Contemporary Alternatives to Classical Risk Analysis Challenges
Risks intrude on every aspect of our daily routines, whether it be through investing, playing a sport, weather forecasting, or just simple activities such as eating or driving; we are constantly in harms way.
In Project Management there are aspects of risk in several key areas, including the development of requirements, the rapid growth in technology and the instability of the operational environment, all of which ultimately adversely effect the three tangible measurements of effectiveness for any project, Performance, Schedule and Cost.
Risk analysis is also an important ingredient of the decision making process, enabling the stakeholders to understand all possible outcomes and the extent of the project exposure. Whilst being a significant contributor to project success, it is however plagued with errors caused by lapses in judgments as a consequence of the inherent subjectivity of the process, especially at the earliest stages.
The primary objective of this paper is to introduce two contemporary methods, Absolute and Empirical Referencing, used to minimize the subjectivity surrounding the Risk Analysis process. The Estimate by Comparison application developed by Galorath Incorporated will be used as the vehicle to illustrate both of these techniques, along with some alternative applications.
Additionally, a section of this paper provides insight into recently completed advances through an interface with Oracle Crystal Ball, which enables users to manipulate the behaviors of variables within the SEER suite of solutions. This capability allows an informed user to provide a closer representation of historical intellectual property, especially as it pertains to distribution selection and correlation.
Once a robust analysis has been carried out, best practice, (and common sense), dictates that a regular revisiting and interrogation of the data is required, enhanced by actuals, in order to see if the current situation lends itself to a successful project outcome. The SEER Project Monitoring and Control application will be proposed as a suitable mechanism to ensure that, through the employment of Earned Value Techniques, project uncertainty and mitigation expenditure can be controlled as a consequence of a real time measurement of progress.
Finally, the author will discuss a collaborative investigative effort that further reinforces the unraveling of the classical Risk Analysis and Management predicaments, specifically with respect to the calculation of contingency funds, portfolio Risk Management and pre and post risk mitigation strategies.
Chris Hutchings is a Business Development Manager with Galorath Incorporated, supporting Aerospace and Defense customers in the Western U.S. Prior to this he served fifteen years with the United Kingdom Ministry of Defense, (MOD), serving in a number of roles within the Defense procurement field, including Integrated Logistic Support, Requirements Management, Systems Engineering and Cost Forecasting. Common to all of these areas was the application of a robust Risk Management process which he studied at Southampton University in the United Kingdom.
Chris has provided expert support in the field of Risk Analysis to a wide range of government and commercial organizations including the UK Defense Logistics Agency, the Army Technical Support Agency, Northrop Grumman Mission Systems and the British Intelligence Department.
With Galroath Incorporated, Chris played a leading role in the development of an interface between the SEER suite of solutions and the Oracle Risk Analysis application ‘Crystal Ball’ enabling Risk Analysts to take a more active role in Project Estimation and Control.