1. Quantitative Cost & Schedule Risk Assessment
National Aeronautics and Space Administration
Quantitative Cost & Schedule Risk Assessment
NASA - Marshall Space Flight Center
Office of Strategic Analysis & Communication
Capabilities & Performance Management Office
Capabilities & Development Support Team
Greg Smith (Smith & Associates, LLC)

2. Background MSFC is one of 10 NASA field centers (leader in SE&I)
OSAC responsibility includes PP&C and Risk Integration
PACMO is the PP&C / Schedule Risk process owner
C&DS owns schedule, EVM, related risk assessment, integration processes
Systems Engineering (SE) is an interdisciplinary field of engineering, that focuses on the development and organization of complex artificial systems. Systems Engineering integrates other disciplines and specialty groups into a team effort, forming a structured development process that proceeds from concept to production to operation and disposal. Systems Engineering considers both the business and the technical needs of all customers, with the goal of providing a quality product that meets the user needs.
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Marshall Space Flight Center

3. Quantitative Cost/Schedule Risk Assessment (C/SRA)
Why do it? To determine the probability of finishing on or before a given point in time for a given cost
Tasks in a schedule should reflect the “most likely” duration for each task – typically they do not
Each task is different and has a varying degree of probability of finishing within the duration specified
Schedule risk assessment attempts to quantify these probabilities by assigning values to each task
Bridges the gap between CPM scheduling and the project’s need to know the likelihood of “when”
A large portion of an effort’s cost is driven by its duration
Other factors (resource availability, skill, rate, utilization, political/environmental/organizational factors) can be considered as variables or independently
Marshall Space Flight Center

4. Risk Assessment – Basic Process Flow Diagram
Does Schedule
Meet Integrity
Prerequisites?
Event Triggers Need
for Risk Assessment
Correct
Problems No
Yes
Establish Data
Collection
Technique(s)
Set Minimum, Maximum,
Most Likely Durations
Collect
Data
Assign Probability
Distribution Curves
Evaluate for Special
Conditions and Assign Values
Perform Risk
Analysis
Calculations
Review Analysis
with
Stakeholders
Analyze Results
Marshall Space Flight Center

5. Event Triggers Newly identified Retired existing Existing evolves
Prior to Initial Baseline
Reviews
Risk change
Newly identified
Retired existing
Existing evolves
Scope change
Single significant change
Successive insignificant changes
Key milestones or events
Trades or Alternatives being considered
Marshall Space Flight Center

6. Schedule Risk Assessment Prerequisites
Impediments to performing an accurate SRA:
Constraints (artificially imposed dates) affect risk calculations – takes probability out of the equation
Incomplete or inaccurate logic networks (missing relationships between tasks in a schedule) lead to inaccurate representations
Missing tasks create incomplete and incorrect results
Descriptions should be complete and clear to better enable the assignment of risk parameters
Tasks that are too long (i.e. have long durations) lead to results with large ranges
Total = $5.3 Billion
Marshall Space Flight Center

7. Schedule Risk Assessment
Duration Assignment
The original duration specified in the schedule is assumed to be the “most likely” unless specified otherwise
The minimum, or optimistic, duration is the least amount of time required or allowed to complete the task, if everything goes perfectly
The maximum, or pessimistic, duration is the greatest amount of time required or allowed to complete the task, if everything goes wrong
There are various methods for making these determinations
Training – joint effort (RS40, SMO, Contracts, etc.)
Tailored – start with fundamentals, cover only pertinent subjects.
Assessments – some planned, others requested. Consists of “health checks”, IBR’s, float analysis, etc.
PM software – wInsight, Risk & Risk+, MSP Central, SAP PS, P3e, Open Plan, etc.
EVM model – in progress.
Marshall Space Flight Center

8. Schedule Risk Assessment
Duration Assignment
Methods for making duration assignments, in order of preference:
Data Interview - Evaluate each task independently by collecting data and interviewing personnel and enter each duration manually (preferred method)
Historical Data – Collect and evaluate data for the subject project or similar projects (does not address direct & indirect performance issues)
Grouping – Assign risk parameters to tasks that share common characteristics (not as accurate, but acceptable)
Blanketing – Assign risk parameters with a parametric across the entire project or sections (not very accurate, difficult to validate)
Heuristic – Make your best “guess” (no basis or validity)
Training – joint effort (RS40, SMO, Contracts, etc.)
Tailored – start with fundamentals, cover only pertinent subjects.
Assessments – some planned, others requested. Consists of “health checks”, IBR’s, float analysis, etc.
PM software – wInsight, Risk & Risk+, MSP Central, SAP PS, P3e, Open Plan, etc.
EVM model – in progress.
Marshall Space Flight Center

9. Schedule Risk Assessment Probability Distribution Curves (PDC)
Normal (bell shaped)
Always symmetrical
Beta (skinny bell shaped)
Can be symmetrical or asymmetrical
Uniform (flat)
Triangular (pyramid shaped)
Can be symmetrical or asymmetrical
Marshall Space Flight Center

10. Schedule Risk Assessment
Special Conditions
Probabilistic branching considers the situation where the outcome of a task can result in two or more possible courses of action
Conditional branching addresses the impact of external influences, such as weather
Marshall Space Flight Center

11. Risk Assessment Calculations
A random sampling method is used by the software tool to select possible duration values in the range between the optimistic and pessimistic duration values
Monte Carlo – Speedier method, but has a larger possibility of sampling error
Latin Hypercube Sampling (LHS) – Slower method, reduces sampling error
An iteration is one cycle of calculated outcomes (one sample point from each task)
These calculations are performed by software – the user specifies the number of iterations
Marshall Space Flight Center

12. Schedule Risk Assessment
Results Analysis
**Scheduled for 8/22/04**
Marshall Space Flight Center

13. Cost Risk Assessment Results Analysis
**Planned for $4.9 M**
Marshall Space Flight Center

14. How To Use The Results
Have an understanding of the probability of completing by a certain date
Use to establish contingency or reserve
Monitor the contingency as it gets used
Understand where the risk areas are so they can be monitored and proactively managed
Sensitivity Analysis
Risk Critical Analysis
Self-explanatory.
Marshall Space Flight Center

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