Project Risk Management with

Pertmaster
Day 1

Pertmaster Ltd 2006

PMI Professional Development Units

To claim PMI Professional Development Units (PDUs), complete the form:
Continuing Certification Requirements Activity Reporting Form.

Learning Activity:
Introduction to Project Risk Management

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Pertmaster software
Schedule and Cost risk analysis software
Suretrak, P3,
Primavera Enterprise

For
Primavera users
MS Project users
OpenPlan users

MSP 98,2000,2002,
2002/3 Server

Or build standalone risk models

Pertmaster
Project Risk

Pertmaster
Risk Expert

Pertmaster Project Risk

plus

Risk Register
Run only

Create and Run

Templated Quick Risk

Probabilistic cash flow

Extend functionality
Interfaces
Reports

Six Sigma reporting

Macros,
e.g. conditional branching

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Pertmaster course day 1

Introductions and overview

An introduction to schedule risk

analysis theory

Better estimates for completion dates (and

costs)
Exercise: A simple schedule
Effect of skewed distributions
The parallel paths effect
Types of schedule

Running a quantitative risk

analysis

Exercise: The New Store schedule

Importing the schedule (optional)
Checking the schedule
Using Quick Risk
Improving estimates
Viewing P-schedules
Feeding back results (optional)

Resources and cost uncertainty

Overview of Pertmaster
CPM vs. Schedule Risk Analysis

Further results

Exercise: Produce further results

Target date
CPM can mask risks - criticality index
Duration sensitivity measures
Selected tasks / milestones
Further P-schedules

Re-using risk assessments

Exercise: Allocate resources

Resources
Time-related and non time-related costs
Cost uncertainty and risk events

Exporting and importing uncertainty

Exporting and importing risks

Summary, questions and feed

back

An introduction to the risk

register

Exercise: Adding a risk event

Modeling a risk event
Using the risk register to model a risk event

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An introduction to schedule risk

analysis theory

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Overview of traditional CPM

10d

--/--/--

Predicts single completion date and cost

Uses single values for activity durations and costs
Does not take uncertainty into account

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CPM with schedule risk analysis

10d

--/--/-8d

10d

15d

Quantifies probability of completing project on time and budget

Uses 3 point estimates for durations and costs (min, most likely, max)
Takes uncertainty into account

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Better Estimates for Completion Dates

Single-Path Schedule
CPM schedule finishes on December 10,
relies on combinations of durations that equal 70 days

Likelihood of the 10th December?

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Exercise Run risk analysis (1 of 1)

Create the 4 task schedule shown in the
previous slide.
(or open TrainingDesignBuild_1Path.pln from the
Pertmaster Samples folder)

Risk | Run Risk Analysis

Save plan if requested
Keep default analysis options and click
Analyse
Identify chance of completing on time

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Better Estimate for Completion Dates

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Key facts
Accuracy of results improves with more
iterations
Convergence statistic is only at mean
More extreme statistics require more
iterations to converge
Iterations can be more random by
choosing a random seed
Risk Analysis Options | More, then clear Set Own Seed
option

Histograms can be made smoother by

setting
Format | Axes, Override Automatic Bar Range, set bar
range (1 or 7 days etc.)

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Why is there only a 18% chance?

Distributions are skewed

(i.e. most likely is nearer to minimum than maximum)

There is a greater chance an activity will take

more time rather than less time to complete.

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Effect of skewed distributions

What would be the chance of completing
the project on time if each distribution
was symmetrical?

50%
Therefore:
With skewed distributions the chance of
hitting a schedule end date will be less
than 50%

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Parallel Paths effect

This project also completes on
December 10
Is it more or less risky than single path?
Likelihood of December 10th finish?

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Exercise Run risk analysis (1 of 1)

Add new tasks to existing project using copy
and paste.
(Or open TrainingDesignBuild.pln in Pertmaster from the
Samples folder)

Risk | Run Risk Analysis

Save plan if requested
Keep default analysis options and click Analyse
Identify chance of completing on time
Schedule with parallel paths more or less
risky?

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More risky

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Often less than 20% chance

Skewed Distributions

+
Parallel Paths

=
Typically less than 20%
chance of hitting completion
date

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Most likely schedule

10d

8d

10d

15d

A most likely schedule has deterministic activity durations equal to the

most likely durations
The chance of completing the project on time will be dependent on
duration uncertainty and parallel paths
The date it gives is not the most likely

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Deterministic duration always most

likely?
Schedules often contain activities where
the duration estimates are not the most
likely. Why?
Estimator too optimistic.
Estimator was too pessimistic.
Estimator wanted to add their own contingency.
The original estimate was inaccurate.
Others.

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Schedule types

Schedules can be categorized as the

following:
1. The Realists schedule (most likely)
2. The Aggressive schedule (optimists)
3. The Cautious schedule (pessimists)
4. The Scale to Fit schedule (politics!)
Lets look at 2, 3 and 4 in more detail

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2. Aggressive schedule
9d

8d

10d

15d

Activities have durations that are less than their most likely durations
The risk analysis will tell us about the chance (if any!) of hitting the
aggressive schedule date
Any advantages or disadvantages to working to an aggressive schedule?

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3. Cautious schedule
12d

8d

10d

15d

Perhaps the worst type of schedule

Activities with durations that are greater than their most likely (i.e. the
durations include contingency)
We would expect some activities to take longer than planned and others
shorter than planned HOWEVER we do not know which activities will do
what.
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Parkinsons Law
12d

Work expands to fill the time available for

its completion
8d

10d

15d

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4. The Scale to Fit schedule

Schedules are often driven by a
completion date and not realistic
duration estimates
Activity durations are scaled so that
project finishes on a predetermined date
e.g. the contract date, client requirement.

Schedule may then be most likely,

aggressive or cautious

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What type is your schedule?

Do you know whether the durations in
your schedules are cautious, aggressive
or the most likely?
Obtaining three point estimates and
running a schedule risk analysis will help
identify the type of schedule you are
working with.

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Running a quantitative risk analysis

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Why run a quantitative analysis?

To help create more realistic schedules
To improve awareness of project risk
and uncertainty
To identify schedule assumptions
Communication: Develop a better
understanding of the schedule amongst
the project team

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New Store Schedule

File | Open | Samples
TrainingNewStore.pln

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Checking the schedule

Before considering a risk analysis, check
the quality of the schedule
Reports | Schedule Check Report

Produces a report in
MS Word
Can be summary or full report
Content can be customised
Can be badged

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Schedule checker
Checks schedule quality
Constraints

Open-ended tasks
Start to Finish links
Negative lags
Positive lags
Long lags

Broken logic
Calendars on lags
Link on summary tasks (MS Project)

Aim: Reflect reality

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Quick Risk
We want to get a feel for the chance of
completing the New Store project on
time
Quick Risk can be used to assign 3 point
estimates based on the deterministic
activity duration

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Exercise Quick Risk

(1 of 1)

Run a Quick Risk on the project:

Risk | Duration Quick Risk
Enter 75%, 100% and 150%
(skewed distributions)
Risk | Run Risk Analysis

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Summary - Quick Risk

Quick Risk automatically assigns minimum,
most likely and maximum estimates to all or
selected activities as a percentage of the
deterministic duration
A Quick Risk gives us a indication of the
uncertainty in the schedule
A Quick Risk allows us to identify the activities
that are likely to delay the schedule. The 3
point estimates can then be refined on these
activities
Quick Risk can be applied to All, Selected or
Filtered tasks

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Exercise (Optional)
Divide into groups.
Take responsibility for some of the tasks in the
project.
In your group discuss and enter more realistic
maximum, minimum and most likely durations
for the tasks your group is responsible for.
Make a note of any assumptions to justify your
estimates.

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P-Schedules
Pertmaster calculates the percentile date
(e.g. P50, P80, P90) for each activity in
the schedule
Selected percentile dates can be
assigned to each activity and then
displayed on the barchart
P80 Bar
Deterministic Bar
P50 Bar

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Exercise Creating P-Schedules

Risk | Run Risk Analysis, and choose More
Click: Create Task Risk Percentiles
Click Settings button. Set up as:

Click OK and then Analyse

Close Risk View
Double-click on an activity and the p-schedule
dates can be seen
User Fields tab | Dates sub-tab
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Exercise Displaying P-Schedules

View | Retrieve View

Open: Risk - Bars User Dates 1 and 2.vue
Select Custom Task Bars only
P80 Bar
Deterministic Bar
P50 Bar

View | Retrieve View

Open: Risk - Markers User Finish 1 and 2.vue
P80 Finish date
Deterministic Bar
P50 finish date
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Using P-Schedules as a baseline

Customer expectations have been set at
the 80% date.
80% P-Schedule can then be used as
the baseline. Shows the scheduling of
the tasks that give the 80% finish date.
Note: Continue to use deterministic
schedule as your baseline (Parkinsons
law!)

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Summary P-Schedules
Chosen percentiles can be calculated for
each activity in a schedule
The P-Schedule dates are often used as
a risked baseline
The P50 to P90 range are typical
p-schedules used. E.g. Setting client
expectations
The p-schedules can be plotted on the
barchart as bars or markers

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Mitigating risk
If the contract has already been signed,
we need to improve chances of meeting
the contracted date (currently 6%)
The tornado helps us:
Risk | Tornado Graph View

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Mitigating risk
As Locate Premises is the biggest driver to the project
duration, this is the best place to mitigate the risk
We can reduce its worst case by obtaining a guarantee
from the agency
Change Maximum Duration from 23 to 18

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Mitigating risk
Re-run the risk analysis
Chance of meeting deterministic finish has improved
from 6% to 9%
The tornado shows a new top driver

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Duration Sensitivity
What makes an activity have a high duration
sensitivity?
On the critical path
Long duration
Relatively large uncertainty on duration

Sensitivity identifies activities that delay the

project finish. Use it to identify the tasks that
are influencing the project finish due to their
range of uncertainty.

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Exercise Sensitivity Column

(1 of 1)

Display sensitivity column in the barchart:

1. Format | Barchart Columns
2. Add the column:
Risk Duration Sensitivity

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Importing from Microsoft Project

File | Microsoft Project | Open Project
Project in server database
MSP Server
Can feed back analysis results

Project in local database file (MPD)

MSP 2003 / 2000 /

Can feed back analysis results
When asked Append or Overwrite, choose Overwrite

Project in file (MPP)

MSP 2003 / 2000 /

Can not feed back analysis results

Project in MPX file

MSP 2003 / 2000 /

Many other tools
Can not feed back analysis results

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Importing from Microsoft Project

Import mappings
Choose where uncertainty is stored in MSP
Choose how to import resources / costs

Warnings
Progress issues (actuals in the future, or no actuals in the past)
Links to other projects
Planning units

Check all dates:

grey bars
User Start Date 14 and User Finish Date 14

Start Check and finish check

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Importing from Primavera

File | Primavera
Project in P3e database

Can open multiple projects and entire EPS nodes

Can feed back analysis results

Project in P3e XER file

Can export from P3e to an XER file

Can not feed back analysis results

Project in P3 database

P3 v3.1
Can feed back analysis results

Project in P3 PRX file

Download PRMREST utility from:

http://www.pertmaster.com/bin/prmrest.exe
Will restore a PRX file into a P3 database
Can feed back analysis results (only to the P3 database)

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Importing from Primavera

Import mappings
Choose where uncertainty is stored in P3 / P3e
Choose how to import resources / costs

Warnings
Links to other projects
Planning units

Check all dates:

grey bars
User Start Date 14 and User Finish Date 14
Start Check and finish check

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Feeding back results to Microsoft Project

Can feed back P-schedules and sensitivities
File | Microsoft Project | Update Server Project
or Update Project
Export mappings
Choose custom columns for P-schedule dates
If blank, choose Retrieve: MSPMappings.mf3

View in Microsoft Project

Pertmaster | 50% and 80% Finish Dates
or Criticality and Sensitivity

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Feeding back results to P3 / P3e

Can feed back P-schedules and sensitivities
File | Primavera | Update Primavera Project
or Update Primavera P3 Project
Export mappings

Choose custom columns for P-schedule dates

If blank set up mappings and then save for future use.

View in Primavera

View | Layout | Open

Choose layout: Risk Output - User Dates

If layout not in the list

Import
Navigate to C:\Program Files\Pertmaster Software\Pertmaster78x\Others
Choose layout file: Risk Output - User Dates.plf

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An introduction to the risk register

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Estimate Uncertainty or Risk Events?

Estimate Uncertainty
We cannot give an exact duration for an activity. Unpredictable
things can happen that increase or reduce an activity duration

Risk Events
There maybe events that have a probability of occurrence and
when they do occur they have an impact on the schedule

Example - Travel to Work

Uncertainty: It takes between 25 and 35 minutes to travel to
work. The are many reasons why the journey varies by 10
minutes. In fact too many and too minor for us to identify the
specific events that cause this variation
Risk: There is a 5% chance the train will be cancelled adding
another 30 minutes to the journey. This is an event that
sometimes occurs and has a significant impact

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Exercise: Risk event

Use TrainingNewStore.pln
While refurbishing premises, there is a
chance that hidden wiring is discovered
Assessment:
We estimate the likelihood as 10%
We estimate the resulting delay as 10-15d

Add this risk as a task:

Add it after the Refurbish premises task

Call it Find hidden wiring
Link it in to appear after the Refurbish premises task
Give it the appropriate impact

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Exercise: Risk event

Right click on the risk,
and choose Existence Risk
Click Risk On and give it the correct
probability

Step through and run the risk analysis

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Exercise Removing risk events

(1 of 1)

What is the chance of finishing the previous

project on or before the deterministic finish?
Why is this chance so high?
Change the duration of the risk to zero
Re-run risk analysis. What is the chance now?
Why has the chance changed so much?

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Summary - Task Existence

Task Existence can be assigned as a
percentage to any activity
During the risk analysis the activity will occur
for only a percentage of the iterations
Task Existence can be used to model events
that have a probability of occurrence and an
impact
Activities with low probabilities are often given
a zero duration so they do not impact the
deterministic finish date

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Risk Register
The risk register

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Linking Risks to a project schedule

If a risk occurs it may impact one or
more activities (time and/or cost)
Risks can be mapped to activities in a
schedule.
A quantitative risk analysis gives
combined impact of risks on the
schedule completion date and cost.

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Exercise: Risk Register

Use TrainingNewStore.pln
While refurbishing premises, there is a
chance that hidden wiring is discovered
Assessment:
We estimate the probability as Low (10%)
We estimate the resulting delay as Medium (10-15d)

Add this risk as a risk:

Risk | Register
Type its title: Find hidden wiring
Prepare scoring scales for qualitative assessment:
Edit | Risk Scoring

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Exercise: Qualitative assessment

Assess the risk qualitatively

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Exercise: Mapping risk to schedule

Map the risk to the impacted task(s)

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Exercise: Refine impacts

Click on the Quantified check box
Impacts can now be refined

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Building impacted risk plan

Finally, build the impacted risk plan

The risk is added as a task to model:

where in the project the additional delays / costs occur

the size of the impacts
the likelihood of the impacts
the deterministic duration

Step through and run the analysis

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Risk Register: Data flow

Risk Register
(e.g. bespoke, ARM,
Welcom Risk, EasyRisk)

Project schedule
(e.g. Primavera, MSP)

Pertmaster Risk Expert

Risk Register
Mapping risks to activities,
define multiple scenarios

Quantitative risk analysis,

compare scenarios
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Risk Register: Risks in Register

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Risk Register: Map Risks

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Risk Register: Build Impacted Risk Plans

Dont make changes

to the impacted risk
plans!

Make changes to schedule

and / or risks
and rebuild the impacted
risk plans each time.

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Risk Register: Impact on schedule

Project Prism
Entire Plan : Finish Date

100% 26/Dec/05
95% 07/Nov/05

230

90% 20/Oct/05
85% 14/Oct/05
80% 07/Oct/05
70% 29/Sep/05
65% 23/Sep/05
60% 21/Sep/05

138

Hits

55% 19/Sep/05
50% 14/Sep/05
45% 12/Sep/05
40% 07/Sep/05

92

35% 05/Sep/05

Cumulative Frequency

75% 04/Oct/05

184

30% 01/Sep/05
25% 30/Aug/05
20% 23/Aug/05

46

15% 23/Aug/05
10% 23/Aug/05
5%

23/Aug/05

0
23/Aug/05

17/Sep/05

12/Oct/05

06/Nov/05

01/Dec/05

26/Dec/05

Distribution (start of interval)

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Risk Scoring
Edit | Risk Scoring
Create suitable: PID, wording, ranges and scoring

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Importing risks
Copy and Paste
Risk data can be quickly copied and pasted to and from the
risk register grid.

From Excel
Risk data can be stored in Excel and imported into the risk
register.
Pertmaster format export a template from Pertmaster
(File | Export Risk Register, choose XLS file type)
Use template to put risks into template format
Import into Pertmaster Risk Register (File | Import Risk
Register, choose XLS file type)

Other
Import from ARM, Sharepoint, Deltek and create custom
imports

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Resources and cost uncertainty

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Cost Risk
Costs can be assigned to individual
activities and WBS items in a project
A cost assignment can be dependent or
independent of an activitys duration:
Dependent Engineer
Independent Material

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Exercise Set the currency

Plan | Plan Options

Enter your currency symbol

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Time independent costs

Scenario: Locate premises involves hiring an
agency [thats how we mitigated it earlier] which
is a fixed fee of $5,000.
Insert the Cost (Remaining) column.
Plan | Resources: Add a resource with a spread loading.

Assign 5000 units to the task Locate premises

Step through risk analysis and cost does not change

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Time dependent costs

Scenario: Refurbish premises will need 3 decorators,
at $200 per day each.

Plan | Resources: Add a resource with a normal loading

and cost $200.

Assign 3 decorators to the task Refurbish premises

Step through risk analysis and see cost change

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Cost uncertainty
So far the cost variation in our analysis is
due to the uncertainty of the task durations.
Task costs / resources can also be assigned
distributions...

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Uncertainty on Fixed costs

Scenario: The $5,000 agency fee for locating
premises was a good guess, but it could be
different. It will be between $4,000 and $7,000.
Add uncertainty to the agency fee resource
assignment

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Uncertainty on time related cost

Scenario: The number of decorators
employed could be between 2 and 5.
Add uncertainty to the decorator
resource assignment

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Uncertainty on resource rate (1 of 2)

Scenario: The day rate paid to the
decorators is uncertain. It will be
somewhere between $175 and $230 per
day.
Assign a uncertainty to the decorator
resource daily cost

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Uncertainty on resource rate (2 of 2)

Assign cost to Decorator as a sub-resource

Assign distribution

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Day 1 Summary
Distributions skewed towards minimum mean chance of hitting
finish is less than 50%
Parallel paths give rise to less chance of completing project on
time
Schedule types: Most likely, Aggressive, Cautious and Scale to Fit.
Key is to assess risk and uncertainty, to give realistic picture
Projects and programmes can be seamlessly imported form
another project tool or built from scratch
Check schedule, quick risk, refine estimates, run analysis
The Risk Register stores additional risk events that impact the
project
Criticality Index identifies tasks likely to be on critical path due to
uncertainty and risks in schedule.
Duration Sensitivity identifies tasks that influence the project
completion
P-schedules can give well-informed schedules to a chosen
degree of risk, and can be fed back to the original project tool
Cost and resource uncertainty can be added to activities

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Project Risk Management with

Pertmaster
Day 2

Pertmaster Ltd 2006

Pertmaster course day 2

(Morning session)

Templated Quick Risk

Exercise: Using Templated
Quick Risk
Categorising tasks
Importing tasks and
categories
Assign Templated Quick Risk
Save definitions

Correlation
Exercise: Measuring and
defining correlation
Measuring correlation
Defining correlation
Other ways to define
correlation

Probabilistic events
and branching
Exercise: Modeling
probabilistic branching
Re-cap of task existence
Modeling probabilistic
branching

Conditional branching
Exercises: Building macros
Conditional branching macro

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Pertmaster course day 2

(Afternoon session)

Advanced risk register

Exercises: Qualitative and

quantitative risk assessment
and analysis, with mitigation
Further assessment details
Target assessments and
mitigation plans
Audit trail
Risk matrix
Capturing quantitative
assessments
Series impacts
Advanced options
Cost / benefit analysis
Risk Tornado
Importing / exporting

Management Costs

Exercise: Modeling
Management costs
Management costs
Penalties

Probabilistic cash flow

Exercise: Creating and

understanding probabilistic cash
flow data
Cumulative uncertain spend
curves
Per-period uncertain spend
curves
The cost / time football plot
Other settings

Simulation Details

Exercises: Exploring
convergence, seeds and
simulation methods
Number of iterations
Using a seed
Latin Hypercube simulation

Summary, Questions and

Feedback

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Templated Quick Risk

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Templated Quick Risk

Quick Risk can be too generic

deterministic

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Templated Quick Risk

Can apply different shapes to different groups of
tasks
For example:
Categorize tasks by duration uncertainty
Duration uncertainty

Rationale

Min

Likely

Max

High uncertainty

Duration could double

75%

100%

200%

Medium uncertainty

Could be half as much again

80%

100%

150%

Low uncertainty

Could be -10% / +20%

90%

100%

120%

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Example: Qualitative duration uncertainty

Open ExampleRegister-Rocket.pln sample
Scroll to see the Duration Uncertainty column

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Example: Qualitative duration uncertainty

Format | Barchart Columns
The Duration Uncertainty column is actually
User Text Field 1

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Example: Qualitative duration uncertainty

Risk | Templated Quick Risk
Clear All if there is a template already defined
Set up the template shown below

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Exercise: Qualitative duration uncertainty

The TrainingNewStore project team has done a qualitative
uncertainty assessment:

Tell them the chance of completing on time

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Example: Uncertainty by WBS

Can assess duration uncertainty at a
higher level

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Example: Uncertainty by WBS

Can assess duration uncertainty at a
higher level
Phase uncertainty

Rationale

Min

Likely

Max

A020 Preliminaries

We dont know much

about this phase

75%

100%

200%

A060 - Design

We have some
knowledge

85%

100%

150%

A140 - Fabrication

Less uncertain, but are

consistently
underestimated

90%

110%

130%

A180 - Testing

Always uncertainty with

this phase

75%

100%

150%

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Example: Uncertainty by WBS

Risk | Templated Quick Risk
Clear All

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Summary - Templated Quick Risk

Categorise tasks

By
By
By
By

qualitative uncertainty:
discipline:
WBS
when the task happens

High / Medium / Low risk

Design / Engineering / Testing /

Use a different Quick Risk shape for each category

Re-use templates, achieve consistency

Store organisational knowledge

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Correlation

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Correlation
Measure correlation
Sensitivity analysis
Measure cost / time correlation

To measure correlation:
Risk | Scatter Plot
Then Format | Scatter Plot to choose what to measure

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Define correlation
Define correlation
Link two uncertain elements in the model
Reflect common causes without needing too much detail
Take account of Central Limit Theorem (CLT)

Example:
Time to train new staff is related to time to install
computer systems

To define correlation:

Risk | Correlation
Choose the first uncertain element
Choose Correlation
Choose the second uncertain element, and Add
Choose amount of correlation, and OK

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Example: Define correlation

Time to train new staff is related to time to install
computer systems

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Exercise: Define correlation

Open ExampleRegister-Rocket sample
Save with the suffix without correlation (for later
comparison)
Then save with the suffix with correlation
Scenario:
The project team has identified a strong correlation between
A110 Design rocket engine
and A160 Fabricate guidance system
There are many common factors between them, which means
they are likely to tend to either both be long or both be short

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Exercise: Define correlation

Risk | Correlations
Choose A110, and Set Correlation
Choose A160, and Add
Set the strength to 90%

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Exercise: Define correlation

Step through and run the risk analysis
Check that the durations of both tasks move somewhat in step

How has the correlation changed the project

finish date distribution?
Reports | Compare Project S-Curves,
re-open the without correlation
previously saved, choose finish date

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The effect of correlation

Correlation tends to make project finish date
and cost distributions wider
Negative correlation can also apply (and makes
them narrower)
For example, longer design means shorter manufacture?

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Correlation and level of detail

Open Correlation and level of detail.pln
Are the two versions of this project the
same?

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Correlation and level of detail

Reports | Compare Task S-Curves
Choose Duration

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Correlation and level of detail

They are not the same, because at a different
level of detail
Correlation makes them the same

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Correlation and level of detail

The more detail, the less variance (CLT)
unless you have correlation!
Add correlation to reflect reality as best as
possible within reason
Easiest to use Templated Quick Risk, when
categorising by WBS

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Define correlation
Other ways to define correlation
Correlate groups of variables together
Show correlations in a column

In the Risk Register, when a risk impacts many tasks

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Probabilistic events and branching

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RECAP: Estimate Uncertainty or Risk Events?

Estimate Uncertainty
We cannot give an exact duration for an activity. Unpredictable
things can happen that increase or reduce an activity duration

Risk Events
There maybe events that have a probability of occurrence and
when they do occur they have an impact on the schedule

Example - Travel to Work

Uncertainty: It takes between 25 and 35 minutes to travel to
work. The are many reasons why the journey varies by 10
minutes. In fact too many and too minor for us to identify the
specific events that cause this variation
Risk: There is a 5% chance the train will be cancelled adding
another 30 minutes to the journey. This is an event that
sometimes occurs and has a significant impact

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Probabilistic branching
Can express chance of whole groups of tasks
being necessary
Select configuration

Option 1

Design fuel system

Option 2

Design rocket engine

Design fuel system

Option 3

Design frame
Design rocket engine
Design fuel system

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Example: Probabilistic branching

After A090, Select configuration, either:

Option 1: 20% likely
Use an off-the-shelf solution for the rocket which already has a fuel
system and rocket engine, so we dont need the following 2 tasks

Option 2: 30% likely

Use an off-the-shelf solution for the missile which already has a fuel
system, so we dont need the following task

Option 3: 50% likely

Design it all ourselves, so we need to do all the following 3 tasks

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Example: Probabilistic branching

Add the three options as milestones
Link appropriately:
Option 1 successors:

Design fuel systems

Option 2 successors:

Design fuel systems

Design rocket engine

Option 3 successors:

Design fuel systems

Design rocket engine
Design frame

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Example: Probabilistic branching

Double-click A090, Select configuration

Risks tab, Probabilistic Branch sub-tab
Tick Risk On
Add the probabilities
They must add up to 100%

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Conditional branching

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Conditional Branching
Modelling specific project conditions and
consequences
The logic is often simple, but cannot be
expressed using normal project planning
logic
Examples:
If the cost of a task exceeds $10k, an approval delay is
incurred
If configuration selection slips into April, we cannot buy
off-the-shelf

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Example: Conditional branching macro

If configuration selection slips into April,
we cannot buy off-the-shelf
The only option is option 3
Select configuration

Option 1

Design fuel system

Option 2

Design rocket engine

1st April

Design fuel system

Option 3

Design frame
Design rocket engine
Design fuel system
Pertmaster Ltd 2006

Example: Conditional branching macro

If configuration selection slips into April,
we cannot buy off-the-shelf
Tools | Macros | Visual Basic Editor
Navigate to ThisPlan under the Rocket plan.
Double-click on ThisPlan to open a window on
the right

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Example: Conditional branching macro

Choose the Plan from drop down:

This adds a new default sub routine:

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Example: Conditional branching macro

Use the drop down to add the AfterRiskIteration
sub routine:

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Example: Conditional branching macro

In the Plan_AfterRiskIteration routine type this
code:
The configuration selection tasks
name is A090

Option 3s name
Note: In your plan this may be different

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Example: Conditional branching macro

Check your code is as follows:

Close the Visual Basic editor. The code will be saved when
you save the Pertmaster plan.
In Pertmaster run risk analysis and step through some
iterations. Check conditional branch is operating as
expected.
Note: The probabilistic branch will still operate when the
conditional branch is not selected.

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Macro uses
Conditional branching
Modelling specific project conditions and consequences

Interfacing with other applications

Pulling in data automatically from other applications, e.g.
Microsoft Excel
Sending data to other applications, e.g. Oracle Projects

Producing custom reports

Automatically building reports, e.g. in Word or Excel

Enhancing Pertmaster

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Advanced risk register

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Risk Register
Pertmasters risk register is built for:
Efficient quantitative risk analysis that includes specific risk
events

But also:
Qualitative risk assessment
Categorising and organizing risks
Managing risks by ownership
Entering proposed mitigation actions
Tracking risks and mitigation actions
Pre- and post-mitigation cost and schedule benefit analysis
Customizable reporting

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Risk Register
Open ExampleRegister-Rocket sample
Think of three risks that could affect it
Add them to the risk register
Risk | Register

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Risk Register
Can change the next risk ID
Tools | Edit Next Risk ID

Can show deleted risks, and purge them

Edit | Show Deleted Risks
Edit | Purge Deleted Risks

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Risk Register describing risks

Fully describe the three risks
Title a concise description of what it is that may or may
not happen (there is a risk that )
Cause background conditions (ideally facts)
Risk full description of what it is that may or may not
happen
Effect the consequences (be specific in terms of the
affected area of the project)

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Risk Register assessing risks

For each risk, give qualitative assessments
(High, Medium, Low etc.) for:
Probability
Schedule impact
Cost impact
Performance impact

The scores indicate the overall rating of the

risks

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Risk Register risk scores

Try to make one risk red by increasing
one of its assessments

Probability
Schedule impact
Cost impact
Performance impact

Try to make one risk green by decreasing

one of its assessments
Change them back afterwards

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Risk Register risk scores

Edit | Risk Scoring

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Risk Register adding impact types

Add a new impact type
that could apply to one of your risks

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Risk Register adding impact types

Assess the risk for the new impact type

The score will only change if the new impact

types assessment is higher than all the others
Schedule impact
Cost impact
Performance impact

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Risk Register mapping to tasks

Map the risk to specific tasks

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Risk Register refining impacts

Refine quantitative assessments
Can use qualitative assessments as starting point
Clicking on Quantified allows impacts to be refined
Click to refine schedule and cost impacts for a risk

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Risk register: Mitigation Overview

Where we
could be

Where we
are now

How we could get there

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Risk Register adding mitigation

Add two mitigation actions for the risk
Give them Start and Finish dates
Give them an estimated cost

For the other risks, make post-mitigation

assessments the same as for pre-mitigation

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Risk Register running the analysis

Tools | Build Impacted Risk Plan
Build a pre-mitigation plan only
Run the risk analysis
Compare finish date distribution
with plan before you added your risks

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Risk Register risk significance

Show a duration sensitivity tornado
View | Risk Mode
Note the significance on project duration
of your risk

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Risk Register mitigation benefit

Show the effect of mitigation on project duration
and project cost
Build both pre- and post-mitigation plans
Reports | Compare Project S-Curves
(see next slide for example s-curves report)

Optional:
Show the effect of the specific mitigation of your
risk

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Risk Register Compare s-curves

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Risk Register sanctioning mitigation

Choose an action to approve and sanction
File | Return to plan
Add the action as a task to the project, with
duration, cost and links

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Risk Register sanctioning mitigation

Risk | Register
Mark the action as Sanctioned

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Risk Register sanctioning mitigation

Specify the corresponding task in the project
that will complete the action

The action changes status to Planned

and takes the tasks dates and costs

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Risk Register sanctioning mitigation

Finally update the risks pre-mitigated assessment
to assume the action will take place
(and be effective)

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Risk register: Advanced options

Can change:

Colours
Advanced cost options
Default distribution
shapes
Upper limit of VH
impacts

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Management costs

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Management Costs
There may be activities whose duration is
dependent on the duration of other activities in
the schedule:

Project management
Site supervision
Site security
Equipment hire

These type of activities can be modeled using

HAMMOCKS

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Exercise Management Costs

(1 of 2)

An agency will be hired to help us

advertise for, interview and hire staff
Insert a new activity
above Train staff
Change it to a hammock by
typing h in duration
Link the hammock to Advertise
for staff and Hire Staff as
shown below:

Right click to insert

a new activity:

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Exercise Management Costs

(2 of 2)

Risk | Run Risk Analysis

View | Select Task
Select Employment Agency Hire
Right click on distribution graph and
choose Duration

The duration distribution can be used to

view the uncertainty on an activities
duration

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Penalties
There are penalties payable if the new store is
not open within a specified time of signing the
lease
The amount of time we are likely to have to
pay penalties can be modeled with a hammock
During the risk analysis the hammock can
stretch to record the number of days late the
project is:

Hammock extends with project

recording days of Penalties

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Penalties
The impact of penalties can be modeled.
E.g. costs associated with exceeding
agreed contract dates in a project

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Example Modeling Penalties

Add a finish milestone activity Penalties
start
Add a hammock activity Penalties
Link the milestone to the hammock
Double-click on milestone and click on Dates
tab. Enter an imposed start 21/Mar/05 (This is
a start no earlier than constraint)

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Example Penalties histogram

Run risk analysis and view the duration
distribution for the Penalties task:

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Example Penalties Calendar

Penalties are going to be charged 7 days a
week. Currently the Penalties activity is using
a standard 5 day week calendar
Double-click on Penalties and choose General
tab
Change the Calendar to 7 day
Re-run the risk analysis

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Example - Restoring Critical Path

The critical path has been lost as the task
Store ready for opening is no longer the last
task in the network

Double-click on the task Store ready for

opening
Select the General tab and select Always
Critical option

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Exercise Add penalty to Rocket

Model a penalty of $50,000 per day for
late rocket delivery beyond 21st Feb
2008.

What does the penalty distribution look

like? And with risks?
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Probabilistic cash flow

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Probabilistic cash flow

Understand the full effect of
risk / uncertainty
on cost
on schedule
on both cost and schedule together

Make sure analysis

creates data
If option is grayed out, check
settings

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Example: Probabilistic cash flow

Using Rocket sample with the penalty

Include the risks, pre-mitigation
Run the analysis
Create probabilistic cash flow graph

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Uncertain spend curves - cumulative

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Uncertain spend curves by period

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Uncertain spend curves vs deterministic

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Uncertain spend curves football plot

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Random numbers
A monte-carlo analysis requires a supply of
random numbers to pick the values from the
input distributions for each iteration
Computers create random numbers using a
Random Number Generator
SEED

RNG

0 to 1

A seed can be chosen in the risk analysis

options. If no specific seed is chosen then
Pertmaster seeds the RNG with the computer
clock time
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Why have a seed?

If a risk analysis is run using the same seed
the results will be exactly the same each time
the analysis is run (assuming no changes are
made to the model)
Setting a seed gives repeatability of the risk
analysis results
How would the results vary if the seed was
changed for two simulations of the same
model?
ANSWER: Results will vary but the variations
should not be significant
If the variations are significant what is the
problem with our risk analysis?
Pertmaster Ltd 2006

Latin Hypercube
What is Latin Hypercube? It sounds
complicated
Latin Hypercube is a technique that
allows the results of a risk analysis to
converge in less iterations
It was invented when computing time
was expensive and an analysis took
hours rather than seconds
Now it is the default option for an
analysis. If the option is not checked the
then Monte Carlo sampling is used.
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Latin Hypercube how it works

Latin Hypercube sampling recreates the input
distributions more quickly than Monte Carlo by
using stratified sampling
Each distribution is broken down into a number
of equal areas. Each area is sampled once
during the analysis
Uniform distribution sampled

Monte Carlo sampling

Latin Hypercube sampling

Pertmaster Ltd 2006

Day 2 course summary

Templated Quick Risk allows you to assess task duration
uncertainty qualitatively
Risks can be modeled with a probability and impact using
task existence or probabilistic branching
Hammocks can be used to model duration and cost across
selected periods
Correlation can be measured and defined
Probabilistic cash flow charts combine cost and schedule
results
The Risk Register allows deep qualitative and quantitative
assessment and analysis, including mitigation options
Macros can be used to model particular logic in a project
Various techniques can be used to optimise and choose the
number of iterations

Pertmaster Ltd 2006