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Why Not Do Project Risk Analysis Parametrically?

Risk Track

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The dominant approach to quantitative project risk analysis is troublesome for several reasons:

• Subjective probability distributions assigned to WBS elements
• Subjective correlations assigned between WBS elements
• Limitation of risks to those associated with direct charge work
• Ease of overlooking important risks
• No feedback from project experience or lessons learned.

To overcome all of these defects, we have created a new approach to project risk analysis. We call it XIPRR, an acronym for Experience Informed Project Risk Reduction. XIPRR is a parametric approach, analogous to the parametric approaches used to estimate project costs, and resembling methods used by the insurance industry to determine risk premiums. The risk drivers recognized by XIPRR are lack of adherence to risk avoiding project management practices that have been identified by the GAO, IEEE, SEI and others. We have collected many of these into a Project Readiness Survey comprising currently about 170 questions, with associated multiple choice answers. About 50 of these questions are “core” questions applicable to virtually any project. Another 45 apply to hardware only development projects, 60 to software only development projects and altogether about 170 apply to hardware/software co- development projects. A separate survey addresses hardware production projects.
XIPRR users activate the model by answering the appropriate questions for three of their historical projects. Additional answers include the actual cost and duration overruns that occurred. A XIPRR feature called Dynamic Calibration assigns weights to the survey questions such that their relevance to overruns accurately aligns with actual overrun experience.
XIPRR users assess likely cost and schedule overruns for new projects by answering the survey questions. XIPPR’s overrun estimating relation estimates percent overruns for both cost and duration. Users can add more questions to the survey to account for project lessons learned. XIPRR produces a variety of useful reports.


Daniel Galorath
During his over three decades in the industry, Daniel D. Galorath has been solving a variety of management, costing, systems, and software problems for both information technology and embedded systems. He has performed all aspects of software development and software management. One of his strengths has been reorganizing troubled software projects, assessing their progress applying methodology and plans for completion and estimated cost to complete. He has personally managed some of these projects to successful completion. He has created and implemented software management policies, and reorganized (as well as designed and managed) development projects. His company, Galorath Incorporated, has developed the SEER applications, methods, and training for 1) software, 2) hardware, electronics & Systems, 3) Information Technology, and 4) Manufacturing cost, schedule, risk analysis, and management decision support. He is one of the principal developers of the SEER‐SEM™ software evaluation model. His teaching experience includes development and presentation of courses in Software Cost, Schedule, and Risk Analysis; Software Management; Software Engineering; to name a few. Mr. Galorath is a sought after speaker. Among Mr. Galorath’s published works are papers encompassing software cost modeling, testing theory, software life cycle error prediction and reduction, and software and systems requirements definition. Mr. Galorath was named winner of the 2001 International Society of Parametric Analysts (ISPA) Freiman Award, lifetime achievement award, awarded to individuals who have made outstanding contributions to the theoretical or applied aspects of parametric modeling. Mr Galorath’s book “Software Sizing, Estimation, and Risk Management” was published March 2006. Mr. Galorath publishes a blog, “Dan Galorath on Estimating” at http://www.galorath.com/wp/.

Evin Stump
Mr. Stump is a Senior Systems Engineer at Galorath Incorporated. His current responsibilities mostly involve writing specifications for new and innovative cost and risk models, including SEER-EOS, SEER-IC, XIPRR, and recent enhancements of SEER-H. He has 55 years of experience in the aerospace industry as a systems engineer, project engineer, design engineer, and flight test engineer. He holds the B.S. in mechanical engineering from Loyola University of Los Angeles, the M.S. in operations research and industrial engineering from the University of Texas at Austin, and the professional designation in government contract management from UCLA Extension. He is a member of Alpha Sigma Nu national honor society.