Project Risk Quantification: Methods that Work

Decision makers depend on reliable capital project cost and schedule risk analyses to give them confidence in their capital investment decisions.

To deliver reliability, risk analysts need to apply project risk quantification (PRQ) methods that work. That means the PRQ methods should: - be based on empirical research of risk drivers and validated against actual data, - be applicable on all projects– simple and complex, large and small, conceptual or detailed, and good or bad quality estimates and schedules, and - be simple enough that consultants are not needed except for an outside view of strategic projects.

Unfortunately, few methods meet these criteria. Too often methods are purely subjective, and/or ignore the risk drivers that matter. Other methods rigidly tie to risk registers that were never intended for quantification. The discussion will review research on what drives project cost growth, schedule slip and accuracy. It will highlight the concept and importance of “systemic” risk (i.e., qualities of one’s capital project system). It will then review an integrated set of PRQ methods “that work” for projects, programs and portfolios of every description for both owners and contractors. The session is based on the presenter’s book: “Project Risk Quantification: A Practitioner’s Guide to Realistic Cost and Schedule Risk Management”.