Podcast
Questions and Answers
In the context of overall project risk analysis, under what condition would stakeholders MOST likely utilize higher-level remedial actions, such as altering project objectives or organizational risk tolerances?
In the context of overall project risk analysis, under what condition would stakeholders MOST likely utilize higher-level remedial actions, such as altering project objectives or organizational risk tolerances?
- When there is a complete absence of useful tools and techniques available for risk assessment.
- When cost and schedule risk assessments reveal that the project is unlikely to meet its original objectives within acceptable risk parameters. (correct)
- When initial cost and schedule risk assessments indicate a high probability of project approval without modifications.
- When project managers demonstrate an inability to provide insights into cost and schedule risks.
What critical caveat must project management teams consider when utilizing expert judgment to estimate overall project cost and schedule risk by decomposing the project plan into mutually exclusive segments via the WBS?
What critical caveat must project management teams consider when utilizing expert judgment to estimate overall project cost and schedule risk by decomposing the project plan into mutually exclusive segments via the WBS?
- The Delphi method must be excluded to prevent potential personal bias and promote objectivity.
- The approach only yields reliable results if the project lacks significant interdependencies between WBS elements.
- The acceptability of the resulting estimates hinges largely on the perceived credibility of the experts interviewed and the rationalization of the underlying data used. (correct)
- The exclusive focus on quantitative data negates the influence of expert intuition, leading to biased estimates.
During a Monte Carlo simulation for overall project risk assessment, how are task cost and duration values typically derived to generate notional schedule runs?
During a Monte Carlo simulation for overall project risk assessment, how are task cost and duration values typically derived to generate notional schedule runs?
- By deriving values randomly from their respective probability distributions. (correct)
- By selecting values deterministically from a predefined list of potential scenarios.
- By applying fixed percentage adjustments based on the project manager's experience with similar projects.
- By calculating the weighted average of optimistic, pessimistic, and most likely estimates.
What inherent limitation in project task duration estimation does Figure 9.3 illustrate, specifically concerning the relationship between the mode (most likely value) and the mean (average value) of a three-point distribution?
What inherent limitation in project task duration estimation does Figure 9.3 illustrate, specifically concerning the relationship between the mode (most likely value) and the mean (average value) of a three-point distribution?
How does the incorporation of probability paths, as depicted in Figure 9.5 for redesign/build/test activities, MOST significantly enhance project schedule modeling and simulation?
How does the incorporation of probability paths, as depicted in Figure 9.5 for redesign/build/test activities, MOST significantly enhance project schedule modeling and simulation?
In the context of project risk analysis, what specific scheduling phenomenon is described as a 'merge bias,' and why is its effect often surprising when inspecting project schedule simulation results?
In the context of project risk analysis, what specific scheduling phenomenon is described as a 'merge bias,' and why is its effect often surprising when inspecting project schedule simulation results?
Why is it inadvisable to establish a Plan of Record (POR) baseline schedule and budget before iterating an integrated master schedule (IMS) a few times with modeling and simulation tools?
Why is it inadvisable to establish a Plan of Record (POR) baseline schedule and budget before iterating an integrated master schedule (IMS) a few times with modeling and simulation tools?
What is the MOST critical implication of project data consistently collected with well-established WBSs according to organizational project governance guidelines?
What is the MOST critical implication of project data consistently collected with well-established WBSs according to organizational project governance guidelines?
When using modeling and simulation for overall project risk assessment, what potentially unrealistic condition should project managers be cautious of when collecting three-point estimates?
When using modeling and simulation for overall project risk assessment, what potentially unrealistic condition should project managers be cautious of when collecting three-point estimates?
What are the primary benefits of performing "What if" analyses using modeling and simulation tools in project risk management?
What are the primary benefits of performing "What if" analyses using modeling and simulation tools in project risk management?
What is the MOST effective strategy to mitigate the risk caused by 'merge bias' in project scheduling, according to the principles outlined in the provided text?
What is the MOST effective strategy to mitigate the risk caused by 'merge bias' in project scheduling, according to the principles outlined in the provided text?
What is the primary role of a capable project planning team when implementing modeling and simulation for project risk assessment, particularly in the context of integrated project master scheduling?
What is the primary role of a capable project planning team when implementing modeling and simulation for project risk assessment, particularly in the context of integrated project master scheduling?
In determining overall quantitative project risk, what is the MOST significant advantage of using modeling and simulation over relying solely on raw expert judgment?
In determining overall quantitative project risk, what is the MOST significant advantage of using modeling and simulation over relying solely on raw expert judgment?
Which of the following is the MOST critical reason for project sponsors and stakeholders to seek representative cost and schedule risk assessments early in the project lifecycle?
Which of the following is the MOST critical reason for project sponsors and stakeholders to seek representative cost and schedule risk assessments early in the project lifecycle?
How do integrated project master schedules (IMS) serve as a foundational element for a project risk assessment model, especially when using modeling and simulation?
How do integrated project master schedules (IMS) serve as a foundational element for a project risk assessment model, especially when using modeling and simulation?
When should a project team analyze overall project cost and/or schedule risk when using modeling and simulation tools, and what action should they be prepared to take based on the results?
When should a project team analyze overall project cost and/or schedule risk when using modeling and simulation tools, and what action should they be prepared to take based on the results?
In situations where individual project risks are qualitatively assessed, what is the primary caveat regarding the direct aggregation of these individual risks to derive overall project risks?
In situations where individual project risks are qualitatively assessed, what is the primary caveat regarding the direct aggregation of these individual risks to derive overall project risks?
Considering the utilization of expert judgment in determining overall project risks, what is the MOST critical reason for organizations to leverage the collective wisdom of Subject Matter Experts (SMEs)?
Considering the utilization of expert judgment in determining overall project risks, what is the MOST critical reason for organizations to leverage the collective wisdom of Subject Matter Experts (SMEs)?
What is the key prerequisite for effective use of modeling and simulation in assessing overall project cost and schedule risk?
What is the key prerequisite for effective use of modeling and simulation in assessing overall project cost and schedule risk?
What is the practical implication of Parkinson's Law ("Work expands so as to fill the time available for its completion") on project schedule simulation, particularly concerning the creation of realistic project schedules?
What is the practical implication of Parkinson's Law ("Work expands so as to fill the time available for its completion") on project schedule simulation, particularly concerning the creation of realistic project schedules?
In the context of project risk management, what does the term "analogous data" refer to, and how can it be utilized to enhance the credibility and accuracy of project risk assessments?
In the context of project risk management, what does the term "analogous data" refer to, and how can it be utilized to enhance the credibility and accuracy of project risk assessments?
In the context of project risk management, what is the significance of the 'Tornado Diagram' output from a simulation, and how does it inform risk response actions?
In the context of project risk management, what is the significance of the 'Tornado Diagram' output from a simulation, and how does it inform risk response actions?
During project risk assessment, what inherent challenges must be addressed when utilizing modeling and simulation, and what clear benefits can be realized by overcoming these challenges?
During project risk assessment, what inherent challenges must be addressed when utilizing modeling and simulation, and what clear benefits can be realized by overcoming these challenges?
In the context of project management, what is a 'high-confidence schedule' and which percentage typically represents it?
In the context of project management, what is a 'high-confidence schedule' and which percentage typically represents it?
How can the establishment of consistent project WBSs (Work Breakdown Structures) across an organization contribute to the effectiveness of project risk assessments, particularly when utilizing historical project data?
How can the establishment of consistent project WBSs (Work Breakdown Structures) across an organization contribute to the effectiveness of project risk assessments, particularly when utilizing historical project data?
During cost risk assessment, what is the primary purpose of establishing a cost probability distribution for each item or activity in a project plan?
During cost risk assessment, what is the primary purpose of establishing a cost probability distribution for each item or activity in a project plan?
How can the simulation tools enable customization distribution to improve credibility?
How can the simulation tools enable customization distribution to improve credibility?
What factor allows the team to have more options to control simulation complexity and resultant fidelity?
What factor allows the team to have more options to control simulation complexity and resultant fidelity?
Why is it more important to have a detailed schedule when using simulation?
Why is it more important to have a detailed schedule when using simulation?
When using a Monte Carlo simulation, what is the distribution type that is easiest for modeling, based on three-point estimates for each activity?
When using a Monte Carlo simulation, what is the distribution type that is easiest for modeling, based on three-point estimates for each activity?
What does the successfully simulated three-point estimation technique depend on? (Select all that apply)
What does the successfully simulated three-point estimation technique depend on? (Select all that apply)
What technique can be performed to determine the individual risks that have the greatest impact on overall project cost?
What technique can be performed to determine the individual risks that have the greatest impact on overall project cost?
What does effective interpretation of modeling and simulation results require?
What does effective interpretation of modeling and simulation results require?
How does past project performance data play a role in estimating future projects effectively?
How does past project performance data play a role in estimating future projects effectively?
During project planning and risk assessment, what significant advantage do organizational assets provide?
During project planning and risk assessment, what significant advantage do organizational assets provide?
What should first happen when determining overall risk assessment?
What should first happen when determining overall risk assessment?
What are the two primary concerns of overall project quantitative risk analyses?
What are the two primary concerns of overall project quantitative risk analyses?
What are the two project components that overall project risk assessment can usually focus on?
What are the two project components that overall project risk assessment can usually focus on?
What are the three useful tools and techniques that aid determining overall project risks?
What are the three useful tools and techniques that aid determining overall project risks?
Flashcards
Overall Project Risk Analysis
Overall Project Risk Analysis
Cost and schedule risk assessments to approve, shut down, or remediate projects.
Overall project risk assessment
Overall project risk assessment
Focuses on project cost and schedule objectives.
Project risk assessment methods
Project risk assessment methods
Methods and techniques to assess overall project risks.
Aggregating individual project risks
Aggregating individual project risks
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Expert judgment
Expert judgment
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Delphi method
Delphi method
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Estimating overall project risk
Estimating overall project risk
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WBS Technique
WBS Technique
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Modeling and Simulation
Modeling and Simulation
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Project risk assessment models
Project risk assessment models
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Simulation
Simulation
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Modeling and Simulation Tools
Modeling and Simulation Tools
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Modeling and Simulation Input
Modeling and Simulation Input
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Aggregate activities
Aggregate activities
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Tornado Diagram
Tornado Diagram
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Project team responsibilities
Project team responsibilities
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Modeling and Simulation
Modeling and Simulation
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Past project data
Past project data
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Project Schedules
Project Schedules
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Study Notes
Overall Project Risk Analysis
- Project sponsors and stakeholders need cost and schedule risk assessments to approve projects, shut them down, or take remedial actions.
- Project managers should be able to provide this insight using available tools and techniques.
- Overall project risk assessment focuses on cost and schedule objectives, incorporating scope and quality risks.
- Methods range from interviewing and expert judgment to modeling and simulation.
Performing Overall (Quantitative) Project Risk Analysis
- Assessing overall project risk is difficult for large, complex projects.
- Directly aggregating individual qualitative risks is not prudent.
- Overall quantitative project risk assessments benefit from individual qualitative risk identification and analysis, and vice versa.
- Overall project risk can determine the priority of individual qualitative risks.
- The project management team should understand these sensitivities.
Risk Management Tools and Techniques for Quantitative Analysis
- Figure 9.1 expands on Figure 8.1 to include project management tools and techniques for overall quantitative risk analysis.
- Commonly used methodology is interviewing and expert judgment due to low cost and complexity.
- Modeling and simulation provide greater accuracy but at the highest relative cost.
Determining Overall Risk Via Interviewing and Expert Judgment
- Expert judgment is valuable for determining overall project risks.
- Organizations should use the collective wisdom of subject matter experts (SMEs).
- SMEs include project managers, key team members, technical gurus, sponsors, and consultants.
- The Delphi method, where SMEs provide anonymous inputs, addresses potential personal bias issues.
- Breaking the project plan into mutually exclusive segments via WBS can help estimate overall project cost and schedule risk.
Determining Overall Risk Via Modeling and Simulation
- Sophisticated tools and techniques are available.
- Modeling and simulation tools are improving in user-friendliness, cost, and ease of use.
- Project risk assessment models are built from the project's integrated master scheduling (IMS).
- The IMS should contain all tasks, activities, and interdependencies.
- A cost probability distribution is needed for cost risk assessment, and a distribution of task or activity durations is needed for schedule risk assessment.
- The easiest method of modeling is using triangular distributions based on three-point estimates.
- The simulation is comprised of a set of notional schedule runs resulting from different potential combinations of task cost and/or durations.
- It uses Monte Carlo simulation.
- Histograms and cumulative probability curves are generated for specific key end milestones.
Mechanics of Modeling and Simulation for Analyzing Overall Project Risks
- The primary input to the model is the project's IMS.
- The IMS should be consistent with a WBS that appropriately segregates work activities.
- The more complete and accurate the IMS, the more precise your results.
- Focus on higher-level aggregate activities for reduced model complexity.
- Establish the project plan by committing to the worst-case schedule and working to the best-case schedule.
- Project teams do not typically complete tasks ahead of schedule.
- The resultant schedule simulation distribution is only valid if the more aggressive dates are targeted.
- Ask for three-point estimates that bound the extremes in a reasonable way.
- Avoid using estimates where the best-case or worst-case is the same as the nominal.
Modeling and Simulation Side Benefits
- The simulation process determines the individual risks that have the greatest impact on project cost and schedule performance.
- A Tornado Diagram identifies the tasks that have the most influence on the probability distribution for a particular milestone.
- Simulation results can point out issues inherent in the project's Gantt chart.
- The probability of achieving the original Gantt chart completion date is typically lower than expected.
- This is due to the average value of the three-point distributions being skewed to the right and merge bias.
Modeling and Simulation for Evaluation of Project Plans
- The project integrated master schedule (IMS) should be iterated a few times with this tool before establishing the Plan of Record (POR) baseline schedule and budget.
- Modeling and simulation can point out some surprising cost and schedule risks.
- The team should analyze overall project cost and/or schedule risk during the planning process before signing up to project cost and/or schedule commitments.
Modeling and Simulation for Analyzing Project Plans
- Modeling and simulation reveals basic issues with the project schedule structure.
- "What-if" analyses determine the individual project risks that have the most impact on project performance.
- Trade-off analyses evaluate different project plan changes to address individual risks.
- Running both schedule and cost simulations gives additional insight into overall project risk.
Modeling and Simulation for Project Monitoring and Control
- Modeling and simulation is a good monitoring and control tool.
- As the project progresses and schedule detail is adjusted, the model and simulation results will reflect these changes.
- Track figures of merit to understand probabilities of achieving milestones, equating to project health.
Organizational Assets That Benefit Overall Project Risk Analysis
- Organizational assets provide benefits to project planning and overall risk assessment.
- Past project data are invaluable, especially for organizations that develop similar products continuously.
- This data can used to create credible distributions for three-point estimates.
- The key to collecting project data is the establishment of consistent project WBSs.
Chapter 9 Summary
- Interviewing and expert judgment assess overall project risk, and modeling and simulation tools and techniques are accurate.
- The two primary concerns of overall project quantitative risk analyses are project cost and schedule.
- All methodologies require knowledgeable and experienced individuals, and credibility depends on sound inputs and outputs.
- Modeling and simulation methodologies usually require an integrated project master schedule as a starting point.
Side Benefits to Using Modeling and Simulation Tools
- Assessing and modifying the project plan
- Determining which individual risks have the most impact to the project plan
- Evaluating and determining individual project risk responses via "what ifs" and trade-off analyses
- Providing the project team with a supplemental project monitoring and controlling tool and technique
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