@RISK Helps Nuclear Power Company Reduce Cost Overruns by 80%

In This Issue
Case Study
» @RISK Helps Nuclear Power
   Company Reduce Cost
   Overruns by 80%

What's New
» Palisade’s 2014 Risk
   Conference New Orleans
   Draws Professionals from
   Many Industries

» Risk Management Monitor:
   Analyzing the Real Costs of
   Climate Change

@RISK Modeling Tips
» Oil Transportation with
   Weather Disruptions

Upcoming Webcasts

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2014 Palisade Risk Conferences
An intensive day of networking, software training presented by Palisade trainers and consultants, and real-world case studies presented by industry experts. Join us at an event near you. More dates to come for 2015.
» Mumbai:
   13 January

» Johannesburg:
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Regional Seminars
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Auckland: 10-11 February
Sydney: 24-25 February

Bangalore: 15-16 January
Moscow: 27-29 January
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Seattle: 15-17 December
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Ottawa: 10-12 February
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Los Angeles: 10-12 March


Live Web TrainingProject Risk Assessment
using @RISK

9-10 February, 2pm-6pm EST

Decision-Making and
Quantitative Risk Analysis
using @RISK

10-11 February, 11am-3pm EST
17-18 February, 11am-3pm EST

Using Decision Trees with
PrecisionTree to Add Insight
to Decisions

18 March, 1pm-5pm EST


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The DecisionTools Suite

@RISK Helps Nuclear Power Company Reduce Cost Overruns by 80%
Building a new power plant in the U.S. is not for the risk-averse. The average cost of building one of these plants is historically 300% of the planned cost at the start of construction. Because of these prohibitive cost risks, as well as unfavorable public sentiment in reaction to the Three-Mile Island accident in 1979, U.S. nuclear power plant construction had ground to a halt for decades.

Almost 30 years later, the first contracts for new plants were signed by a major U.S. nuclear power company in 2008. The total expected project cost for the three projects was over $30 billion. Hoping to avoid the abysmal track record of cost overruns in the industry, the nuclear power company wanted to use a new and improved risk-management approach to the planning process—so they hired Dr. Sola Talabi, Risk Management Professor at Carnegie Mellon University and Risk Management Consultant for Pittsburgh Technical, to serve as Nuclear Power Plant Risk Manager. “They knew what the history had been with these projects, and they didn’t want it to happen again,” says Dr. Talabi.

In previous power plant construction projects, risk management was only an objective of project managers. This time, risk management was both an objective and a function; the company created a dedicated risk organization whose only role was to manage risk. Furthermore, the company switched from deterministic risk planning methods, to probabilistic methods—using @RISK. Armed with the software, Dr. Talabi and his risk management team were able to characterize the uncertainty associated with cost items and perform quantitative risk analysis using Monte Carlo simulation. They were also able perform a sensitivity analysis to identify key cost drivers, such as the fact that supply chain issues was the greatest risk driver of all.

Thanks to this analytical, @RISK-driven approach, Dr. Talabi and the risk organization were able to dramatically impact these nuclear power plant projects, reducing cost overruns by roughly 80% relative to the historical trend. “While we still have cost overruns, it’s nothing like what we had before,” says Dr. Talabi. “I think it’s very important for decision-makers to realize that the rampant cost overruns of the past can be much better managed using tools like @RISK.”

  » Read the full case study
  » Learn more about @RISK

Palisade’s 2014 Risk Conference New Orleans Draws Professionals from Many Industries
The 2014 Palisade Risk Conference in New Orleans brought together over 150 decision-makers from a wide range of industries to discuss the latest trends and best practices in risk and decision analysis. The forum took place November 20-21 at the Hilton Riverside Hotel and Conference Center.

Over 35 sessions were held across four conference tracks, including software training on @RISK and the DecisionTools Suite as well as real-world industry case studies. Case studies encompassed a wide range of applications, including engineering reliability from CH2M HILL, project funding from Entergy Corp, safety and security from NASA, cost modeling from Woodside Petroleum, and many others. The conference keynote was delivered by Dave MacAdam from Novelis, and dealt with valuation of uncertain R&D projects while facing challenges in organizational culture.

The Risk Conference events prove repeatedly to be invaluable opportunities for participants: “This conference was great. It provided me a lot of insight on the capability and uses of the @RISK tool,” said James Uzdavinis, Engineering Project Controls Manager at The Mosaic Company.

The conference wraps up a global series of conferences for 2014. The 2015 conference schedule will be posted soon!

  » Learn more about the conference and download presentations

'Risk Management Monitor' features Palisade in Analyzing the Real Costs of Climate Change
Randy Heffernan, Palisade’s Vice President, wrote a recently featured piece in the Risk Management Monitor discussing the looming risks of climate change. The piece, titled ‘Analyzing the Real Costs of Climate Change’ details how businesses and organizations are in for serious changes in the coming decades thanks to increasingly unpredictable weather patterns.

Are companies prepared for skyrocketing energy costs to combat extreme heat? Can farmers handle average crop losses of up to 73%? Should businesses invest in oceanfront property that is virtually guaranteed to flood?,” Heffernan asks in his piece.

Some organizations are preparing themselves. The Australian Federal Government hired AECOM, a professional technical and management support company, to run Monte Carlo simulation-based evaluations on flooding risk in populated areas, such as the Narabeen lagoon, near Sydney. “Because climate change is expected to increase flooding in the Narrabeen catchment over the coming century, decision-makers needed a clearer understanding of the different possible adaptation measures,” Heffernan says.

  » Read the full article here

Product Spotlight
Oil Transportation with Weather Disruptions
An oil rig in the Gulf of Mexico serves as an inventory stocking point for several other platforms. Crude oil is generated daily. Some of it is shipped to the coast, some is sent through a pipeline, and the rest is stored at the rig. The potential crude output is constrained because of storage capacity. If the inventory after shipping and pipeline amounts would be greater than the storage capacity, the crude output is decreased so that the final inventory that day is equal to storage capacity. There are also severe weather events that interrupt shipping. These events occur at random times and have random durations. Using the example model below in @RISK you can run simulation to see how severe weather will impact oil transportation.

 » Download the example model
 » More about @RISK  


Life Cycle Cost Analysis Using @RISK
Presented by: Anthony Sclafani
   18 Dec. - 11am EST-Eastern US(5pm CET)  
Register Now

Introducción al análisis de riesgo y decisión
con @RISK y DecisiónTools Suite

Presentado por: Manuel Carmona, Palisade
   06 enero - 11am CET - Central Europe (5am EST)  
¡Regístrese ahora!

Introduction to Risk Analysis using @RISK
(Cost Estimation & Risk Register Focus)

Presented by: Doug Oldfield, Palisade
   08 Jan. - 11am CET - Central Europe (5am EST)  
Register Now

» See complete Webcast schedule


The Global Leader in Risk
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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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