Project

Project--Risk
RiskRegister,
Register,Real-time
Real-timeCash
CashFlows
Flows
This
Thisworkbook
workbookdemonstrates
demonstratesthe
theuse
useof
of@RISK
@RISKcombined
combinedwithwithMS
MSProject
Projectto
tobuild
buildaacomplete
completemodel
modelofofthe
theconstruction
constructio
commercial
commercial venue. The model includes uncertainty in task times, a Risk Register for calculating contingencies,and
venue. The model includes uncertainty in task times, a Risk Register for calculating contingencies, andaalink
link
time cash flows in an NPV calculation model.
time cash flows in an NPV calculation model.
On
Onthe
theTasks
Taskssheet,
sheet,@RISK
@RISKprobability
probabilitydistributions
distributionshave
havebeen
beenassigned
assignedtotothe
thedurations
durationsof
ofseveral
severaltasks
tasksininthe
theschedule
schedule
with a distribution and others using Risk Categories. The uncertain task times are assumed to be uncorrelated.
with a distribution and others using Risk Categories. The uncertain task times are assumed to be uncorrelated.
On
Onthe
theRisk
RiskRegister
Registersheet,
sheet,aaRisk
RiskRegister
Registerlists
liststhree
threepossible
possiblerisk
riskevents
eventsthat
thatcould
couldimpact
impactthe
theproject
projectschedule
scheduleandandcos
cos
using
usingthe
theRiskProjectAddDelay
RiskProjectAddDelayfunction
functioninincolumn
columnP,P,these
theserisks
risksintroduce
introduceschedule
scheduledelays
delaysand
andassociated
associatedcosts.
costs.Specific
Specifi
function
functionallows
allowsthe
themodel
modelto togenerate
generatenewnewtasks
tasksdynamically,
dynamically,depending
dependingon onwhether
whetherthethethe
therisks
risksoccur
occuror
ornot.
not.Changes
Change
reflected at run time only, so it is necessary to run a simulation to see the impact and results of the Risk Register.
reflected at run time only, so it is necessary to run a simulation to see the impact and results of the Risk Register.
The
TheCash
CashFlow
Flowsheet
sheetcontains
containsaamodel
modelof ofcash
cashflowsflowsthat
thatleads
leadsto tothetheNPV
NPVof
ofthetheproject.
project.InInparticular,
particular,the
theproject
projectcosts
costsi
of
of this sheet link to a report in the Timescaled Data sheet. To get this report, you must first configure the Collect Dataop
this sheet link to a report in the Timescaled Data sheet. To get this report, you must first configure the Collect Data o
Project
ProjectSettings
Settingsdialog
dialogbox.
box.(See
(Seethe
thetwo
twotop
topdialog
dialogboxes
boxesto tothe
theright.)
right.)Then
Thenyou youneed
needto torun
runthethesimulation
simulationsosothat
thatthe
the
cumulative
cumulativecosts
costsare
arecollected
collectedininmemory.
memory.Next,
Next,afterafteraasimulation
simulationhas hasbeen
beenrun,
run,you
youshould
shouldselect
selectTimescaled
TimescaledData
Datafrom
fro
and
andReports
Reportsininthe
theProject
Projectdropdown
dropdownand andfill
fillininthe
thedialog
dialogbox
boxas asshown
shownbelow
belowto tothe
theright.
right.This
Thiscreates
createsaaTimescaled
TimescaledDaD
filled
filledout
outwith
withthe
thecumulative
cumulativecost
costdata
data(by
(bymonth)
month)ininrow row8.8.ItItisisimportant
importantto tocheck
checkthe
the"Include
"IncludeRow Rowfor
forReal-Time
Real-TimeTim
Tim
Data"
Data"option
option(which
(whichthen
thenchecks
checksthethe"Update
"UpdateAutomatically
AutomaticallyAfterAfterEach EachRun"
Run"option)
option)ininthe
theTimescaled
TimescaledDataDatadialog
dialogbox.
box.T
ensures
ensuresthatthatwhen
whenyouyourun
runthe
thesimulation
simulationagain,
again,new newcosts
costswill
willbe begenerated
generatedand andcollected
collectedafter
aftereach
eachiteration.
iteration.
The
Theother
otherreports
reportsgenerated
generatedare
arethe
theNPV
NPVand
andthe
theContingency
Contingencyfor
forthe
therisk
riskregister,
register,atatdifferent
differentconfidence
confidencelevels.
levels.Finally,
Finally
flow
flow also includes a Revenue Adjustment calculation (row 17 of the Cash Flow sheet) that takes the portionof
also includes a Revenue Adjustment calculation (row 17 of the Cash Flow sheet) that takes the portion ofthe
theyear
yeari
Sales
Salesare
areinitiated
initiatedand
andapplies
appliesaadiscount
discountto
tothe
thepredicted
predictedannual
annualrevenue.
revenue.
Note:
Note: The
TheIndustrial
Industrialor
orProfessional
Professionaledition
editionisisrequired
requiredto
touse
usethe
theProject
Projectfeature
featureofof@RISK.
@RISK.
mplete
mpletemodel
modelofofthe
theconstruction
constructionofofaanew
new
culating contingencies, and a link toreal-
ulating contingencies, and a link to real-

sof
ofseveral
severaltasks
tasksininthe
theschedule,
schedule,some
some
med to be uncorrelated.
med to be uncorrelated.
act
actthe
theproject
projectschedule
scheduleandandcosts.
costs.ByBy
ays
aysand
andassociated
associatedcosts.
costs.Specifically,
Specifically,this
this
e the
he therisks
risksoccur
occuror
ornot.
not.Changes
Changesareare
sults of
esults ofthe
theRisk
RiskRegister.
Register.
.t.InInparticular,
particular,the
theproject
projectcosts
costsininrow
row1414
first configure the Collect Data optionfrom
rst configure the Collect Data option from
oorun runthethesimulation
simulationsosothat
thatthe
the
ould select
hould selectTimescaled
TimescaledData
Datafrom
fromCharts
Charts
ht. This
ght. Thiscreates
createsaaTimescaled
TimescaledData
Datasheet
sheet
e"Include
"IncludeRow Rowfor
forReal-Time
Real-TimeTimescaled
Timescaled
he
theTimescaled
TimescaledDataDatadialog
dialogbox.
box.This
This
ted after
cted aftereach
eachiteration.
iteration.
fferent
fferentconfidence
confidencelevels.
levels.Finally,
Finally,the
thecash
cash
hat takes the portion of the year inwhich
at takes the portion of the year in which

SK.
ISK.
ID Name Duration Start Finish

1 New Product 24.01 mons 8/1/2012 6/4/2014

2 Project Start 1 hr 8/1/2012 8/1/2012

3 Project Site 15 mons 8/1/2012 9/25/2013

4 Site Selection 1 mon 8/1/2012 8/29/2012

5 Land Procurement 2 mons 8/29/2012 10/24/2012

6 Permits 1 mon 10/24/2012 11/21/2012

7 Engineering Design 6 mons 11/21/2012 5/8/2013

8 Design Complete 0 mons 5/8/2013 5/8/2013

9 Plant Construction 9 mons 1/16/2013 9/25/2013

10 Construction Complete 0 days 9/25/2013 9/25/2013

11 Equipment & Machinery 17 mons 2/13/2013 6/4/2014

12 Procurement 4 mons 2/13/2013 6/5/2013

13 Delivery 6 mons 9/25/2013 3/12/2014

14 Installation 2 mons 3/12/2014 5/7/2014

15 Testing 1 mon 5/7/2014 6/4/2014

16 Equipment Ready 0 days 6/4/2014 6/4/2014

17 Furnishings 4 mons 9/25/2013 1/15/2014

18 Interior 4 mons 9/25/2013 1/15/2014

19 Exterior 3 mons 9/25/2013 12/18/2013

20 Production Starts 0 days 6/4/2014 6/4/2014

 Cost Predecessors Resource Names Critical Aug-2012 Sep-2012 Oct-2012

$299,200.00 Yes

$0.00 Yes

$120,000.00 Yes

$0.00 2 Owner Yes

$0.00 4 Owner Yes

$0.00 5 Owner,City Hall Yes

$48,000.00 6 Contractor 1 Yes

$0.00 7 Contractor 1 No

$72,000.00 7SS+2 mons,8FF+3 Contractor 1 Yes

$0.00 9 Contractor 1 Yes

$145,600.00 Yes

$44,800.00 7SS+3 mons Contractor 2 No

$67,200.00 12,10 Contractor 2 Yes

$22,400.00 13 Contractor 2 Yes

$11,200.00 14 Contractor 2 Yes

$0.00 15 Contractor 2 Yes

$33,600.00 No

$19,200.00 10 Contractor 3 No

$14,400.00 10 Contractor 3 No

$0.00 18,19,16 Yes

Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013
Aug-2013 Sep-2013 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014 Apr-2014
May-2014 Jun-2014 Jul-2014
ID Resource Name Initials Group Max. Units
1 Owner O 100%
2 City Hall C 100%
3 Contractor 1 C 300%
4 Contractor 2 C 100%
5 Contractor 3 C 200%
 Std. Rate Ovt. Rate Cost/Use Accrue At Base Calendar Code
$0.00 /hr $0.00 /hr $0.00 Prorated Standard
$0.00 /hr $0.00 /hr $0.00 Prorated Standard
$50.00 /hr $50.00 /hr $0.00 Prorated Standard
$70.00 /hr $70.00 /hr $0.00 Prorated Standard
$30.00 /hr $30.00 /hr $0.00 Prorated Standard
Single Occurrence Impact ($)
Occurs?
Mitigation Mitigated Value if
Risk (1=Yes, Min Most Likely Max Value
Cost Probability Occurs
2=No)
Risk 1 50 10% 0 $ 30,000 $ 50,000 $ 55,000 $ 45,000 $ -
Risk 2 100 15% 0 $ 70,000 $ 90,000 $ 100,000 $ 88,333 $ -
Risk 3 N/A 10% 0 $ 125,000 $ 145,000 $ 170,000 $ 146,667 $ -
Total $ -
 Time (ds)
Risk
Value if
Min Most Likely Max Value Delay /
Occurs Cost
1 3 5 3 0
5 8 15 9 0
10 15 19 15 0
Cash Flow
Parameters of distributions
Uncertain inputs Distribution Parameter 1 Parameter 2
Year 1 revenue $140,000 Triangular $ 70,000 $ 150,000
Annual fixed cost $49,000 Triangular $ 32,000 $ 40,000
Annual revenue growth rate 10.0% Normal 10% 4%
Annual variable cost percentage 50.0% Normal 50% 7%
Percentage of Sales 1st Year 42.47%
Discount rate 12%

DCF calculations
Year 2012 2013 2014 2015 2016
Project Cost -$11,550 -$223,550 -$64,100 $0 $0
Initial Revenue Year 0 0 1 1
Revenue $0 $0 $140,000 $154,000
Revenue Adjustment $0 $0 -$59,452 $0
Fixed cost $0 $0 -$49,000 -$49,000
Variable cost $0 $0 -$70,000 -$77,000
Cash flow -$11,550 -$223,550 -$64,100 $199,548 $280,000

Outputs
NPV $865,610
IRR 58.0%

Summary statistics
Mean NPV $865,610
Probability NPV negative 0.0%
stributions Calculation of % of Year
Parameter 3 Start 8/1/2012
$ 200,000 End 6/4/2014
$ 75,000 Ref Date 12/31/2014
Days of Sales 210
% of Year 57.53%

2017 2018 2019 2020 2021

1 1 1 1 1
$169,400 $186,340 $204,974 $225,471 $248,019
$0 $0 $0 $0 $0
-$49,000 -$49,000 -$49,000 -$49,000 -$49,000
-$84,700 -$93,170 -$102,487 -$112,736 -$124,009
$303,100 $328,510 $356,461 $387,207 $421,028
 Aug-2012 Sep-2012
Risk Register, Real-time Cash Flows.mpp <entire Deterministic 0 0
Cumulative Cost Minimum 0 0
20 Perc% 0 0
Mean 11.8408503984 983.6134855356
80 Perc% 0 0
Maximum 831.8769625407 14450.451280576
Real-Time Risk Register, Real-time Ca Err:511 Err:511
 Oct-2012 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013
0 3150 11550 25500 48150 76710
0 0 0 7390 15390 27790
0 0 2990 12190 23580 42710
2762.5458746246 4550.1333772313 10426.125993356 20351.408382445 33561.706200817 55112.383382727
0 510 8910 20220 39174 65830
31865.025776849 50180.651305018 67663.748400088 86811.902361356 94575.23 95307.84
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013
106630 130760 139950 149150 157950 168830
36590 46190 54190 64084.519944335 73552.473552001 77817.12
69787.461327362 92598.79 93566.24 96529.68 106156.24 127610.188125
79887.30543073 103708.06953403 119667.88068173 129690.88716405 138779.80840786 148470.88724353
93030 120504 137406 147566 156366 165582
103638 132742 149084 158894 167694 176094
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014
192750 214590 235100 250410 261610 273370
86739.72 88769.72 97569.72 110799.72 130643.51 157886.66958556
153811.03824424 175172.24 198974 222156 235957.88 249130
165929.21554566 188320.96909789 211591.30208339 231750.04207212 245087.40067311 257743.44310003
184094 207177.78 230547.27586175 248842 260634 272394
206917.23 250071.62 279505.39 297213.36940299 308745.2 320505.2
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014
285690 298010 299200 299200 299200 299200
177472.73967064 200308.77376935 216900.02053924 234859.51 243259.51 252059.51
261498 275146 287322 292832 293776 294944
270811.98675401 283953.04657584 294416.75289567 299518.82735105 303382.90744449 307573.83906929
284906 297402 306368 307632 309872 313673.13
332825.2 345145.2 353055.2 386085.7007622 399619.09 411939.09
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
 Oct-2014 Nov-2014 Dec-2014 Jan-2015 Feb-2015 Mar-2015
299200 299200 299200 299200 299200 299200
274875.51 285584 285584 285584 285584 285584
295456 295728 296064 296064 296064 296064
311956.00133381 315574.68948694 319152.06094612 322178.55442793 324626.49733006 326693.58093597
331328.62 338748.75 346185.62 351157.12 356028 368977.77
425118.73690118 450154.22 463034.22 475354.22 486554.22 498874.22
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015
299200 299200 299200 299200 299200 299200
285584 285584 285584 285584 285584 285584
296064 296064 296064 296064 296064 296064
328200.5532 329163.1032 329985.0132 330654.9932 331223.8332 331631.0432
377766.62 379844.1 379844.1 379844.1 379844.1 379844.1
507904.22 507904.22 507904.22 507904.22 507904.22 507904.22
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016
299200 299200 299200 299200 299200 299200
285584 285584 285584 285584 285584 285584
296064 296064 296064 296064 296064 296064
331880.4532 332062.2832 332255.4832 332421.5932 332504.8232 332555.5732
379844.1 379844.1 379844.1 379844.1 379844.1 379844.1
519423.64 531183.64 544063.64 555823.64 560709.64 560709.64
Err:511 Err:511 Err:511 Err:511 Err:511 Err:511
Apr-2016
299200
285584
296064
332555.5732
379844.1
560709.64
Err:511
NPV
Confidence Level 95%
Top 5% $ 865,610 Min $ 865,610 Mean
Bottom 5% $ 865,610 Max $ 865,610 Mode

@RISK graph Percentile

5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
 $865,610

$ 865,610
$ 865,610

Value
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
$ 865,610
NPV
Confidence Level 95%
Top 5% $ - Min $ - Mean
Bottom 5% $ - Max $ - Mode

@RISK graph Percentile

5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
 $0

$ -
$ -

Value
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -