Skip to main content
UploadLanguage (EN)Support
BusinessMobileSocial MediaMarketingTechnologyArt & PhotosCareerDesignEducationPresentations & Public SpeakingGovernment & NonprofitHealthcareInternetLawLeadership & ManagementAutomotiveEngineeringSoftwareRecruiting & HRRetailSalesServicesScienceSmall Business & EntrepreneurshipFoodEnvironmentEconomy & FinanceData & AnalyticsInvestor RelationsSportsSpiritualNews & PoliticsTravelSelf ImprovementReal EstateEntertainment & HumorHealth & MedicineDevices & HardwareLifestyle
Association for Project Management , profile picture
Uploaded byAssociation for Project Management
1,578 views

Integrated Cost and Schedule Risk Analysis (ICSRA), Demystified webinar, 14 November 2023

The document presents a comprehensive overview of Integrated Cost & Schedule Risk Analysis (ICSRA) as a method for enhancing project management decision-making by incorporating risk and uncertainty considerations into project schedules and budgets. It highlights the advantages of ICSRA over separate quantitative analyses, such as improved team engagement, accountability, and forecasting, making it relevant for professionals at all organizational levels. Additionally, the session aims to simplify the understanding of ICSRA to promote its adoption in major projects and programs.

Education◦
DEMYSTIFYING INTEGRATED COST & SCHEDULE RISK ANALYSIS Robert Balaam APM Risk SIG webinar Tuesday 14 November 2023
OVERVIEW
OVERVIEW • Integrated Cost & Schedule Risk Analysis (ICSRA) provides powerful insight into how a project’s critical path and cost can deviate when Estimating Uncertainty and Risk are considered. These insights can be far superior to just using the critical path, or performing separate Quantitative Schedule Risk Analysis (QSRA) and Quantitative Cost Risk Analysis (QCRA). • This talk will provide an overview and demonstrate progressive approaches and techniques to ICSRA which can be used at various stages throughout a project’s lifecycle, and using outputs to make better informed decisions and consider additional actions. • The session is aimed at project professionals at all levels to demystify a method which is often thought of as too complicated or unnecessary. • It is also aimed at corporate and board professionals to express the supplementary understanding and awareness provided by ICSRA, why it should be executed on major projects and programmes, and the benefits of implementing ICSRA into projects and organisations.
INTRODUCTION
PEOPLE - PLANT - PROCESS - PERFORMANCE - PREDICTION • London, UK > Europe, USA > Canada > London, UK • PMO, Project Controls, Risk, & IT Projects for 25+ years • Management Consultant on many major programs/projects: • Airports: Major Airport New £4Bn Terminal • Rail: Major Programmes, Portfolio £100Bn • Nuclear Power: New £15Bn, Major Refurbishments £7Bn • Defense: Major Air, Land, & Sea £40Bn • Football, Football (NFL!), Walking, Cycling, Snooker, Tennis INTRODUCTION
INDUSTRIES & SECTORS
BILLION POUND OPPORTUNITIES
BASE PLATING • Scarcity of development space • Shortage of housing / facilities • “Air Rights” above railway tracks & stations • Hudson Yards, New York: $25b, own energy supply! Euston? HS2? Clapham Junction? https://www.hudsonyardsnewyork.com/about/building-hudson-yards https://www.theguardian.com/us-news/2019/mar/14/hudson-yards-new-york-city-open-debut https://www.imdb.com/title/tt9591896/
ICSRA: THE PROBLEM
ICSRA: THE PROBLEM How do Programme / Project Managers make decisions to provide best value to mitigate / recover / expedite / buffer the schedule, including duration / estimating uncertainty, risk, and schedule-logic dependencies and constraints? TIME CONTINGENCY MANAGEMENT
ICSRA: THE PROBLEM • No Process • No Experience • Risk mapping takes too long • Schedule & Cost information misalignment • Software hard to use • Not detailed enough • Too detailed • Don’t get the right results • No buy-in from leadership £ £
ICSRA: BENEFITS • Removes “risk mapping” • Drives ‘Real’ conversations • Drives accountability, engagement, behaviours • Utilises whole team, knowledge, experience • Greater understanding & awareness of drivers • Improves Change Management assessments • Matures schedule and cost estimate • Joint Confidence Levels (JCL) • Superior Budget & Cash-Flow forecasting • Enhanced Change Management & Contingency Management
PROJECT BASICS
PROJECT BASICS • Scope: Time / Cost / Quality • Assumption, Exclusions, Dependencies (AED) • Work Breakdown Structure (WBS): WBS Dictionary • Organisational Breakdown Structure (OBS) • Responsibility Assignment Matrix (RAM): Accountability • Control Accounts (CA): Performance Measurement • Work Packages (WP): Company • Activities: Earned Value Technique • Resources: People / Plant • Logic & Constraints: Dependencies / Availability • Decomposition: (Future) Planning Packages
PROJECT BASICS: SCHEDULE WBS OBS CA-1 WP-1.1 WP-1.2 CA-2 WP-2.1 WP-2.2 CA-3 WP-3.1 WP-2.3
QUANTITATIVE RISK ANALYSIS (QRA) BASICS
QRA BASICS • Base Estimate • Estimate Uncertainty (EU): Duration, Cost • Risks: Threats / Opportunities: Risk Workshops / Risk Interviews • Distributions: Single Point, Uniform, Triangular… • Correlation: Matrix, Factors • Simulation: Scenarios • Outputs: S-Curves, Percentiles… • Contingency: Time & Cost!
QUANTITATIVE SCHEDULE RISK ANALYSIS (QSRA)
QSRA BASICS • Base Estimate: Schedule • Duration Uncertainty (DU) • Risks: Threats / Opportunities • Distributions: Single Point, Uniform, Triangular… • Correlation: Matrix, Factors • Simulation: Scenarios • Outputs: S-Curves, Percentiles… • Contingency: Schedule Buffer / Time Risk Allowance
QSRA: SCHEDULE QUALITY • APM Schedule Maturity Assessment • https://www.apm.org.uk/book-shop/the-scheduling-maturity-model/ • DCMA • https://www.dcma.mil/ • GAO • https://www.gao.gov/products/gao-16-89g • NDIA • https://www.ndia.org/divisions/ipmd/committees/planning-and-scheduling
QSRA: COMPONENTS Base Duration Duration Uncertainty Risk • Duration Uncertainty can have negative element • Multiple risks can be mapped to one activity • Risks can be negative (opportunities) • Correlation also applied to relevant activities • All elements combine to generate duration for each iteration • Simulation has x iterations • Current, Post-Mitigated, Target, simulations
QSRA: BASE
QSRA Iteration Duration ID Project Base Duration Base Duration Rank Duration Uncertainty Risk Iteration Duration Iteration Duration Rank 1 Activity 1 40 12 6 25 71 15 2 Activity 2 20 20 2 18 40 20 3 Activity 3 40 12 11 38 89 10 4 Activity 4 80 3 11 22 113 2 5 Activity 5 60 6 11 -5 66 16 6 Activity 6 90 1 15 4 109 4 7 Activity 7 40 12 17 49 106 5 8 Activity 8 60 6 6 6 72 14 9 Activity 9 50 10 5 -9 46 19 10 Activity 10 80 3 7 12 99 8 11 Activity 11 80 3 17 34 131 1 12 Activity 12 30 18 17 34 81 12 13 Activity 13 40 12 16 47 103 6 14 Activity 14 30 18 2 15 47 18 15 Activity 15 60 6 18 17 95 9 16 Activity 16 40 12 13 47 100 7 17 Activity 17 90 1 4 18 112 3 18 Activity 18 40 12 3 44 87 11 19 Activity 19 50 10 1 15 66 16 20 Activity 20 60 6 5 13 78 13 QSRA: ITERATION 1 Activity Name
QSRA: ITERATION 1
QSRA Iteration Duration ID Project Base Duration Base Duration Rank Duration Uncertainty Risk Iteration Duration Iteration Duration Rank 1 Activity 1 40 12 9 20 69 14 2 Activity 2 20 20 4 5 29 20 3 Activity 3 40 12 10 1 51 18 4 Activity 4 80 3 1 36 117 4 5 Activity 5 60 6 8 31 99 7 6 Activity 6 90 1 5 26 121 3 7 Activity 7 40 12 3 45 88 10 8 Activity 8 60 6 3 5 68 15 9 Activity 9 50 10 2 5 57 17 10 Activity 10 80 3 17 46 143 1 11 Activity 11 80 3 13 49 142 2 12 Activity 12 30 18 11 38 79 11 13 Activity 13 40 12 2 32 74 13 14 Activity 14 30 18 4 45 79 11 15 Activity 15 60 6 3 30 93 9 16 Activity 16 40 12 17 -8 49 19 17 Activity 17 90 1 3 2 95 8 18 Activity 18 40 12 20 1 61 16 19 Activity 19 50 10 10 44 104 6 20 Activity 20 60 6 2 46 108 5 QSRA: ITERATION 2 Activity Name
QSRA: ITERATION 2
QSRA: S-CURVE 0 10 20 30 40 50 60 70 80 90 100 01/01/2026 01/04/2026 30/06/2026 28/09/2026 27/12/2026 27/03/2027 25/06/2027 23/09/2027 22/12/2027 21/03/2028 19/06/2028 Percentile End Date Activity 20: S-Curve Percentile Date 0 02/01/2026 5 10/05/2026 10 15/07/2026 15 17/08/2026 20 16/09/2026 25 16/10/2026 30 15/11/2026 35 14/12/2026 40 11/01/2027 45 07/02/2027 50 06/03/2027 55 01/04/2027 60 26/04/2027 65 25/05/2027 70 27/06/2027 75 06/08/2027 80 21/09/2027 85 13/11/2027 90 14/01/2028 95 27/03/2028 100 19/06/2028
• Key Drivers: Which activities / uncertainty / risks most influence end date • Criticality Index (CI): Probability activity lies on critical path • Significance Index (SI): Relative duration importance of an activity • Schedule Sensitivity Index (SSI): SI * CI • Cruciality Index (CRI): Duration - Total Duration correlation • Resource Analysis QSRA OUTPUTS
QUANTITATIVE COST RISK ANALYSIS (QCRA)
QCRA BASICS • Base Estimate: Cost Breakdown Structure • Cost Uncertainty (CU) • Risks: Threats / Opportunities: Prolongation Risk • Distributions: Single Point, Uniform, Triangular… • Correlation: Matrix, Factors • Simulation: Scenarios • Outputs: S-Curves, Percentiles… • Contingency: Project Contingency, Programme Contingency
QCRA: COMPONENTS Base Cost Cost Uncertainty Risk • Cost Uncertainty can have negative element • Multiple risks can be mapped to one cost element • Risks can be negative (opportunities) • Correlation also applied to relevant cost elements • All elements combine to generate cost for each iteration • Simulation has x iterations • Current, Post-Mitigated, Target, simulations
QCRA Iteration Cost ID Cost Element Base Cost Base Cost Rank Cost Uncertainty Risk Iteration Cost Iteration Cost Rank 1 Cost Element 1 £ 41,832 17 £ 45,962 £ 77,002 £ 164,796 15 2 Cost Element 2 £ 144,486 2 £ 92,900 £ 125,612 £ 362,998 3 3 Cost Element 3 £ 82,880 10 £ 79,271 £ 153,466 £ 315,617 6 4 Cost Element 4 £ 137,107 4 £ 116,788 £ 82,263 £ 336,158 5 5 Cost Element 5 £ 33,250 19 £ 7,171 £ 22,410 £ 62,831 20 6 Cost Element 6 £ 93,971 8 £ 75,866 £ 139,984 £ 309,821 7 7 Cost Element 7 £ 85,594 9 £ 92,718 £ 94,576 £ 272,888 9 8 Cost Element 8 £ 44,609 16 £ 52,078 £ 81,870 £ 178,557 14 9 Cost Element 9 £ 109,968 5 £ 47,411 £ 123,528 £ 280,907 8 10 Cost Element 10 £ 74,702 12 £ 86,176 £ 102,093 £ 262,971 11 11 Cost Element 11 £ 149,075 1 £ 120,336 £ 290,098 £ 559,509 1 12 Cost Element 12 £ 41,394 18 £ 25,511 £ 48,877 £ 115,782 18 13 Cost Element 13 £ 137,172 3 £ 40,756 £ 228,309 £ 406,237 2 14 Cost Element 14 £ 23,579 20 £ 17,906 £ 33,869 £ 75,354 19 15 Cost Element 15 £ 100,639 7 £ 115,934 £ 130,509 £ 347,082 4 16 Cost Element 16 £ 53,803 14 £ 9,848 £ 96,065 £ 159,716 16 17 Cost Element 17 £ 79,315 11 £ 82,442 £ 105,495 £ 267,252 10 18 Cost Element 18 £ 64,613 13 £ 38,911 £ 119,907 £ 223,431 13 19 Cost Element 19 £ 47,689 15 £ 25,415 £ 65,006 £ 138,110 17 20 Cost Element 20 £ 103,845 6 £ 26,645 £ 124,032 £ 254,522 12 Total £ 1,649,523 £ 1,200,045 £ 2,244,971 £ 5,094,539 QCRA: ITERATION 1
QCRA Iteration Cost ID Cost Element Base Cost Base Cost Rank Cost Uncertainty Risk Iteration Cost Iteration Cost Rank 1 Cost Element 1 £ 41,832 17 £ 13,655 £ 31,427 £ 86,914 19 2 Cost Element 2 £ 144,486 2 £ 33,341 £ 279,422 £ 457,249 1 3 Cost Element 3 £ 82,880 10 £ 41,928 £ 111,274 £ 236,082 9 4 Cost Element 4 £ 137,107 4 £ 52,469 £ 142,567 £ 332,143 4 5 Cost Element 5 £ 33,250 19 £ 13,294 £ 60,893 £ 107,437 18 6 Cost Element 6 £ 93,971 8 £ 56,496 £ 153,744 £ 304,211 6 7 Cost Element 7 £ 85,594 9 £ 35,405 £ 82,316 £ 203,315 12 8 Cost Element 8 £ 44,609 16 £ 33,984 £ 63,197 £ 141,790 15 9 Cost Element 9 £ 109,968 5 £ 41,671 £ 148,210 £ 299,849 7 10 Cost Element 10 £ 74,702 12 £ 45,369 £ 90,641 £ 210,712 11 11 Cost Element 11 £ 149,075 1 £ 163,404 £ 106,215 £ 418,694 2 12 Cost Element 12 £ 41,394 18 £ 30,262 £ 46,906 £ 118,562 16 13 Cost Element 13 £ 137,172 3 £ 19,610 £ 74,014 £ 230,796 10 14 Cost Element 14 £ 23,579 20 £ 14,240 £ 42,076 £ 79,895 20 15 Cost Element 15 £ 100,639 7 £ 119,400 £ 110,675 £ 330,714 5 16 Cost Element 16 £ 53,803 14 £ 14,478 £ 76,662 £ 144,943 14 17 Cost Element 17 £ 79,315 11 £ 89,682 £ 74,785 £ 243,782 8 18 Cost Element 18 £ 64,613 13 £ 7,906 £ 35,107 £ 107,626 17 19 Cost Element 19 £ 47,689 15 £ 21,187 £ 79,925 £ 148,801 13 20 Cost Element 20 £ 103,845 6 £ 99,033 £ 148,932 £ 351,810 3 Total £ 1,649,523 £ 946,814 £ 1,958,988 £ 4,555,325 QCRA: ITERATION 2
0 10 20 30 40 50 60 70 80 90 100 £ 1,000,000 £ 1,500,000 £ 2,000,000 £ 2,500,000 £ 3,000,000 £ 3,500,000 £ 4,000,000 £ 4,500,000 £ 5,000,000 £ 5,500,000 £ 6,000,000 £ 6,500,000 Percentile Total Cost Total Cost S-Curve Percentile Total Cost 0 £ 1,268,332 5 £ 1,405,076 10 £ 1,491,898 15 £ 1,547,023 20 £ 1,599,523 25 £ 1,649,523 30 £ 1,799,523 35 £ 1,957,023 40 £ 2,122,398 45 £ 2,296,042 50 £ 2,478,368 55 £ 2,669,810 60 £ 2,870,824 65 £ 3,102,996 70 £ 3,371,154 75 £ 3,680,877 80 £ 4,038,606 85 £ 4,451,784 90 £ 4,929,005 95 £ 5,480,194 100 £ 6,116,818 QCRA: S-CURVE
INTEGRATED COST & SCHEDULE RISK ANALYSIS (ICSRA)
ICSRA: APPROACH • Organisational / PMO culture key • Schedule and Cost systems driven by WBS & Control Accounts • Estimating Uncertainty and Risk assigned to schedule • Schedule decomposed jointly with cost decomposition • Activities reviewed wholistically – Time, Cost, & Risk together! • Application Programme Interfaces (APIs) to reduce errors
ICSRA: COMPONENTS Activity Duration Duration Uncertainty Time Risk Activity Cost Cost Uncertainty Cost Risk • Direct conversations and challenges • Greater understanding of Estimating Uncertainty & Risk • Accountable elements > drives ownership!
ICSRA: JOINT CONFIDENCE LEVELS • ISSUE: QSRA & QCRA results don’t reflect combined effects. • RESULT: Better insight, more accurate estimating & forecasting.
ICSRA: CASH FLOW • ISSUE: Cash flow forecasting is poor. • RESULT: More accurate forecasting and insight. 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Risk Cost Profile by End Date Series1 Series2
ICSRA ASSURANCE: SCHEDULE HIERARCHY • ISSUE: Schedule incomprehensible by stakeholders, difficult for scenarios. • RESULT: Comparative assessments, additional insight. Initial Initial Design Detailed Design Procurement Construction Commissioning Handover Summary Schedule (by Phase) WBS Control Account Work Package Work Package / Activity (Key areas as required)
ICSRA ASSURANCE: SUMMARY SCHEDULE • The Summary schedule should be high level, contain 100% of work, have all phases, key deliverables, key milestones, key undertakings, key sequences, key paths, identify key interdependent logic, tactical relationships, be sufficiently reflective, consistent, and aligned with the detailed schedule. • Challenge schedule producer with this statement > signature !! • Tip: Start with detailed Level 3-4 and look for logic across components.
ICSRA ASSURANCE: PRAGMATIC • ISSUE: Too many risks to map to schedule. • RESULT: Pragmatic assessment. • Red risks • Red & Amber risks • Red & Amber & ‘Green Total’ risks • Risks on / near critical path • Risks on activities with low float • Highlights key areas > detailed analysis
ICSRA: BENEFITS • Removes “risk mapping” • Drives ‘Real’ conversations • Drives accountability, engagement, behaviours • Utilises whole team, knowledge, experience • Greater understanding & awareness of drivers • Improves Change Management assessments • Matures schedule and cost estimate • Joint Confidence Levels (JCL) • Superior Budget & Cash-Flow forecasting • Enhanced Change Management & Contingency Management
THE FUTURE !!
FUTURE OUTPUTS • ISSUE: Outputs don’t provide decision making information. • RESULT: Powerful decision making insights. • Most cost-effective activities (current and future) to expedite / reduce the critical path? • Which activities most likely to increase the overall cost? • Which activities most likely to increase the critical path and overall cost? • Where are the biggest cash flow periods and related values – are they achievable? • Highest Cost Path / Critical Path • Highest Labour Cost Path / Critical Path • Highest Materials Cost Path / Critical Path
COST EFFECTIVE SCHEDULE MANAGEMENT • ISSUE: Inability to see where schedule & cost problem areas are at once. • RESULT: Powerful visualisation of key areas to focus on.
RISK ALGORITHMS / AI • ISSUE: Bias in estimating and lack of historical insight & trending. • RESULT: Increased insight and forecasting assurance. • Uses historical information to predict risk • Can combine data across companies, industries, and countries • Sometimes just uses text to forecast • Machine learning provides continuous refinement • May not suit first-of-a-kind or unique projects
RISK ALGORITHMS / AI • ISSUE: Bias in estimating and lack of historical insight & trending. • RESULT: Increased insight and forecasting assurance.
CONCLUSION
CONCLUSION • Organisational Culture is key! • Schedule should ALWAYS drive the project • Decompose Schedule and Cost at the same rate – Schedule first! • No ‘bad’ simulation – an iterative, engaging, absorbing, insightful, process • Try to automate – so many potential errors doing manually • Really look at integrating your schedule, cost, and risk software using APIs • ICSRA is far more efficient, effective, & insightful, than siloed QSRAs / QCRAs • It’s a journey not a destination! EMBRACE. ENGAGE. EMPOWER.
“THE ONLY THING NECESSARY FOR THE TRIUMPH OF COST-DRIVEN PROGRAMMES IS FOR GOOD RISK, PMO, PROJECT CONTROLS, & PLANNING PROFESSIONALS TO DO NOTHING."
THANK YOU
QR CODES APM EVENTS APM RISK SIG