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E-Focus: Larsen & Toubro Institute of Project Management Uses @RISK to Manage Engineering Outsourcing Projects

In This Issue
What’s New
» L & T Institute of Project
   Management Uses @RISK to
   Manage Engineering
   Outsourcing Projects

» Save the Dates: Palisade Risk
   Conferences in Australia and
   Las Vegas

Case Study
» @RISK from Palisade plays key
   role in LEGO’s Enterprise Risk
   Management strategy

@RISK Modeling Tips
» Using @RISK for Cost
   Estimation of a Defense
   Project – US Air Force Example

Upcoming Webcasts

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2013 Palisade Risk Conferences
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Larsen & Toubro Institute of Project Management Uses @RISK to Manage Engineering Outsourcing Projects
Larsen & Toubro Limited is an Indian multinational conglomerate headquartered in Mumbai. The company has business interests in engineering, construction, manufacturing goods, information technology and financial services, and is India's largest engineering and construction company. It is one of the largest and most respected companies in India's private sector. Set up as a center of excellence in project management, the L&T Institute of Project Management provides high quality education and research in the field and collaborates with leading institutes of repute across the globe for research in this area.

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.

 » Read the full case study
 » More about the L&T Institute of Project Management

Save the Dates: Palisade Risk Conferences
in Australia and Las Vegas

Attracting nearly 1,000 delegates so far this year alone, the Palisade Risk Conferences have become the most important events of the year for quantitative risk and decision analysis. Each event offers real-world case studies from professional users, as well as software training from Palisade experts. Most offer multiple tracks and the chance to meet one-on-one with technical consultants to address your personal modeling problems.

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:

  • Using stochastic modeling for financial analysis in the mining industry – presented by Collahuasi Mining Co
  • Assessing the financial viability of new projects –
    presented by the Brazil National Development Bank
  • Risk assessment of capital projects in the power industry –
    presented by PricewaterhouseCoopers

Upcoming Palisade Risk Conferences include:

 » 2013 Palisade Risk Conference Series

Case Study
@RISK from Palisade plays key role in LEGO’s Enterprise Risk Management strategy
Toy manufacturer The LEGO Group uses Palisade’s risk analysis software @RISK as a key tool in its Enterprise Risk Management framework. The company undertakes Monte Carlo simulations to quantify the volatility that it sees as inherent to its business activities. Key risk information is then presented to the board of directors who, knowing the impact of each risk, can make informed strategic decisions.

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.”

 » Read the full case study

Product Spotlight
Using @RISK for Cost Estimation of a Defense Project – U.S. Air Force Example
In its 2007 Cost Risk and Uncertainty Analysis Handbook, the U.S. Air Force describes in great detail its methodology for estimating the total cost of a given system. This methodology is applied to a potential (but fictitious) missile system. The handbook stresses the importance of first developing a deterministic model, based on point estimates. This deterministic model can then be extended to a simulation model that incorporates uncertainty. Uncertainty is then incorporated according to the guidelines in the handbook.

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.

 » Download the series of cost estimation models

Modeling Multi-Staged Investments with @RISK
Presented by: Eric Torkia, MASc
Technology Partnerz Ltd
   25 July - 11am (Eastern Daylight Time)

   » Register Now

Introduction to Risk Analysis using
@RISK and the DecisionTools Suite

Presented by Palisade Corporation
   1 August - 10am GMT (Greenwich Mean Time)
  » Register Now
   26 September - 10am GMT (Greenwich Mean Time)   » Register Now
   28 November - 10am GMT (Greenwich Mean Time)   » Register Now

Introduction a l’analyse des Risques et décisions
avec @RISK et DécisionTools Suite (en français)

Présenté par Manuel Carmona
Palisade Corporation
   24 septembre, 10h, heure d'été

   » Inscrivez-vous maintenant

Einführung zur Risiko- & Entscheidungsanalyse mit
@RISK und der DecisionTools Suite (auf Deutsch)

Präsentiert von: Sascha Stange
Palisade Corporation
   15. Oktober 2013 10:00 Uhr (Berlin)

   » Jetzt registrieren

Introducción al análisis de riesgo y decisión con
@RISK y DecisiónTools Suite (en español)

Presentado por: Manuel Carmona
Palisade Corporation
   29 de octubre - 10:00 (CET)

   » Regístrate ahora

Introduction to Risk Registers using @RISK
Presented by: Doug Oldfield
Palisade Corporation
   31 October - 10am (GMT)

   » Register Now

» See complete Webcast schedule


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Palisade Corporation is the world’s leading provider of risk and decision analysis software and solutions. Founded in 1984, its products @RISK and the DecisionTools Suite are used by over 95% of the Fortune 100, in nearly every industry around the world. Palisade is headquartered in New York State, and has offices in London, Sydney, Rio de Janeiro, and Tokyo.

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