Overview of schedule and cost risk analysis methodology for aerospace industry. For more information how to perform schedule risk analysis using RiskyProject software please visit Intaver Institute web site: http://www.intaver.com. About Intaver Institute. Intaver Institute Inc. develops project risk management and project risk analysis software. Intaver's flagship product is RiskyProject: project risk management software. RiskyProject integrates with Microsoft Project, Oracle Primavera, other project management software or can run standalone. RiskyProject comes in three configurations: RiskyProject Lite, RiskyProject Professional, and RiskyProject Enterprise.

1. Intaver Institute Inc.
303, 6707, Elbow Drive S.W.,
Calgary AB Canada T2V 0E5
www.intaver.com
Quantitative Risk Analysis for Aerospace
Industry

2. Common Issues with Space System Projects
• Multiple risks and uncertainties
• Many uncertainties are event-driven
• Historical data mining should include relevance analysis

3. Existing Methodologies
• PERT
• Monte Carlo Simulation
• Bayesian approach
• Scenario analysis and Decision Trees

4. Project Example
Laser Interferometer Space Antenna (LISA) project
Calendar Year ==>
Project Phasing
NASA HQ Milestones
Mission Reviews
SE&I Contractor Acquisition
Technology
LISA Test Package (SM2)
ST7 DRS (SM2)
Interferometry Measurement
System
System Verification
Disturbance Reduction
System
Payload
Spacecraft
Observatory I&T
Constellation Testing
Launch Campaign
Pre-Phase A Phase A Phase B Phase C/D
FAD ICR/CA
NAR ESA MOU (F)
PCA
FAD HQ
Briefing
MDR
SRR
SCR
TRR
PDR CDR
S/C1 PER
Obs 1 PER
MOR
ORR
PSR
MRR
FRR
LRR
Prep Phase Execution PhasePartnering Phase
RFI RFP D Sel RFP Sel
LISA Demo
CDR Deliver to SM2 SM2 Launch
DRS Demo
PDR CDR Deliver to SM2 SM2 Launch
Trades Subs
Assy Test
TRL5 TRL6
Model Envr R1 Model Envr R2 Model Envr R3
Testbed Demos
Trades
Tgt Std
Subs
Assy Test
GRS TRL5 GRS TRL6
Rqts/Architecture/Trades
Design Build / Test
PDR CDR EM 1 2 3
ESA Definition Phase
ITT Award ITT Award PDR CDR
ESA Implementation Phase
EM 1 2 3
Preps
Observatory I&T
EM 1 2 3
Preps
1 2
Constellation Testing
3
Launch Preps
LRD
4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The document is courtesy of NASA/Goddard Space Flight Center

5. Heuristics and Biases in Project Management
The Bank of Sweden Prize in
Economic Sciences in
Memory of Alfred Nobel 2002
Daniel Kahneman
Decision makers use
“heuristics”, or general
rules of thumb, to arrive
at their judgments.
In certain instances, this
will lead to systemic
biases.

6. Examples of Heuristics in Project Management
• Representativeness – unwanted appeal to detailed scenarios
• Availability – access the probability of an event by the ease
with which instances can be brought to mind
• Anchoring – human tendency is to remain close to the initial
estimate

7. Event Chain Methodology
Event Chain Methodology is a method of
modeling uncertainties for different time-related
business and technological processes including
project management for space systems.

8. Moment of Risk and State of Activity
An activity (task) in most real life processes is not a continuous
uniform procedure. Tasks are affected by external events,
which transform an activity from one state to another.

9. Event Chains
Events can cause other events, which will
create event chains. These event chains
can significantly affect the course of the
project.

10. Monte Carlo Simulations
Once events and event chains are defined, quantitative
analysis using Monte Carlo simulation can be performed to
quantify the cumulative impact of the events.
Information regarding the uncertainties
expressed as an event is supplemented
with distributions related to duration,
start time, cost, and other parameters

11. Critical Chains of Events
The single events or the event chains that have the most
potential to affect the projects are the “critical events” or
“critical chains of events.”

12. History Matching and Relevance Analysis
• Similar events or event chains are found based on historical
data
• Analysis based on Bayesian approach is performed and
relevance parameter is calculated
• Project manager defines relevance of each event or event chain
for the current project
• Both calculated and user defined relevance parameters are
used to determine probability and impact of the events for the
current project

13. Performance Tracking with Event and Event Cha
During the course of the project, the probability and time of the
events can be recalculated based on actual data.
Actual performance data and
original estimate is used
forecast duration of activity
with risks

14. Event Chain Diagrams
Event Chain Diagrams are visualizations that show the
relationships between events and activities and how the events
affect each other

15. Repeated Activities
Common scenario for real life projects: sometimes a previous
activity must be repeated based on the results of event in a
succeeding activity

16. Event Chains and Risk Mitigation
Mitigation plan can be assigned to an event or event chain. These
small schedules will be triggered when an event chain occurs.

17. Resource Allocation Based on Events
Event: the reassignment of a resource from one activity to
another
Example: if an activity requires more resources to complete it
within a fixed period, this will trigger an event to reallocate the
resource from another activity.

18. Project Management Workflow using Event Cha
Methodology
1. Define a detailed project schedule with resources and costs
assigned to the activities
2. Define a detailed risk breakdown structure and assign risks to
the activities. The probability of each event can be taken from
historical data.
3. Define the activities associated with mitigation efforts and
then assign costs and resources to them.

19. 4. Perform a quantitative risk analysis using Monte Carlo
simulations.
5. Analyze the results of the quantitative risk analysis: perform a
sensitivity analysis and identify the crucial tasks and critical
risks.
Project Management Workflow using Event
Chain Methodology

20. 6. Perform reality checks: compare the results of analysis with
outside independent expert reviews and historical experience.
7. Monitor the course of the project on a regular basis, perform
repeated quantitative risk analysis, reassess the event and
event chain parameters
Project Management Workflow using Event
Chain Methodology

21. Acknowledgements
Intaver Institute Inc. is thankful to Kevin N. Miller, Deputy Project
Manager/Resources, Laser Interferometer Space Antenna (LISA)
Project, NASA/Goddard Space Flight Center, for providing data
necessary to illustrate the methodology discussed in the paper.