Dear all,
Currently I am working in Buildings Works, the list for the RED RISK or RISK PRONE or ALERT ZONE events/activities in Building Construction Projects, according to me would be,

1. Approvals & Clearances by Concerned Govt Authorities,
2. Sign Off of Concept Design for Internal Finishes,
3. Sign Off of Architectural Drawings (Design-Built),
4. Subcontractor Identification & Appointment,
5. Material & Drawing Submittals Approvals by Project Management Consultant,
6. MEP Items Procurement (When requirements are customised)

Most of the items in the list would be form Design Development & Procurement Package of the Project Life Cycle.

I would like the amendments and comments on the list.

Cheers & Regards,
Rahul

Dear All,

I certainly agree with Mr. Salamat, Risk in schedule is just like an Aplha & Omega. In oil & gas plants and refineries especially plant shutdown & Turnaround projects i always meet this interfacing of activities most are from piping works, asbuilt.

Jerry Alivio

Dear All,

Risk is always part of the planning and you will always encountered in Oil & Gas or Petrochem Construction due to the following reasons particularly for FEED or EPC Contract.
1) Starting from the concept design where Plant has to meet the specification requirement by the Client.
2) Developing definitive design based on the approved concept with the concurrence or approval from the Consultant or the expert
3) Approval of the materials and Procurement where they requires time for the approval of documentation, manufacturing period and delivery from the origin.
4) Other factors or site condition that might affects the design where deviation from specs should require.
5) Interfacing of the above items to the construction that will define the Critical Path.
6) Site working condition if there is the existing Plant and requires Interfacing of the system.
7) Plant Pre-commissioning work where system might later discovered some under design that will replace equipment.
8) And finally, the Plant Start-up whether the finish product really meets the specification demanded by the Client.

I have to note that these sequence of events will be typically always at risk , if you have no any proper planning.

In all projects, there will always be a "Risk". Mr.Salamat is correct about good planning. It is very essential that from the very beginning of the project, we must establish a good, realistic with resource loading schedule.

But on the FEED+EPC+Performance Testing Project, we can only apply going outside to downstream of construction (incl. pre-comm/comm/testing)to know and physically quanitify progress. However, FEED + EP, we should atleast look for all the documents and deliverables to the Document Data Base and Delivery Data Base to update progress.

Furthermore, Risk analysis can only be done (in FEED, EP)if you have the ontime information, correct sequence of activities, deliverables equivalent to Act. ID, etc...

But the best tools is "Experience" on how to detect risk and its countermeasures.

I hope this will help.

Risk is always there from start to the end. The only way to be out of the risk is the good planning.

Ensure that you have visited and evaluated the work site condition, identify logical work sequence and perform the lowest detail of planning with proper interfacing of work.

While to deal really with risk, dig up all the options and decide wisely to ensure that you can contain these rsik.

Philip,

No argument...the only absolutes are birth, death and taxes.

I was responding to the posts indicating that somehow risk management is about getting out and visiting the site.

As you know, being Petro-Chem, no amount of site visits prior to the inspection activities during the shutdown is going to narrow the risk beyond what can be established from the historical/statistical records on those pieces of equipment.

Petro-Chem usually requires developing a risk model that at least quantifies the worst case and allows you to load the schedule with activities that are desirable but could be discarded and thus provides the necessary level of resource to accommodate the worst case scenario.

I rarely see this approach adopted in other industries, but then again most are not continuous process in nature. I also have not seen too many shutdowns where attempts are made to perform risk analysis once the shutdown has started.

Whilst I agree that there is no substitute for site visits once the job is underway, it does yield benefits during the initial feasibility/tender/establishment stage.

Once the detailed planning is complete in a well scoped project much of the risk is mitigated.

Alex,

Can’t agree more.
Bear in mind the first step of any risk analysis is to identify risk.
If you have no idea what the risks are, how can you interpret the result?

I quite agree

Robert
If you are recommending this, then a reference might be useful (for me and others).

Vladimir wrote:

"The question is open - how many iterations are necessary for Monte Carlo simulation of 10000 activities resource loaded project schedule? . . Does anybody know the answer?"

What is your guess, Vladimir? I’m really interested.

"I mean receiving the probability estimations with not more than 1% difference if to do Monte Carlo simulation once more"

Can I suggest that the variables involved in the input to a Monte Carlo-type system, and the work performance, cause a MUCH greater noise than algorithmic variances?

I’m also curious if we’re talking specific distribution shapes for each activity estimate, or simply a "standard" Beta or triangular distribution. How much of a difference does that make? Obviously, different distibution shapes will result in very different outputs. You think that the 85% estimate is too long? Try changing from triangular to Beta distribution!

Of course it is necessary to do everything that is needed for risk avoidance or mitigation but still you will not be able to avoid them all. Besides your estimations of activity durations, costs, resource requirements are not perfect, there is always some uncertainty. Simulating risks you can set reliable targets, determine necessary contingency reserves and control success probability trends.
Risk simulation is necessary for reliable estimates of future project results.
The question is open - how many iterations are necessary for Monte Carlo simulation of 10000 activities resource loaded project schedule?
Assumptions - no risk events and conditional branches, no calendar uncertainties, just uncertainties in estimating every activity duration and cost. Additional requirement - 1% accuracy of process convergence. I mean receiving the probability estimations with not more than 1% difference if to do Monte Carlo simulation once more.
Does anybody know the answer?

To Serge Marashlian:
There is always some uncertainty in estimating any activity duration. It does not mean that project planning is useless. Proper project planning takes these uncertainties into consideration to determine which contingency reserves are necessary. The schedule targets that were determined without comsidering uncertainties and risks have low probability to be met.

Dear Serge :-)

Your assumption is perfect!!! This assumption is really philospophy of Project Management, specially risk Management. In practice all factors and processess are risky but manager must to reduce this risk - radically (!). But total reduction is not possible in 100%, of course. (!!!). More suitable is control of risk - not simulating it - but before selection of "risk management method" we must to evaluate levels of risk. If we run random tests without any rational types of distributions our selection/evaluation is bad and our risk analysis is not valuable (it is only play/fun). I suppose that this discussion is related with serious problem of valuability/rationality of risk analysis because discussioners want to be serious managers/planners meybe analysers or simply fanatics of good/faithful planning.

Hello Everyone,
Tomek from Poland

Yes, Frank.
That is why I asked a simple question. You have 10000 activities schedule, no prbabilistic branches, but these activities have uncertain durations and costs (let’s suppose that you have optimistic, most probable and pessimistic estimates and suppose beta-distribution on each activity). Activitites are linked, schedule is resource loaded and resources are limited. Let’s forget about calendars and risk events to make the task simple.
So the question - what is the number of necessary iterations. It is pure mathematical question and I hope that those who use Monte Carlo simulation know the answer.
Vladimir

The number of iterations to reach convergence is not a function of the number of activities but a function of the complexity of the problem eg number probabilistic and conditional branches, use of probabilistic calendars, etc, etc.

Scott,
unfortunately you received information that shall be verifyed. It is not that easy, they did not tell you that analyzing large schedules you need to make millions of iterations to receive reliable results. It means that calculating reliable probability curve for the large project may take years. Usually people have not that much time and restrict the number of iterations by several hundreds. It means that calculated probability of meeting some target is not correct. Let’s suppose that an error is within 10% and it is enough for initial estimate. Now let’s suppose that later you decided to analyze project status and calculated the same probability once more. If the result shows that it became 5% lower you will not be able to make any conclusion. It may be caused by project performance problems or by unsufficient number of iterations.
Unfortunately you will not be able to estimate project performance.
It is interesting that people promoting Monte Carlo simulation never answered these questions - what number of iterations is necessary for receiving reliable probability curve for 10000 activities project (if each activity has uncertain duration and cost) and what time is necessary for proper Monte Carlo simulation of this project. Another question that may be asked - how to estimate the reliability of obtained results (error’ size) if you had made only 0.01% of the necessary number of iterations?
I hope that Tomasz will answer. Being Pertmaster and MC fanatic he shall know proper answers.
Mabe somebody else will join this discussion.
Regards,
Vladimir

A friend suggested I contact Pertmaster, which I did and learned what you stated, that the logic is necessary. Also, Pertmaster recognizes up to 128,000 activities and it is just as easy for the user to have Pertmaster analyze a 10,000 activity schedule as it is a 1,000 activity schedule. The only additional time is waiting for the computer to generate its analysis. I only learned of Pertmaster today and did not realize it had replaced the old Monte Carlo.

Dear Scott and Dayanidhi,

I know that Primavera Systems don’t improve MonteCarlo system today and this system is not connected with new Primavera Enterprise (only with older P3). I know that today official risk analysis software for all products of Primavera is Pertmaster, not MonteCarlo for P3.

I am fanatic of Pertmaster (Primavera of course too) not only in newest form of Pertmaster with MonteCarlo engine. But If you are interested in MC method I would like to inform that MC is here great, powerfull improvement of schedule analysis because You can calculate easy all probabilities of important aspects of schedule (You know it of course). We have not any limitations of MC analysis, I suppose :-). It is not GERT of course, but You can model different interesting situation with good effects! Some problems we have with interpretation of some interrelations but it is subject for other, deep discussion (I will write about it in PEO).

I don’t have license of old MC for P3 but in Pertmaster we can model the risk for summary and hammock tasks (in P3 we have not summary tasks, of course) but risk is related specially with "child" tasks, not with summary tasks. In my oppinion comparisson of MC for P3 with MC in Pertmaster is not valuable today. In some aspects MC for P3 was perfect/best but in Pertmaster we can open P3/PE files directly without any problems too. In PE we can move some effects of MC analysis back to PE.

Today MC for P3 is history if we must to abandon old P3! Pertmaster is good tool, not only for MC analysis!!!! but british producer of Pertmaster is interested only in MC analysis..... It is big problem from my point of view, but You are interested only in MC :-( Meybe my destription is not valuable for You, Dear Scott, but in my oppinion scheduling and MC in one system is better than slowly action of two separated systems so comparrision of this two MC systems is not simply.

good luck for Planning Planet users :-)
Tomek from Poland

Can someone send me a copy of evaluation version of Monte Carlo software that supports P3 version 3.0 or 3.1 to my email id plannerdaya@yahoo.com

TQ

Daya

[please do not post the same message in multiple threads. Thank you.]

I Would think it would depend on what your analyzing

I have studied risk analysis and would like to help. Can someone describe the scenario?
Bob

Dear Pramesh,

You are starter of this discussion so I would like to write You :-) In my oppinion risk analysis with Excel is simple but distant from ideal (waste of secondary analysis of MC simulation effects - we need @Risk or CrystalBall). I am interested in Project Risk so I work with it and I have deep view.

In my oppinion most friendly AND most advanced is Pertmaster! I am user of it in my scientific work because in practice (!) advanced risk analysis is not common desirable in construction (it is only for connoisseurs :-) Today problem is too high price of Pertmaster :-( but other systems are expensive too. It is second problem of using of MCS in "real live projects" (your citation :-)).

We may to discuss about MCS in AEC industry. For me MCS was started with aid of Pertmaster, not with basic Excel. You can fall in love MCS with Pertmaster, too. Pertmaster is easier than Excel in aspect of MCS !!! I am good modeller of risk and modeller of complex projects. In my oppinion Pertmaster must to have own topic on the our discussion list, not only like Risk Analaysis tool (not only!).

Good Luck

I will describe approaches that are used here and supported by Spider Project.

All project information (durations, volumes of work to be done, costs, material requirements) is collected with three estimates - optimistic, most probable and pessimistic.

Potential risk events (like third-party inspections, weather events, delivery delays etc.) are estimated (probability and impact). Impact can lead to additional work that shall be done, delays, additional cost, etc.
You shall choose which risk events should be considered (PMBOK Guide described this approach). Let’s call these risk events as red risks.

Red risks with the probability 90% or more (almost certain) will be included in the optimistic project scenario, 50% or more - in the probable scenario and all red risks - in the pessimistic scenario.
Optimistic version is based on the optimistic estimates of the project parameters, probable - on most probable and pessimistic - on pessimistic.

Three schedules are calculated. As the result we receive optimistic, most probable and pessimistic estimates of project duration and cost (the same about project phases). The next task - to estimate what are the desired probabilities of successful achievement of the project targets. If you set these probabilities the software will calculate desired project (phase) finish date and project (phase) budget. And vise versa - setting project targets you will receive the probability of meeting these targets. It is calculated reconstructing the probability curves. These curves remind beta distribution but are sharper depending on the number of project activities in the resource critical path (for schedule) and the total number of project activities (for budget). If you do it manually define the curve yourself (PERT is one of the options). You may be wrong and your estimate will be for example 10% more or less than actual. What is much more important - this error will be the same (or close) in the future estimates. Later you shall control the trends of these probabilities and estimate project performance - if the probability of meeting project targets is rising then the performance was successful.

So you will have target dates and costs and 3 schedules. Use optimistic schedule to set tasks for the project implementors, target dates will define project management team targets, contract targets should include additional reserves (or profit for costs).

Managing the project you shall update all schedules to be able to estimate current probability of meeting all project targets (example - team target finish probability 70%, contract target finish probability - 85%).

Contract schedule is high level and the result of negotiations. Usually you don;t need to show your internal detailed work plans.

The number of necessary iterations create a huge problem with using Monte Carlo simulation. It is useless in large projects. You can receive rough approximation but you will not be able to rely on results trends. We always insist that probability trends matters much more that probabilities themselves. You can use rough approximation if the error is the same in each following simulation.

first of all there are many methods by which risks can be analysed, like the 3-point estimate method or the Clean sheet method.

as long as u want to keep it simple, i think excel could be used, but simple method means less reliable.

Be carefull with simplistic PERT risk analysis. It is usually wrong as the individual risk distribution of near critical activities might affect the resulting distribution.

As far as I know there is no simple alternative other than a simulation.

If all your activieties are in tandem, none in parallel then you might use a simplistic approach.