Primavera Pertmaster

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Agenda

IntroductionsRisk Management OverviewPertmaster Value PropositionRisk Methodology

"Primavera has mastered the art of determining trends in the project portfolio management (PPM) market, identifying the PPM needs of its target markets, and acquiring solutions that fit the vendor's evolving product mosaic. Building on Primavera's own project management solution set, which addresses all nine of the PMBOK areas, the company has built a comprehensive and seamless suite of products that fit a broad base of industry verticals.”

Louis Cardin, The Forrester WaveTM

December 18, 2007

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Why Conduct Risk Analysis?

Eliminate project failureProjects fail because plans are unrealisticExecution is not to plan

Achieve greater confidence with project plansTrack past performance to forecast futureReduce uncertainty of estimatesMore realistic schedules

Set appropriate expectations for cost and scheduleDetermine probabilistic start or finish Manage and allocate resources accordinglyAccurate forecasting, Earned Value validation

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Project Risk Types

Estimate UncertaintyModel

Risk Distributions e.g. 3pt estimatesMonte Carlo simulation

Reduction of risk exposureContingencyRisk responses (e.g. mitigation)

Risk EventsModel

Risk register/logPI Matrices

Estimate Uncertainty + Risk Events = Total Risk ExposureEstimate Uncertainty + Risk Events = Total Risk Exposure

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Primavera Pertmaster Overview

Risk TechniquesSchedule improvement: PPM maturityRisk assessment: risk registerRisk Analysis: Monte Carlo simulation

Risk-Based Predictive Modeling Confidence in schedule/budgetRealistic forecast expectationsContingency assessment Cost-benefit of mitigation scenarios

Pertmaster’s proven techniques provide risk based predictive modelingacross the entire project lifecycle

Full Lifecycle Risk ManagementPortfolio risk – strategic project selectionProject risk – tactical project controls/PMCost and schedule risk analytics

IntegrationPrimavera: P3, P3e, P5, P6, SuretrakMS Project, EPM, Deltek

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Why Pertmaster for Risk Management?

P6 Risk CapabilitiesRisk log – basic risk registerNo risk analytics capabilitiesInput into Pertmaster

Input > Analysis > OutputAll inputs to Pertmaster

Pertmaster Risk CapabilitiesFull cost/schedule risk managementMC risk analytics enginePublish “Risk Adjusted” schedule into P6

"It's impossible to hide a bad plan in Primavera." Chris Morris, Agere

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Portfolio Analysis Project Planning Project Execution

• Project selection?• Capacity planning?• Minimize risk exposure?

• Project completion dates?• Confidence levels?• Contractor: “do-able” plan?• Owner: Max cost/benefit?

• Execution to plan?• Avoid risk events?• Reduce risk hot spots?

• Top-down phases• Project alternatives• Revenue / expenditure risk

• Determine contingency• Determine mitigation • Cost > schedule integration

• Update risk plans• Forecast accuracy

Pertmaster Value Proposition

"To improve programme confidence, we've mandated the use of Primavera Pertmaster in all key projects." David Ashkroft, Thales

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Risk Methodology

Schedule ReviewRisk Ready StateReview for logic & errors

Risk Identification Estimate UncertaintyRisk Events: Risk Register

Develop Preliminary Risk ModelEnter Estimate UncertaintyMap Risks to Activities

Preliminary Analysis & ReviewImpacted Risk PlanMonte Carlo simulation

Final Model & ReportRisk Event planResponse planning

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Schedule Check Report

Content can be customised

Examples:Open-ended tasks – If a task has no successor, and it gets delayed, it will not delay the project. Does this reflect reality?Most Constraints will fix a task to its constraint date, therefore during the analysis, this task will not be delayed, even if it is carrying duration uncertainty!Schedule logic

If issues are not resolved, then the analysis results will be effected.

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Risk Analysis

Distribution Graph:What is the likelihood of completing this project by 25th December?ONLY 32% of finishing on or before 25th December 07The earliest this project finished in the simulation was 19th October 2007, the latest was 04th April 2008

>Confidence Scale>“How confident are you?”

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Risk Analysis

Tornado Chart – Duration SensitivityDetermine the Risk Hotspots in the scheduleWhich tasks are the most sensitive? Which should we mitigate?

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Cost-load schedule

Initial Cost Estimate

Apply estimate uncertainty to cost items

Resources can be time-dependent or independent

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Cost-load schedule

Cost Distribution Graph

Chance of completing this project to budget? 28%

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Cost-load schedule

Tornado Chart – Cost SensitivityBiggest cost drivers may not be the same as the biggest project finish drivers!

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Cost-load schedule

Cost contingency is P80 cost – Deterministic Cost

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Cost-load schedule

Duration contingency is P80 Finish Date – Deterministic Finish Date

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Cost-load schedule

50% of the iterations when the project was delivered on time50% of the iterations when the project was delivered to budget

% number of iterations when the project was delivered on time and to budget is only in this bottom left-hand quadrant = 29%

The Scatter Plot

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7. Cost-load schedule

The dividers (highlighters) can be dragged. This is most effective when the quadrant is locked (50% in this case).

Reducing the budget pushes out the project finish date and vice-versa

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Risk Register

Uncertainty on time and cost has been estimated, but no risk events have been taken into account.

Discrete risks that, if occur, will have a significant impact on time and/or cost.

Risks can be directly inputted into the Risk Register or imported from external systems

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Risk Register

There is a workflow to using the Risk Register. It usually starts with the Risk Scoring scheme

Set up qualitative RiskScoring (PID) matrix (Edit > Risk Scoring)

Risk Scoring matrix can be configured from 2x2 to 9x9

All fields can edited to conform to the organizations scheme

Scoring templates can be saved, stored and distributed for future projects

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Risk Register

The qualitative risk assessments are inputted here.The values in the drop-down menu are taken from the risk scoring matrixFocusing on one risk, the risk assessment derives a risk score, e.g. 56 for ‘Key Resource Unavailable’

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Risk Tornado Chart

“Key Resource Unavailable”was highest scored risk. But is not the biggest driver!

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Risk Mitigation

We have analysed a project with just estimate uncertainty on time and cost, and then looked at a pre-mitigated plan – Shows the worst case scenario

Pre-mitigated result shows there is no chance of delivering this project on time or to budget

Let’s build in a mitigation strategy and see if it has reduces the risk exposure on this project.

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Risk Mitigation

Where we are now Where we want to beWhat we could do

Cost of each mitigation strategyFor e.g. it will cost £32m to reduce ‘Key Res. Unav.’ probability of occurrence down from H > VL, and Safety Impact from VH > N, overall score down from 56 to 1.

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Distribution Analyzer

Compare original vs. pre-mitigated – Impact of risks is 272.4 days (80% confident)

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Distribution Analyzer

Comparing pre and post at 80% confidence, shows that mitigating these risks will bring the project back by 208 days.

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Distribution Analyzer

Cost S-curves. Will mitigating these risks save money?

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Probabilistic Cash Flow

There is a cash demand in these periods

Amount of cash that was not used in each these periods

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Q&A