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From page 69... ... 67 INTRODUCTION The tasks of identifying, assessing, and managing risk for rapid renewal projects can produce results useful to project risk managers, in helping to understand and optimize project performance. However, there is another very valuable process within the sphere of risk management, risk analysis, which can provide additional valuable information to project managers when projects are more complex or the information required for decisions must be more precise. Read the entire page →
From page 70... ... 68 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS • Adequately (a) quantify the likelihood for achieving existing budgets and milestones or (b) Read the entire page →
From page 71... ... 69 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Qualitative Versus Quantitative Assessment This was addressed in Chapter 6 with respect to risk assessment. For risk analysis as described in this chapter, quantitative assessment is required, generally including explicit quantification of significant uncertainties (in terms of probability distributions) Read the entire page →
From page 72... ... 70 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Probabilities are defined on a range from 0.0 (impossible) to 1.0 (guaranteed) Read the entire page →
From page 73... ... 71 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS (4) the schedule of disruption can then be determined (if desired) Read the entire page →
From page 74... ... 72 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS -- The mean value and standard deviation of the outputs can be determined approximately as a function of the mean and standard deviation of each input (in conjunction with the correlation coefficients between each pair of inputs) , for example, via first-order second-moment and related point-estimate methods. Read the entire page →
From page 75... ... 73 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS 2. A set of outputs is developed for each set of inputs, using the deterministic model. Read the entire page →
From page 76... ... 74 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Subjective Versus Objective Assessment of Input Information As discussed in Chapter 6, when an adequate database of information related to a particular variable is available, an objective, or statistical, approach can be used to develop inputs to the risk analysis. However, when statistical information is not available, the opinion of experts can be elicited, de-biased (as discussed in Chapter 6) Read the entire page →
From page 77... ... 75 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS PROCESS OF RISK ANALYSIS The risk analysis process is relatively straightforward, consisting of the following eight steps, which are subsequently described in more detail: Step 1. Identify the desired outputs or types of results from the risk analysis. Read the entire page →
From page 78... ... 76 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Be careful not to focus project risk assessments too narrowly on construction. This is a mistake because many of a project's largest risks and other uncertainties can occur early in a project's development. Read the entire page →
From page 79... ... 77 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Assuming a qualified modeler, DOTs can choose from several commercially available software packages to perform probabilistic, risk-based, integrated cost and schedule modeling. A few canned packages also conduct risk-based analysis. Read the entire page →
From page 80... ... 78 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS and duration or, if no precedence requirement, its milestone date. Durations can be base-only (which might be uncertain) Read the entire page →
From page 81... ... 79 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Step 5. Identify risks and opportunities relative to that base. Read the entire page →
From page 82... ... 80 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS • Distribution. For significant factors (i.e., those that can greatly affect the outputs) Read the entire page →
From page 83... ... 81 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Conversely, for relatively insignificant factors, only the mean value (instead of the full range of possibilities) is generally needed. Read the entire page →
From page 84... ... 82 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Step 7a. Implement the model with uncertain or correlated inputs to determine uncertainty in the desired outputs. Read the entire page →
From page 85... ... 83 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS translating uncertainties in the inputs into uncertainties in the outputs. Several good, although technical, references are available on propagating uncertainty (see References section) Read the entire page →
From page 86... ... 84 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Step 7b. Determine the sensitivity of the outputs to the inputs. Read the entire page →
From page 87... ... 85 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS For more complex nonlinear models, approximate linear models can be developed that use weights (actually first derivatives) for each input factor, where the weights are derived by regression analysis from the many results produced during Monte Carlo simulation. Read the entire page →
From page 88... ... 86 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Figure 7.3. Forms and template (see Appendix C) Read the entire page →
From page 89... ... 87 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Although these models are deterministic, if mean values are used for inputs, then the models produce reasonable approximations of the mean values of the outputs. More sophisticated analyses, typically using Monte Carlo simulation in conjunction with these (or more complicated) Read the entire page →
From page 90... ... 88 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS Example The hypothetical QDOT case study (see Appendix D) , which is used to illustrate the various steps of the risk management process and includes a risk management plan (RMP; see Appendix E) Read the entire page →
From page 91... ... 89 GUIDE FOR THE PROCESS OF MANAGING RISK ON RAPID RENEWAL PROJECTS 36 2014.01.13 R09 08 Guide Chapter 7_final for composition.docx QRA flowchart for QDOT US-555 and SH-111 Project Risk or Opportunity Probability of Occurrence (%) Cost Change if Occurs (2009 millions of $) Read the entire page →

From page 69...

... 67 INTRODUCTION The tasks of identifying, assessing, and managing risk for rapid renewal projects can produce results useful to project risk managers, in helping to understand and optimize project performance. However, there is another very valuable process within the sphere of risk management, risk analysis, which can provide additional valuable information to project managers when projects are more complex or the information required for decisions must be more precise.