E-Focus:Embracing Risk Management in the Enterprise – for Projects and More

In This Issue
What’s New
» Embracing Risk Management
   in the Enterprise – for Projects
   and More

» Palisade Global Risk
   Conferences Advance Best
   Practices in Risk Management

» Accenture, Others Note Need
   for Better Risk Analysis in
   Capital Projects in Mining and
   Metals Sector

Case Study
» @RISK Aids Federal Transit
   Authority Projects

@RISK Modeling Tips
» @RISK for Cost and Schedule
   Risk using Risk Registers

Upcoming Webcasts

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2013 Palisade Risk Conferences
These events include industry experts presenting a selection of real-world case studies, practical software workshops and training classes presented by Palisade trainers, consultants, and software engineers. Also, be sure to sign up for an Expert Session, in which you can have an expert review your model and answer questions, one-on-one, at no charge!
» Santiago de Chile: 19 March
» São Paulo: 21 March
» Johannesburg: 25 April
» Tokyo: 14 May
» Shanghai: 16 May
» London: 11 June
» Frankfurt: 13 June
» Las Vegas: 20-21 November

Regional Seminars
» Asia-Pacific
Perth: 19-20 June
Kuala Lumpur: 3-4 July
Sydney: 10-11 July
Melbourne: 17-18 July
Brisbane: 7-8 August
Adelaide: 21-22 August
Bangkok: 11-12 September
Hong Kong: 16-17 September

» EMEA & India
Paris: 10-12 June
London: 16-18 July
London: 17-19 September
Munich: 24-26 September

» Latin America
Santiago: 9-11 de julio

» North America
Calgary: 4-6 June
Portland: 19-20 June
Toronto: 25-27 June
New Orleans: 8-9 July
Cincinnati: 9-10 July
Houston: 16-18 July**
New York City: 30-31 July*
Calgary: 6-8 August**
Boston: 13-15 August
Chicago: 27-28 August*
Atlanta: 10-12 September
San Francisco: 17-19 September
*Project Risk Assessment Seminar
**Special Oil and Gas Seminar

Live Web Training
Decision-Making and
Quantitative Risk Analysis
using the DecisionTools Suite

11-12 July, 1pm-5pm ET
9-10 December, 9am-1pm ET

1-2 August, 1pm-5pm ET
19-20 December, 9am-1pm ET

Project Risk Assessment
using @RISK

18-19 September, 1pm-5pm ET

Decision-Making and Quantitative Risk Analysis using @RISK

31 Oct.- 1 Nov. 1pm-5pm ET

14-15 November 1pm-5pm ET


Trial Versions
Palisade software is available
in fully functional trial versions.
Try @RISK or any of our
software today!

The DecisionTools Suite
The complete risk and
decision analysis toolkit

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Risk analysis software using Monte Carlo simulation for Excel and Project

Visual decision analysis
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The Innovative Optimizer
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The DecisionTools Suite

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Embracing Risk Management in the
Enterprise – for Projects and More

Arras People, a UK-based project management recruiting firm, recently published an article by Palisade’s Randy Heffernan on how project managers – and others – can embrace risk management concepts across an organization. This step is as necessary as having the proper tools and models, and there are many ways to approach the challenge. In the article, Randy outlines some “all-purpose” steps organizations can use to convince others to start thinking about risk in systematic, meaningful ways.

 » Read the full article

Palisade Global Risk Conferences Advance Best Practices in Risk Management
In the last few months, nearly 1,000 professionals from around the world have gathered to push the boundaries of risk analysis through the Palisade Risk Conference series. Since March, Palisade Risk Conferences have been held in Santiago, Chile; São Paulo, Brazil; Johannesburg, South Africa; Tokyo, Japan; and Shanghai, China. Decision makers from industry and academia have presented dozens of real-life case studies, applying sophisticated quantitative techniques in new and exciting ways. These innovative approaches use Monte Carlo simulation, optimization, decision trees, and other techniques found in Palisade’s @RISK and DecisionTools Suite software to solve a wide range of pressing problems.

Some examples 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
  • Achieving optimal inventory levels to minimize cost –
    presented by Mitsubishi Chemical Company
  • Risk assessment of food safety imports –
    presented by the Shanghai Food and Drug Administration
  • Probabilistic risk analysis of cross-border oil projects –
    presented by Sinopec

Upcoming Palisade Risk Conferences include:

 » 2013 Palisade Risk Conference Series

Accenture, Others Note Need for Better
Risk Analysis in Capital Projects in Mining
and Metals Sector

Accenture recently released research illustrating that mining and metals companies could "significantly reduce the costs of large capital projects" by improving their risk analysis and management methods. With billions at stake, and delays and budget overruns the norm, the need for better systematic accounting for risk has never been greater. Accenture’s research was based on 31 interviews with mining and metals executives around the world."

Palisade sees the same trend, with more and more companies in the minerals sector demanding sophisticated, yet easy-to-use quantitative risk solutions like @RISK. The topic spans other sectors involving mega projects as well, such as oil and gas, infrastructure (see Case Study section of this newsletter), aerospace, and defense. The scale and complexity of multi-billion-dollar projects means that risk cannot be ignored. Just a few companies in the mining sector who have publicly given recent talks or workshops on the topic at Palisade events include Collahuasi in Chile, Promon Engenharia in Brazil, Anglo American Kumba Iron Ore in South Africa, and Vale in Brazil.

Fortunately, @RISK’s Monte Carlo simulation is a great tool for understanding the various possible outcomes in any megaproject, and their probabilities of occurrence. With this information, project leaders can better understand the chances of going over budget or of missing deadlines, and what to do about it. @RISK identifies not only what the risks are, but what is driving them, enabling managers to set contingencies and make smarter decisions.

 » Read a case study about a defense-related megaproject using @RISK
 » Experiment with example models using @RISK to model construction
    of a commercial venue, and how to accomplish construction faster

 » Learn how @RISK manages the risks in project management
 » More on the Accenture research

Case Study
@RISK Aids Federal Transit
Authority Projects

Local transit authorities often apply for federal contributions to help fund capital projects. The Federal Transit Administration (FTA), the federal body overseeing public transit in the United States, has established guidelines that call for detailed risk assessments by qualified consultants before granting federal funds. Gannett Fleming, a national planning, design, and management firm, uses Palisade’s @RISK to provide detailed project planning and risk assessment services that exceed FTA guidelines.

Public bodies including the FTA are expecting confidence levels of 70-80% and sometimes higher for project completion estimates. @RISK aids in identifying inherent confidence levels. As respective confidence levels are compared to preliminary budgets and schedules, contingency and schedule float are thus evaluated for sufficiency.

According to Dan Estrada, Project Manager for Gannett Fleming, “@RISK facilitates an integrated approach to quantifying schedule and cost risks and offers concise evaluations of their potential impacts. The software allows us to confidently address FTA requirements.”

 » Read the full case study
 » Read about how @RISK can be used for project management

Product Spotlight
@RISK for Cost and Schedule
Risk using Risk Registers

@RISK can be used in conjunction with MS Project and Excel to model the schedule and cost risks inherent in large, complex projects. This example demonstrates the use of @RISK to build a complete model of the construction of a new commercial venue. The model includes uncertainty in task times, a Risk Register for calculating contingencies, and a link to real-time cash flows in an NPV calculation model.

@RISK probability distributions have been assigned to the durations of several tasks in the schedule, some with a distribution and others using Risk Categories. The uncertain task times are assumed to be uncorrelated.

A Risk Register lists three possible risk events that could impact the project schedule and costs. By using the RiskProjectAddDelay function, these risks introduce schedule delays and associated costs. Specifically, this function allows the model to generate new tasks dynamically, depending on whether the risks occur or not. Changes are reflected at run time only, so it is necessary to run a simulation to see the impact and results of the Risk Register.

The example also contains a model of cash flows that leads to the NPV of the project. In particular, the project costs create a Timescaled Data report. This collects the total cumulative costs during a simulation. After a simulation, you can see the total cumulative costs for the project as they grow over time.

The other reports generated are the NPV and the Contingency for the Risk Register, at different confidence levels. Finally, the cash flow also includes a Revenue Adjustment calculation that takes the portion of the year in which Sales are initiated and applies a discount to the predicted annual revenue.

 » Download the model. (Requires @RISK 6.x Professional or higher)
 » Download a trial of @RISK 6.1 Industrial

Introduction to Risk Analysis using
@RISK and the DecisionTools Suite

Presented by Palisade
   20 June - 10am GMT (Greenwich Mean Time)
   » Register Now
   1 August - 10am GMT (Greenwich Mean Time)   » Register Now
   26 September - 10am GMT (Greenwich Mean Time)   » Register Now

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

Presentado por: Manuel Carmona
   25 de junio - 10am (Madrid Time)

   » Regístrate ahora

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

   » Register Now

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

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

   » Inscrivez-vous maintenant

» See complete Webcast schedule


The Global Leader in Risk
and Decision Analysis

Palisade 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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