Project Risk Analysis Software and Project Risk Management Software Forum

We are starting a large construction project and would like to use risky project and event chain methodology. Do you have any recommendations or guidelines regarding the process?

Here is our recommended workflow:

1. Define a detailed project schedule with resources and costs assigned to the activities: nothing extravagant, just a regular work breakdown structure. This is your base scenario schedule. It is sometimes called “focused work on activities”. In reality because of cognitive and motivational biases it is an optimistic project schedule.

2. Define a detailed risk breakdown structure and assign risks to the activities. Each risk should include a probability of occurrence, impact, and moment of risk.

3. Define the activities associated with mitigation efforts and then assign costs and resources to them.

4. Perform a quantitative risk analysis using Monte Carlo. While it is possible to perform this on the entire project schedule, we suggest that you perform the initial analysis on each phase of the project separately. This will help to identify the chance that each phase will be completed on time, within budget, and as a result, you should identify contingencies and reserves.

7. Analyze the results of the quantitative risk analysis. You may use other analytical techniques, which come with classic Monte Carlo. These include probabilistic and conditional branching, deadlines, crucial tasks, and so on. What is specific to Event Chain Methodology is the ability to identify critical events and event chains.

8. Perform reality checks by comparing the results of analysis with outside independent expert reviews and historical experience. Identify the potential impact of the critical risks as calculated through the analysis and ask whether this is realistic. If the results are unrealistic and do not pass your reality check, redefine your risks and perform the quantitative analysis again.

9. Monitor the course of the project on a regular basis, perform repeated quantitative risk analysis, reassess the risks including the probability of risk occurrence based on actual data, and identify new project costs and duration.