100
1000 75% 114

70% 113
40% of
probability
65% 100 65% 111
the

1500
60% 100 800 60% 110

55% 100 55% 109 probability

Hits
Hits

50% 100 50% 107

45% 100 600 45% 105

1000 40% 100
40% 100

35% 100 35% 100

30% 100 400 30% 100

25% 100 25% 100

500 20% 100 20% 100

15% 100 200 15% 100

10% 99 10% 100

5% 97 5% 100

0 0% 100
0 0% 91
100 110 120 130
95 100 105 110 115
Distribution (start of interval) Distribution (start of interval)


Assigning
More than One Risk to an Activity
• If more than one risk is acting on an
activity, the resulting ranges are the
multiplication of the percentages
– Risk 1 has 90%, 100% and 115%
– Risk 2 has 100%, 110% and 130%
– The resulting risk has ranges of
• Optimistic: 90% (.9 x 1.0)
• Most Likely:110% (1.0 x 1.1)
• Pessimistic:150% (1.15 x 1.3)


Two Risks affect One Activity
using Factors

0040 - T echnology Design : Duration
100% 144

95% 130

90% 127
140
85% 124

80% 123

120 75% 121

70% 119

Range 100
65% 118

60% 117
from 90 to 55% 116
Hits

150 days, 80 50% 115

45% 114

Peak about 60
40% 113

35% 111
113 days 30% 110

40 25% 109

20% 108

15% 106
20
10% 104

5% 102

0 0% 93
100 110 120 130 140
Distribution (sta rt of inte rva l)


Two Risks with Less than 100%
Probability Affecting one Activity

0040 - T echnology Design : Duration
1100 100% 144

95% 123

The spike at 1000 90% 119

85% 116

100 days 900
80% 113

75% 111
represents (1) 800
70% 110

the likelihood 700
65% 108

60% 106

that neither risk 600 55% 104
Hits

50% 102
occurs and (2) 500 45% 101

the chance that 400
40% 100

35% 100

100 days is 300
30% 100

25% 100
picked when 200
20% 100

one or both 100
15% 100

10% 99

occur 5% 97

0 0% 91
100 110 120 130 140
Distribution (sta rt of inte rva l)


Sensitivity to the Risk Factors

Risk #1 has
larger
percentage
extremes but
Risk #2 has
a higher
probability.


Simple 2-Stage Space Vehicle Schedule

Software used: Pertmaster v. 8.0

Simple Space Vehicle
Development Schedule
• 87 month schedule
– 67 months for design, fabrication, and test of FS, US
– 16 months of integration and test
• 10 activities linked
• Beginning 3 March 2008
• PDR on 11 SEPT 2009
• CDR on 3 June 2011
• Delivery to launch site 7 Feb 2014


Two Types of Risk
• Background risk based on typical general
risk, estimating error
– Used Quick Risk of -5% and +10%
• Discrete risks derived from Risk Register
– Summarized from detailed Risk Register
– These have a probability of occurring and an
impact on specific activities if they do
– Parallel to their Risk Register information,
which is used in data collection


Schedule Including Background Risk

Background risk:
Optimistic -5% and
Pessimistic +10%


Results with Background Risk Only
Spacecraft Program
Entire Plan : Finish Date
100% 30/Dec/15
95% 27/Oct/15
400
90% 15/Oct/15
85% 07/Oct/15
80% 30/Sep/15
Deterministic:
75% 24/Sep/15 12JUN15 is <1%
300 70% 18/Sep/15

65% 14/Sep/15
60% 09/Sep/15
P-80 is 30SEP15,
55% 04/Sep/15 about 3.5 months
Hits

200
50% 01/Sep/15
45% 26/Aug/15
later than planned
40% 21/Aug/15
35% 18/Aug/15 Spread from P-5 to
30% 12/Aug/15
P-95 is 5JUL15 to
25% 07/Aug/15
100
20% 31/Jul/15 27OCT15 for 3.7
15% 24/Jul/15
10% 17/Jul/15
months
5% 06/Jul/15
0 0% 14/May/15
31/May/15 08/Sep/15 17/Dec/15
Distribution (start of interval)


Discovery of Risk Factors
• From exploratory interviews w/ all project
stakeholders to arrive at their general
ideas about what the risks are
• From the project risk register (each risk
listed on the risk register should be
“mapped” to one Risk Factor)
• From general knowledge about conditions
(market, analogous data) that might affect
the project


Detailed Interviews for Information
about Risk Factors
• Using the arrived at Risk Factors, conduct
interviews to assess their likelihood and
impact
• Be alert to the discussion of new risks
during the interviews
• The use of pre-read information can assist
with the amount of information that can be
covered in a time limited interview


Applying Risk Factors
• Where possible, cover what type of
schedule activities the risk factor will apply
to
• Be alert to the need for applying the same
risk factor with more than one range for
different types of activities
• Be alert to the need to divide schedule
activities in order to discretely apply Risk
Factors


Risk Analysis on Space Vehicle Project
Risk Factors are from Risk Register

• Seven risk factors have been identified and
quantified.
• Each Risk has probability assigned
• Some have optimistic ranges possible, others
are pure threats


Risks Assigned to Activities (1)
Requirements FS Preliminary FS Final FS Test FS
Risk
Definition Design Design Fabrication Engine

Requirements Not
X
Complete
Alternative Designs
X
Possible

Designs Not Proven X

New Materials in
X
Fabrication

Lost Know-How X

Funding Problematic X X X X

Testing Schedule
X
Aggressive


Risks Assigned to Activities (2)
US Preliminary US Final US US Integration
Risk Integration
Design Design Fabrication Test Testing
Requirements Not
Complete
Alternative Designs
X
Possible

Designs Not Proven X

New Materials in
X
Fabrication

Lost Know-How X X

Funding Problematic X X X X X X

Testing Schedule
X X
Aggressive


Results Adding
Risk Factors to the Background Risk
Spacecraft Program
Entire Plan : Finish Date
800 100% 31/Jul/17
95% 02/Sep/16
Baseline 12JUN 15 90% 29/Jun/16
85% 06/May/16
is only 3% likely 80% 29/Mar/16
600 75% 01/Mar/16
The 80th percentile 70% 11/Feb/16

65% 26/Jan/16
(P-80) is 29MAR16, 60% 11/Jan/16

9.5 months later 55% 29/Dec/15
Hits

400 50% 18/Dec/15
45% 07/Dec/15
Spread P-5 to P-95 40% 27/Nov/15
is 12AUG15 to 35% 17/Nov/15
30% 06/Nov/15
2SEP16, for 12.5 200 25% 27/Oct/15

months 20% 14/Oct/15
15% 30/Sep/15
10% 11/Sep/15
5% 12/Aug/15
0 0% 29/Jan/15
17/Dec/15 30/Apr/17
Distribution (start of interval)


Activity Tornado Chart
from All-In Simulation
Spacecraft Program
Duration Sensitivity

Risky Activities:
00011 - FS Fabrication 78%
Fabrication,
00025 - US Fabrication 77%
Integration, Final
00028 - Integration 72%
Design, Preliminary
Design, Testing
00009 - FS Final Design 70%

00023 - US Final Design 70% All except testing
have about the same
00007 - FS Preliminary Design 64%
influence
00021 - US Preliminary Design 64%

00026 - US Test 55%

00029 - Integration Testing 55%

00012 - Test FS Engine 55%


Risk Factor Tornado
from All-In Simulation
Driving Schedule Risk Factors

6 - Funding from Congress is problematic

The main RISK,
4 - Fabricaton requires new materials
however, is funding
3 - New designs not yet proven
from Congress, which
affected all activities.
7 - Schedule for testing is aggressive This is the main risk to
mitigate, if possible
2 - Several alternative designs considered

5 - Lost know-how since last full spacecraft

1 - Requirements have not been decided

0.00 0.20 0.40 0.60 0.80
Correlation


Contribution of
Each Risk to the Contingency (1)
Explain the Contingency to the P-80
P-80 Date Take Risks Out:
All Risks In 6-Jun-16 Days Saved % of Contingency
Specific Risks Taken Out in Order
No Funding Risk 19-Jan-16 139 39%
No Tight Testing Schedule Risk 1-Dec-15 49 14%
No New Design Risk 15-Oct-15 47 13%
No Alternative Design Risk 5-Oct-15 10 3%
No Lost Know How Risk 2-Oct-15 3 1%
No Requirements Risk 30-Sep-15 2 1%
Background Schedule Estimating Risks
No Background Risk 12-Jun-15 110 31%
Total Contingency 360 100%


Contribution of
Each Risk to the Contingency (2)
Distribution Analyzer Report
No Background Risk - Finish Date No Design Alternative Risk - Finish Date No Testing Scheudle Risk - Finish Date
No Requirements Risk - Finish Date No New Design Risk - Finish Date No Funding Risk - Finish Date
No Lost Know How risk - Finish Date No New Materials Risk - Finish Date All Risks - Finish Date
100%

90%

01/Dec/15

29/Mar/16
12/Jun/15

02/Oct/15
05/Oct/15
30/Sep/15
15/Oct/15
27/Oct/15

19/Jan/16
80%

70%

Cumulative Probability
60%

50%

40%

30%

20%

10%

0%
06/ Apr/ 15 15/ Jul/ 15 23/ Oct/ 15 31/ Jan/ 16 10/ May/ 16 18/ Aug/ 16 26/ Nov/ 16 06/ Mar/ 17 14/ Jun/ 17


Summary (1)
• The focus is on the risks, not their impact
• Risks “explain” the need for a contingency
• Management appreciates this focus on
risks
• Risk interviews are conducted at 20,000
foot level, where people typically think of
risk
• Interviews go faster, stick to the substance


Summary (2)
• Risk Register exists, use it for quantitative
analysis
• Specific risks can be quantified and assigned to
schedule activities
– Quantification is probability and impact
– A risk can affect several activities
– An activity can be affected by several risks
• Risk Factors can be combined with other more
traditional approaches such as 3-point estimates
for background risk or probabilistic branching


Using the Risk Register in Schedule Risk
Analysis with Monte Carlo Simulation

David T. Hulett, Hulett & Associates, LLC (USA)
Waylon T. Whitehead, ConocoPhillips (USA)

NASA PM Challenge
Daytona Beach, FL
February 26-27, 2008


David.hulett

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