@RISK Modeling Tips
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Project Risk Assessment
Decision-Making and Quantitative Risk Analysis using @RISK
Larsen & Toubro Institute of Project Management Uses @RISK to Manage Engineering Outsourcing Projects
The Institute used @RISK, Palisade’s Monte Carlo simulation tool for a study to develop a methodology that service providers in the engineering outsourcing industry could use to identify risks that impact the accurate determination of project scope, scheduling, and therefore delivery.
“We chose @RISK for its ease of use and compatibility with Microsoft Excel,” said Dr Chakradhar Iyyunni, Deputy General Manager and Faculty at the L&T Institute of Project Management. “@RISK imports all the analysis into Excel, which means that we can use all the formulae in the software alongside all the @RISK features – a powerful combination for statistical analysis.”
“As many of the projects are small and resources are not dedicated to the team, it is difficult to implement a structured risk management program,” commented Vishal Patil, one of the team members of the design project. “Monte Carlo simulation-based risk analysis is a more reliable approach.”
This study concluded that Monte Carlo simulation was a better way of creating robust project delivery schedules as opposed to a detailed risk analysis exercise, especially for short duration projects that are the norm in the engineering outsourcing industry.
Based on the success of this experiment, the Institute is looking to use @RISK to develop an approach that helps outsourcing project teams to develop risk mitigation strategies.
Save the Dates: Palisade Risk Conferences
Coming up in August, those in the Asia-Pacific region have the opportunity to explore real-world approaches to risk management problems in construction, engineering, oil and gas, mining, infrastructure, and other fields at the Palisade Risk Conferences in Brisbane and Perth. Hear case studies from companies in these sectors, and benefit from software training and personalized help from Palisade consultants.
In November, save time for Palisade’s largest Risk Conference of the year over two days in Las Vegas at the beautiful Mandalay Bay Resort and Casino!
Some examples of past conference sessions include:
Upcoming Palisade Risk Conferences include:
According to Hans Læssøe, Senior Director, Strategic Risk Management at LEGO, “@RISK enables the ERM team to undertake in-depth technical analysis of the risks that are inherent to our operations. At the same time it makes it straightforward to present the findings in a business-focused way to the board of directors so that they can make informed strategic decisions. The overall result is that management can react quickly to mitigate risk as well as leverage opportunities.”
Three overall costs have been designated as @RISK output cells, and their histograms from a run of 1000 iterations are shown. In addition, RiskPercentile functions are used to find what the Air Force calls "Risk dollars." Each is the 60th percentile of the cost distribution minus the point estimate of the cost.
If you run this simulation and calculate correlations between various quantities in column D, you will see that many are indeed correlated. This is because of built-in relationships between the quantities. However, it is also possible to use the RiskCorrmat function to build in other correlations explicitly.
Introduction to Risk Analysis using
Introduction a l’analyse des Risques et décisions
Einführung zur Risiko- & Entscheidungsanalyse mit
Introducción al análisis de riesgo y decisión con
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