1

INCREASING THE PROBABILITY OF PROGRAM SUCCESS USING RISK+

Glen B. Alleman Niwot Ridge LLC

A workshop on the principles and practices of Risk+ and increasing the Probability of Program Success

A Warning
Were going to cover a lot of material in 3 hours

Risk involves uncertainty. Uncertainty involves probability.

Douglas Adams, Hitchhiker's Guide to the Galaxy

MOTIVATION? Your motivation? Your motivation is your pay packet on Friday. Now get on with it. Noel Coward, English actor, dramatist, & songwriter (1899 1973)

We have to know the underlying statistical behavior of the processes driving the project This means cost, schedule, and technical performance measures with probabilistic models We need to know how these three statistical drivers are coupled What drives what? What are the multipliers between each random variable?

Lets start with the basics

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Remember High School Statistics

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The IMS is a collection of probabilistic processes all coupled together

What does this really mean?

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In building a risk tolerant IMS, were interested in the probability of a successful outcome

What is the probability of making a desired completion date?

But the underlying statistics of the tasks influence this probability The statistics of the tasks, their arrangement in a network of tasks and correlation define how this probability based estimated developed.

There are real problems with those pesky Unknowns that get in the way of progress

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Imprint of a bird on our west facing family room second story window on a bright afternoon The Bird survived

The units of measure of Risk

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These classifications can be used to avoid asking the 3 point question for each task. Anchoring and Adjustment of all estimating processes produces a bias. Knowing this is necessary for credible Classification Uncertainty Overrun estimates.
Routine, been done before Routine, but possible difficulties Development, with little technical difficulty Development, but some technical difficulty Significant effort, technical challenge No experience in this area Low 0% to 2% Medium to Low 2% to 5% Medium Medium High High Very High 5% to 10% 10% to 15% 15% to 25% 25% to 50%

1 2 3 4 5 6

Tversky and Khanemann Anchoring and Adjustment

Were looking for knowledge of what is going to happen in he future, with a known level of confidence

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Harvard main library

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What is Monte Carlo Simulation?

With some principals behind us, lets see how to use Risk+ to address the problem of forecasting the future of schedule and cost performance.

A Quick Look At Monte Carlo

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George Louis Leclerc, Comte de Buffon, asked what was the probability that the needle would fall across one of the lines, marked here in green.A l sin That outcome will occur only if

17 Los Alamos Science, Special Issue 1987

Monte Carlo Simulation

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Monte Carlo Simulation is named after the city, in Monaco, of casinos on the French Rivera. Monte Carlo

Examines all paths not just the critical path. Provides an accurate (true) estimate of completion: Overall duration distribution Confidence interval (accuracy range) Sensitivity analysis of interacting tasks Varied activity distribution types not restricted to a single distribution Schedule logic can include branching both probabilistic and conditional When resource loaded schedules are used provides integrated cost and schedule probabilistic model.

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What Are We Really After?

We need to answer the question What is the confidence we will complete on or before at date and at or below at cost? This is the question that should be asked and answered on a periodic basis. We need to have Schedule and Cost margin to protect the deliverables and our Budget At Completion.

Here is some advice on how to depict this margin and where to place this margin. No matter how we show manage these two elements in the IMS, if we dont have margin we are late and over budget before we start.

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http://www.ndia.org/Divisions/Divisions/Procurement/Documents/PMSCommittee/CommitteeDoc uments/WhitePapers/NDIAScheduleMarginWhitePaperFinal-2010(2).pdf

Confidence levels for margin change as the program proceeds

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As the program proceeds we want to have Increased accuracy Reduced schedule risk Increasing visual confirmation that success can be reached

Current Estimate Confidence

Our REAL goal here is to Manage Margin using probabilistic models

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Programmatic Margin is added between Development, Production and Integration & Test phases Risk Margin is added to the IMS where risk alternatives are identified
Duration of Plan B < Plan A + Margin

Margin that is not used in the IMS for risk mitigation will be moved to the next sequence of risk alternatives

Plan B

Downstream Activities shifted to left 2 days

Plan B

3 Days Margin Used

This enables us to buy back schedule margin for activities further downstream This enables us to control the ripple effect of schedule shifts on Margin activities

Plan A 5 Days Margin

First Identified Risk Alternative in IMS

Plan A

5 Days Margin

Second Identified Risk Alternative in IMS

2 days will be added to this margin task to bring schedule back on track

Sensitivity Analysis
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The schedule sensitivity of a task measures the closeness with which change in the task duration matches change in the project duration over the simulation. This closeness is the correlation between changes in individual activities and their impacts on other activities. A task with high schedule sensitivity is more likely to be a major driver of the project duration than a lower ranked task.
: Models of the Schedule

Task Criticality Analysis

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A measure of the frequency that an activity in the project schedule is critical (Total Float = 0) in a simulation If a task is critical in 500 of the 1,000 iterations of the simulation, it has a Criticality Index of 0.5 The higher the criticality index, the more certain it is that the task will always be critical in the project
: Models of the Schedule

Cruciality shows each tasks tolerance to risk

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Cruciality = Schedule Sensitivity x Criticality Schedule Sensitivity can be statistically misleading:

A

task with high sensitivity may not be on or near the critical path. Thus a reduction in that tasks duration may have little effect on the project duration.

Cruciality sharpens the analytical focus:

It

highlights critical or nearcritical activities with high. tasks are most likely to drive project

Schedule Sensitivity
These
: Models of the Schedule

Guiding the Risk Factor Process means weighting each level of risk
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For tasks marked Low a reasonable approach is to score the maximum 10% greater than the minimum. The Most Likely is then scored as a geometric progression for the remaining categories with a common ratio of 1.5 Tasks marked Very High are bound at 200% of minimum.

Min

Most Max Likely 1.04 1.06 1.09 1.14 1.20 1.10 1.15 1.24 1.36 1.55

Low Low+ Moderate Moderate+ High

1.0 1.0 1.0 1.0 1.0

No viable project manager would like a task grow to three times the planned duration without intervention

High+
Very High Very High+

1.0
1.0 1.0

1.30
1.46 1.68

1.85
2.30 3.00

The geometric progress is somewhat arbitrary but it should : Examples of Monte Carlo

Progressive Risk Factors

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A geometric progression (1.534) of risk can be used. The phrases associated with increasing risk have been shown at the Naval Research Laboratory to correlate with an engineers sense of increasing risk.

: Examples of Monte Carlo

Risk Factor Attributes

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The narrative for each risk factor needs to be developed. Each description is dependent on
Discipline Program stage Complexity Historical data Current risk state of the program

This is currently missing from our efforts to quantify schedule and cost risk.
: Examples of Monte Carlo

Accuracy
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Given a specified final cost or project duration, what is the probability of achieving this cost or duration? Frequentist approach

Over many different projects, four out of five will cost less or be completed in less time than the specified cost or duration. We would be willing to bet at 4 to 1 odds that the project will be under the 80% point in cost or duration.

Bayesian approach

Accuracy is needed to plan reserves. Accuracy is needed when comparing competing proposals.
: What is the Purpose of Project Risk Analysis?

Structured Thinking
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All estimates will be in error to some degree of variance. Trying to quantify these errors will result in bounds too wide to be useful for decision making. Risk analysis should be used to
Think about different aspects of the project Try to put numbers against probabilities and impacts Discuss with colleagues the different ideas and perceptions

Thinking things through carefully results in

Which elements of the programmatic and technical risk are represented in the IMS. The: What process becomes more valuable than the is the Purpose of Project Risk Analysis?

To properly use Schedule Margin

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Work must be represented in single units either task or work packages. The overall schedule margin must be related to the variation of individual units of work. The importance of the units of work must be shared among all participants (ordinal ranking of work and its risk). The schedule must be reasonable in some units of measure shared by all the participants.

Protecting Earned Value Schedules with Schedule Margin, Newbold, Budd, and Budd, http://www.prochain.com/pm/articles/ProtectingEVSchedules.pdf

Lets Apply a Monte Carlo Simulation Tool

The Monte Carlo trolley, or FERMIAC, was invented by Enrico Fermi and constructed by Percy King. The drums on the trolley were set according to the material being traversed and a random choice between fast and slow neutrons. Another random digit was used to determine the direction of motion, and a third was selected to give the distance to the next collision. The trolley was then operated by moving it across a two dimensional scale drawing of the nuclear device or reactor assembly being studied. The trolley drew a path as it rolled, stopping for changes in drum settings whenever a material boundary was crossed. This infant computer was used for about two years to determine, among other things, the change

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A Small Diversion
Most Likely Isnt Likely to be the Most Likely When we say most likely what do we think this actually means? If you pick the wrong meaning, your Monte Carlo model will be seriously flawed.

The problem with Most Likelies

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For each activity the best estimate is

The most likely duration the mode of the distribution of durations? (Mode is the number that appears most often) Its 50th percentile duration the median of the distribution? (Median is the number in the middle of all the numbers) Its expected duration the mean of the distribution? (Mean is the average of all the numbers)

These definitions lead to values that are almost always different from each other. Rolling up the best estimate of completion is

Durations are Probability Estimates not Single Point Values

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We know this because

Best estimate is not the only possible estimate, so other estimates must be considered worse. Common use of the phrase most likely duration assumes that other possible durations are less likely. Mean, median, and mode are statistical terms characteristic of probability distributions.

This implies activity distributions have probability distributions

They are random variables drawn from the probability distribution function (pdf).

Actual project duration is an uncertain quality that can be modeled as a sum of random variables

The pdf may be known or unknown.

Task Most Likely Project Most 3 Likely

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PERT assumes probability distribution of the project times is the same as the tasks on the critical path. Because other paths can become critical paths, PERT consistently underestimates the project completion time.
: Managing Uncertainty in the IMS

1+1=3

Probability Distribution Function is the Lifeblood of good planning

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Probability of occurrence as a function of the number of samples. The number of times a task duration appears in a Monte Carlo simulation.
: Managing Uncertainty in the IMS

Remember the quote about statistics

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Lies, Damn Lies, and Statistics Benjamin Disraeli But we know better, we know that any estimate without a variance is not trustworthy. We know that the variances have to be calibrated from past performance to be credible

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A Real World Schedule Analysis

One should expect that the expected can be prevented, but the unexpected should have been expected. Augustine Law XLV

This is a must own book for everyone in our business. It defines fundamental Laws of program and business management, which are many times ignored like the

Our Starting Point

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Risk+ Installed Lets define the needed fields These are used by Risk+ to hold information and run the application. If there are conflicts, you can make changes in Risk+ to work around your fields.

A Simple IMS
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By simple it means serial cascaded work efforts.

Initial Field Usage

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Minimum Remaining Duration

The duration that is least youd expect this task to complete in

Most Likely Remaining Duration

The ML (Mode) of the duration

Maximum Remaining Duration

The duration that is the most youd expect this task to complete in

Define a View and Table for Risk+

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Start with the Gantt View and Entry Table Set up both to match the Risk+ field usage

Use the default if there are no field conflicts

Fields used for Risk+ example

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Lets actually doing something

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Initialize the Most Likely. This sets the Most Likely duration to the same value that is in the Duration field of your IMS.
The

planned duration now becomes the ML duration. If this planned duration is bogus then your model will be as well. Choose wisely.

Now the ML = DURATION step

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All the DURATION values have been moved to the ML field.

But

remember our discussion of the MLs Choose them carefully

The next well set the upper and lower limits of that ML value

Lets do this the simple way

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Lets pick MEDIUM confidence. MEDIUM means

25% +25% And a NORMAL (Gaussian) curve

Lets have Risk+ do something for us

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Enter a 1 in the RPT field (Number 1)

This marks that ROW in the schedule as a work activity we want to see the Monte Carlo output for

Now were ready to run

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The RISK ANALYSIS command starts the process going. Lets make 200 iteration and look at the DURARTION ANALYSIS for the activities we are watching.

This is nice but what actually is Risk + doing?

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Risk+ is picking a random number from under the normal distribution within the range of the
Least remaining and most remaining This is not some ordinary random number it is chosen through an algorithm called the Latin Hypercube more on that later.

Risk+ then plugs that number into the real DURATION field and does that for all the DURATIONS in the schedule Then the F9 key is pressed and the date is recorded for the finish of UID 41. This is done 200 times and a histogram of all the dates that appeared for those 200 time is

And We Get
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Date: 11/29/2011 4:32:17 PM Samples: 500 Unique ID: 19 Name: End Work Package 3
0.20 1.0

Completion Std Deviation: 2.06 days 95% Confidence Interval: 0.18 days Each bar represents 1 day

Completion Probability Table Prob 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 Date Wed 3/7/12 Thu 3/8/12 Thu 3/8/12 Fri 3/9/12 Fri 3/9/12 Fri 3/9/12 Mon 3/12/12 Mon 3/12/12 Mon 3/12/12 Mon 3/12/12 Prob 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Date Tue 3/13/12 Tue 3/13/12 Tue 3/13/12 Wed 3/14/12 Wed 3/14/12 Wed 3/14/12 Thu 3/15/12 Thu 3/15/12 Fri 3/16/12 Tue 3/20/12

Cumulative Probability

0.18 0.16 0.14 0.12 0.10 0.08 0.06 0.04 0.02

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1

Frequency

Fri 3/2/12

Mon 3/12/12

Tue 3/20/12

Completion Date

Learning to Speak in Risk+

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Risk +shows use the probability of finish on or before a date It does NOT show the probability of success. But even the on or before term is loaded with special meaning. It means for the 500 iterations of Risk+ using the upper and lower bounds of the duration, drawn from the probability density function (pdf) with the Normal (Gaussian) shape, 60% of the finish dates were recorded to be on or before 3/12/12.

Medium confidence for a large project

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Date: 11/30/2011 6:05:35 PM Samples: 200 Unique ID: 17 Name: (SA) Systems Requirements Completed
0.22 1.0

Completion Std Deviation: 4.49 days 95% Confidence Interval: 0.62 days Each bar represents 2 days

Completion Probability Table Prob 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 Date Fri 5/4/12 Wed 5/9/12 Thu 5/10/12 Fri 5/11/12 Mon 5/14/12 Mon 5/14/12 Tue 5/15/12 Tue 5/15/12 Wed 5/16/12 Wed 5/16/12 Prob 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Date Thu 5/17/12 Thu 5/17/12 Fri 5/18/12 Mon 5/21/12 Mon 5/21/12 Tue 5/22/12 Wed 5/23/12 Thu 5/24/12 Mon 5/28/12 Mon 6/4/12

Cumulative Probability

0.20 0.17

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 Wed 5/16/12 Mon 6/4/12

Frequency

0.15 0.13 0.10 0.08 0.05 0.03

Wed 5/2/12

Completion Date

Low confidence for a large project

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Date: 11/30/2011 10:30:05 PM Samples: 200 Unique ID: 17 Name: (SA) Systems Requirements Completed
0.16 1.0

Completion Std Deviation: 9.14 days 95% Confidence Interval: 1.26 days Each bar represents 3 days

Completion Probability Table Prob 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 Date Thu 5/3/12 Tue 5/8/12 Wed 5/9/12 Mon 5/14/12 Tue 5/15/12 Thu 5/17/12 Fri 5/18/12 Mon 5/21/12 Wed 5/23/12 Wed 5/23/12 Prob 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Date Fri 5/25/12 Mon 5/28/12 Wed 5/30/12 Wed 5/30/12 Fri 6/1/12 Mon 6/4/12 Wed 6/6/12 Fri 6/8/12 Thu 6/14/12 Wed 6/27/12

Cumulative Probability

0.14 0.12

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 Thu 5/24/12 Wed 6/27/12

Frequency

0.10 0.08 0.06 0.04 0.02

Tue 4/24/12

Completion Date

Lets run some simulations

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Basic Principles of Probabilistic Cost

Now that the schedule can be produced using probabilistic methods, its time to talk about the cost. Cost does not have a linear relationship with schedule unfortunately.

: Basic Principles of Probabilistic Cost

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Basic Principles with Probabilistic Cost Estimating are coupled with scheduling

Cost estimates usually involve many CERs

Each of these CERs has uncertainty (standard error) CER input variables have uncertainty (technical uncertainty)

Must combine CER uncertainty with technical uncertainty for many CERs in an estimate

Usually cannot be done arithmetically; must use simulation to roll up costs derived from Monte Carlo samples

Add and multiply probability distributions rather than numbers Statistically combining many uncertain, or randomly varying, numbers Take random sample from each CER and input parameter, add and multiply as necessary, then record total system cost as a single sample Repeat the procedure thousands of times to develop a frequency histogram of the total system cost samples : Basic Principles of Probabilistic Cost

Monte Carlo simulation

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The Cost Probability Distributions as a function of the weighted cost drivers

Combined Cost Modeling and Technical Uncertainty

Cost = a + bXc
Cost Modeling Uncertainty

Cost Estimate

Historical data point Cost estimating relationship

Technical Uncertainty

Standard percent error bounds

Cost Driver (Weight)

: Basic Principles of Probabilistic Cost

The Risk Adjusted Cost Estimate Connected To The IMS

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In the riskadjusted cost estimate, we now combine discrete risk events and the uncertainty of the input distributions with the uncertainty of the CERs Since the input distributions tend to be right skewed, the expected cost tends to be larger than the baseline estimate In addition, the riskadjusted cost distribution tends to be wider than the baseline estimate The difference between the expected cost of the riskadjusted estimate and the expected cost of the baseline estimate is, by definition, the amount of RISK dollars included in the riskadjusted estimate
: Basic Principles of Probabilistic Cost

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Baseline versus Risk Adjusted Cost Estimates Usually Show a Cost Increase
Baseline vs. Risk-Adjusted Estimates Baseline:

Mean = $102.6M Std Dev = $29.8M

Likelihood

RiskAdjusted: Mean = $122.6M Std Dev = $42.8M

50

100

150 FY$M

200

250

300

350

: Basic Principles of Probabilistic Cost

The SCurve for Cost Modeling

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Cumulative Distribution Function

100% 90% 80%

Cumulative Probability

70% 60% 50% 40% 30% 20% 10% 0% $60

50th percentile $114.7M

Baseline Estimate Mean $102.6M

80th percentile $153.5M

Riskadjusted Estimate Mean $122.6M

$80

$100

$120

$140

$160

$180

$200

FY00$M

: Basic Principles of Probabilistic Cost

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The Real Question Always Returns to But How Much Does It Cost? Really? This is impossible to answer precisely

Decisionmakers and cost analysts should always think of a cost estimate as a probability distribution, NOT as a deterministic number The best we can provide is the probability distribution If we think we can be any more precise, were fooling ourselves It is up to the decisionmaker to decide where he/she wants to set the budget The probability distribution provides a quantitative basis for making this determination
Low budget = high probability of overrun High budget = low probability of overrun

: Basic Principles of Probabilistic Cost

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Some More Parts to using Risk+

Just having the pictures is necessary, but knowing what they mean is required. Making changes to the IMS to increase the Probability of Program Success is the primary outcome from Monte Carlo Simulation.

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Without Integrating $, Time, and TPM youre driving in the rearview mirror

Technical Performance (TPM)

Risk Management Demands a Well Defined Process

Statistics of a Triangle Distribution

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50% of all possible values are under this area of the curve. This is the definition of the median

Minimum 1000 hrs

Mode = 2000 hrs

Maximum 6830 hrs Mean = 3879 hrs Median = 3415 hrs

Basic Statistics

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TPM Trends & Responses directly impact risk and credibility of the IMS
Design Model

ROM in Proposal

Detailed Design Model

Bench Scale Model Measurement

Technical Performance Measure Vehicle Weight

28kg

Prototype Measurement

26kg 25kg 23kg

Flight 1st Article

CA

SFR

SRR

PDR

CDR

TRR
Dr. Falk Chart modified

Not A Mitigation Plan Mitigation is too late, the risk has turned into an issue. The money has been spent, and the time has passed.
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Ordinal versus Cardinal

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Ordinal
A variable is ordinally measurable if ranking is possible for values of the variable. For example, a gold medal reflects superior performance to a silver or bronze medal in the Olympics, or you may prefer French toast to waffles, and waffles to oat bran muffins. All variables that are cardinally measurable are also ordinally measurable, although the reverse may not be true.

Cardinal
A variable is cardinally measurable if a given interval between measures has a consistent meaning, i.e., if the measure corresponds to points along a straight line. For example, height, output, and income are cardinally measurable.

Correcting Ordinal Risk Scales

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Classify and calibrate risk ranking in units meaningful to the decision makers
Risk

rank 1, 2, 3, 4, is NOT sufficient The Risk Rank must have a measurable value connected to the actual behavior of the system being assessed

Calibration coefficients between ordinal probability and consequences should also be used. Ordinal analysis assumes ordering of the risks. Cardinal analysis provides objective measures

Never multiply Likelihood by outcome. They are not numbers, they a probability distributions. Only convolution is possible

Level Likelihood E D C B A

Value
E

Near Certainty E 90% Highly Likely Likely 74% D 90% 40% C 60%

D
C B A A B C D E

Low Likelihood 20% B 40% Not Likely A 20%

These are Cardinal measures of probability of occurrence and consequential impact

Level A B Technical Performance Schedule Minimal or no consequence to Minimal or no impact technical performance. Cost Minimal or no impact

Budget increase or unit Minor reduction in technical Able to meet key dates production cost increases. performance or supportability. < (1% of Budget) Moderate reduction in Minor schedule slip. Budget increase or unit technical performance or Able to meet key production cost increase supportability with limited milestones with no < (5% of Budget) impact on program objectives. schedule float. Significant degradation in Budget increase or unit technical performance or Program critical path production cost increase major shortfall in affected < (10% of Budget) supportability. Cannot meet key Exceeds budget increase or Severe degradation in technical program milestones. unit production cost performance. Slip > X months threshold

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Example of Ordinal Probability Complexity Scale

Definition of the Ordinal Scale Ranking Greater than 20% of the interface design has been altered because of modifications to the ICDs. Greater than 15% but less than 20% of the interface design has been altered because of modifications of the ICDs. Greater than 10% but less than 15% of the interface design has been altered because of modifications of the ICDs. At least 5% but less than 10% of the interface design has been altered because of modifications of the ICDs. Scale Level E

At least 5% of the interface design has been Conrow, altered Effective Risk Management: Some Keys to Success , Edmund AIAA Press, 2003

A real risk Ordinal Ranking Table

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Risk Rank A B

Percent Variance 5% A 10% 5% B 15%

Interpretation of Risk Ranking Normal business, technical & manufacturing processes are applied Normal business & technical processes are applied; new or innovative manufacturing processes Flight software development & certification processes Build & qualification of flight components, subsystems & systems Flight software qualification ISS thermal vacuum acceptance testing

C
D E F

5% C 35%
10% D 25% 10% E 35% 5% F 175%

Project Train Wrecks Occur When There is

Inattention to budgetary

responsibilities Work authorizations that are not always followed Issues with Budget and data reconciliation Lack of an integrated management system Baseline fluctuations and frequent replanning Current period and retroactive changes Improper use of management reserve EV techniques that do not reflect actual performance Lack of predictive variance analysis

Untimely and unrealistic Latest Revised

Estimates (LRE) Progress not monitored in a regular and consistent manner Lack of vertical and horizontal traceability cost and schedule data for corrective action Lack of internal surveillance and controls Managerial actions not demonstrated using Earned Value 79

Our Final Check List

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Set up the Risk+ fields, flags, views, and tables for the program standard IMS. Build an IMS that passes the DCMA 14 Point Assessment with all GREEN. Build the Ordinal Risk Ranking table for the various risk categories on the program. Assign risk ranking to each activities in the IMS, with the variances defined in the Ordinal Table. Run Risk+ to see the confidence in the deliverables. Develop the needed schedule margin to protect the delivery to at least the 80% confidence level.

Advice from the school of hard knocks

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Put margin in front of critical deliverables. Build a margin burn down chart and allocate schedule margin just like you do MR for the PMB. This real world advice is counter to the current DCMA guidance.

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Putting This New Knowledge To Work

Managing margin is what Risk+ is all about

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CP Total Float

Float Erosion: Critical Path Time Usage

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Acceptable Rate of Float Erosion Linear (CP Total Float )

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Critical Path - Time Reserve

Time Now October 31, 2005

60

40

Spacecraft Contract Delivery December 10, 2007

20

-20

-40

How much margin do we need?

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The Missing Link: Schedule Margin Management, Rick Price, PS10, PMICPM EVM World 2008

Deterministic versus Probabilistic

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Sep 2011

Baseline Plan

Oct 2011

Nov 2001

Ready Early Launch Period

Current Plan with risks is the deterministic schedule Plan Margin 20% Risk Margin Current Plan with risks is the stochastic schedule The probability distribution can vary as a function of time
CDR ATLO FRR

Dec 2011

Jan 2012

Mean
Feb 2012

Mar 2012

80%

Apr 2012

SRR

PDR

Missed Launch Period

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References

References
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Protecting Earned Value with Schedule Margin, http://www.prochain.com/pm/articles/ProtectingEVSchedules.pdf Depicting Schedule Margin in the Integrated Master Schedule, http://www.ndia.org/Divisions/Divisions/Procurement/Documents/PMSCom mittee/CommitteeDocuments/WhitePapers/NDIAScheduleMarginWhitePap erFinal-2010(2).pdf Effective Risk Management: Some Keys to Success, Second Edition, Edmund Conrow, AIAA Press. How to Lie with Statistics, Darrell Huff, Norton, 1954 (Available in paper back at any good book store) DID DIMGMT81650 A management method for accommodating schedule contingencies. It is a designated buffer and shall be identified separately and considered part of the baseline.

References
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Interfacing Risk and Earned Value Management, Association for Project Management, 150 West Wycombe Road, High Wycombe, Buckinghamshire, HP12 3AE, United Kingdom. Practice Standard for Earned Value Management, Second Edition, Project Management Institute, 2011. Effective Opportunity Management for Projects, David Hillson, Taylor and Francis, 2004. Measuring Time: Improving Project Performance Using Earned Value, Mario Vanhoucke, Springer, 2009. Performance Based Earned Value, Paul Solomon and Ralph Young, Wiley, 2007.

Effective Risk Management: Some Keys to Success, Edmund Conrow, AIAA Press, 2003.

Niwot Ridge LLC 4347 Pebble Beach Drive Niwot, Colorado 80503

(: 303.241.9633 -: glen.alleman@niwotridge.com

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