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Risk Est 200907 Linked In

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A presentation introducing risk based estimating that Mustafa developed and facilitated

A presentation introducing risk based estimating that Mustafa developed and facilitated

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Risk Est 200907 Linked In Risk Est 200907 Linked In Presentation Transcript

  • Risk Based Estimating Process Orientation Introduction to Risk Based Estimating at WSDOT Mustafa Mohamedali October 18, 2007
  • Risk Based Estimating Orientation  This presentation comprises  An introduction to WSDOT’s cost risk assessment process  Why WSDOT embarked on this effort  Where it fits in WSDOT’s overall project management process  How it works and what is the output  What value it adds for project team and stakeholders  Workshop preparation, roles and responsibilities Mustafa Mohamedali - WSDOT/SAEO 2/38
  • Why are we doing this?  Projects seldom materialize exactly as planned  Risk mitigation: Project teams can act to prevent “bad” outcomes and take advantage of “opportunities”  The process enhances project value only if action is taken to manage the risks. Mustafa Mohamedali - WSDOT/SAEO 3/38
  • Risk: Probability vs. Impact Hi Probability Hi Probability PROBABILITY Low Impact Hi Impact Low Low Probability Probability Low Impact Hi Impact IMPACT Mustafa Mohamedali - WSDOT/SAEO 4/38
  • When a project is conceived… what do people want to know? N? 1. What are we getting? CO 2. How long will it take? T IO ST RA 3. How much will it ? DU cost? WHAT ? Mustafa Mohamedali - WSDOT/SAEO 5/38
  • PM Fundamentals: Triple Constraints Theory LE Risk BU Event! DU DG HE ET SC SCOPE Mustafa Mohamedali - WSDOT/SAEO 6/38
  • PM Fundamentals: Triple Constraints Theory  When one side changes, the other two are inevitably affected E BU UL DG ED ET H SC SCOPE Mustafa Mohamedali - WSDOT/SAEO 7/38
  • PM Fundamentals: Triple Constraints Theory  When one side changes, the other two are inevitably affected E BU UL DG ED ET H SC SCOPE Risk Event! Mustafa Mohamedali - WSDOT/SAEO 8/38
  • PM Fundamentals: Triple Constraints Theory LE BU DU DG HE ET SC SCOPE Mustafa Mohamedali - WSDOT/SAEO 9/38
  • Confidence vs. Project maturity Traditional Engineers’ estimate as project matures Cost or Sched Est as % of Final Unrecognized cost Final cost at (unknown completion unknowns) Known but not quantified cost (known Estimate with unknowns) Contingency (traditional) Conservative Known and estimate with quantified cost some allowance known knowns Concept > Scoping > Design/PS&E > Ad > Construction > Open to Traffic Project Maturity Mustafa Mohamedali - WSDOT/SAEO 10/38
  • Estimating: Traditional v/s Risk Based Construction Geotech Fixed Contingency % 25% 20% Env/Cult. 40% Project Project Deterministic Base Cost ROW 30% Estimate 10% Unknown Mustafa Mohamedali - WSDOT/SAEO 11/38
  • The end result of our work  A one-pager for “mega projects” Adobe Acrobat 7.0 Range of probable cost Document   Range of possible schedule  Ranked risk register  Risk management plan spreadsheet  Detailed report including possible risk mitigation strategies Mustafa Mohamedali - WSDOT/SAEO 12/38
  • Treating alternatives, phases & multiple project portfolios  Single scenario  Multiple scenarios  Portfolio analyses Mustafa Mohamedali - WSDOT/SAEO 13/38
  • Evaluating Uncertainty…  Base Case Scenario (If everything goes according to plan…)  Critical Path = S > A > C > E Activity B  Total Duration = 16 mths 3 mths - $ 5m  Total Cost = $40 m Activity A Activity C 10 mths - $ 12m 6 mths - $ 8m Start End Activity D 8 mths - $ 15m Mustafa Mohamedali - WSDOT/SAEO 14/38
  • Evaluating Uncertainty…  Risk Realization #1: 20 %  New Critical Path = S > A > B > E Activity B  Duration = 18 mths 8 mths - $ 6m  Cost = $46 m Activity A Activity C 10 mths - $ 12m 6 mths - $ 8m Start End 30 % Activity D 12 mths - $ 20m Mustafa Mohamedali - WSDOT/SAEO 15/38
  • Evaluating Uncertainty…  Risk Realization #2:  New Critical Path = S > C > E Activity B  Duration = 20 mths 3 mths - $ 5m  Cost = $47 m 5% Activity A 10 mths - $ 12m Activity C 4 mths - $ 5m Start End 10 % Activity D 20 mths - $ 25m Mustafa Mohamedali - WSDOT/SAEO 16/38
  • Evaluating Uncertainty…  Assessing uncertainties in cost & schedule for each activity:  Project team  Independent SMEs P% $ Activity X Activity Y Activity Z Mustafa Mohamedali - WSDOT/SAEO 17/38
  • Evaluating Uncertainty  Aggregating cost and schedule risks for the whole project Activity B Activity A Activity C Start End Activity D $ } Proj Aggr Mustafa Mohamedali - WSDOT/SAEO 18/38
  • Sample Project Flowchart Costs to Date 0 Remaining Water Line 12B Utility Relocation Agreements 12B Materials ROW Plan 10 Investigation and Approval Initial F – 2 mo. 1 3 Ad / Bid / Water Line Award Slope Cut+ Relocation ROW 11 Rock Cut 12A F – 4 mo. Acquisition 15 Design 9 Complete Approval Design Phase 12B 6 F – 2 mo. 5 Other PSE Improvements NEPA/SEPA 8 16 2 Other Utility Complete Relocation 17 F – 5 mo. Bridge 13 Permitting And Related 7 Water Wetland Mit. Line CN Site Approval 14 4 Notes: • Assumes single design/bid/build contract. • SEPA is DNS. NEPA is DCE. • Significant portion of water-line relocation will be under WSDOT contract. • Mustafa Mohamedali - WSDOT/SAEO the Award date slips past xxxx, construction will not start until xxxx of the following year. If 19/38 • Fish window for Activity 14: In-water work is prohibited between July 1 and October 15.
  • Risk Elicitation  Sample of table developed during risk elicitation Mustafa Mohamedali - WSDOT/SAEO 20/38
  • Model Output  Probability Distributions for Total Project Cost and Schedule Milestones Mustafa Mohamedali - WSDOT/SAEO 21/38
  • Model Output  Sample of output from model run: COST  Current Year Year of Expenditure 0.3 0.25 0.25 0.2 0.2 0.15 Probability Probability 0.15 0.1 0.1 0.05 0.05 0 0 185 125 135 145 155 165 175 195 175 115 125 135 145 155 165 Total Project Cost (2006 $M) Total Project Cost (YOE $M) Mustafa Mohamedali - WSDOT/SAEO 22/38
  • Model Output  Sample of output from model run: SCHEDULE 0.4 0.35 0.3 0.25 Probability 0.2 0.15 0.1 0.05 0 Jul 2014 Jul 2012 Jul 2013 Jan 2012 Jan 2013 Jan 2014 Apr 2012 Apr 2013 Apr 2014 Oct 2012 Oct 2013 Project Completion Date Mustafa Mohamedali - WSDOT/SAEO 23/38
  • Model Output  Ranked risk register Mustafa Mohamedali - WSDOT/SAEO 24/38
  • The Workshop Process  Process flow chart Start Internal Workshop i Orientation Request Microsoft Word Document Prep Session Workshop Reporting CRA/CEVP Orientation i CRA/CEVP i Preliminary Results Introduction Draft Report Project Brief & Issues Project Brief & Issues of Concern of Concern in Detail Workshop Report 3 > 6 months Draft Review & Finalize Design/Construction Design/ Construction Mitigated Updated Activity Flow Chart Activity Flow Chart and Scenarios with Base Durations End Estimate Format Evaluate Uncertainty Validate Base Cost in Cost & Schedule Workshop Participation Risk-Management Microsoft Excel Review Risk Register Mustafa Mohamedali Worksheet - WSDOT/SAEO Strategies 25/38
  • Cost/Risk Leads & Independent SME Responsibilities  Independent expert judgment & validation  Support the project team develop a base cost estimate  Flowchart of activities for the project  Elicitation and guidance on cost and risk uncertainties  Run models on scenarios; provide results and reports in timely fashion  Ranked risk register for cost and schedule Mustafa Mohamedali - WSDOT/SAEO 26/38
  • Facilitator Responsibilities  Review workshop needs with project teams.  Review SME workshop participation and initiate invites.  Align consultants for the workshop as required.  Manage consultant task order and invoice process.  Develop action items and agreements after each session.  Coordinate inputs and track progress for reporting of results.  Obtain feedback and implement process improvement. Mustafa Mohamedali - WSDOT/SAEO 27/38
  • Project Team Responsibilities  Project Information  Project location maps, overheads, etc.  Project cost estimate & backup  Design & construction schedule or flow chart (high level)  Logistics  Venue  Refreshments  Workshop support  Participant invitation & coordination Mustafa Mohamedali - WSDOT/SAEO 28/38
  • How does your team estimate cost and schedule… ? Mustafa Mohamedali - WSDOT/SAEO 29/38