Help wanted for risk analysis.

Hi Darell,

Despite all the fancy software and related bull out there, risk analises in the real terms is seat of the pants stuff, and requires a feel that is gained by experience. We can discuss this elsewhere, as there is a lot of software junkies, who will probably disagree.

In flying terns it is flying with a joystick, and not by wire.

Cheers

Philip

M y god this one was missed by Charlie
I agree risk analysis whether monte carlo
games theory or the like all comes back to what went wrong last time and the time before and what did my mate say went wrong
after all the software only is as good as the data input
fly by the seat its the only way to fly

Are you still using Monte Carlow? oscar?

No I use a system called Dorian Grey
A dummy project is set up where all the nasty risks are kept covered.
The Project runs and any risks that were established, occur and result in delays are transffered to Dorian the dummy project.
At the end of the project by utilising this method the baseline programme is as beautifull as it began while the dorian is horribly mutated.
I believe Dorian Grey has to be created by the owner via satanic software inc
Perhaps Charlie has the website
TTFN

oscar wilde

You are well read, well read in at least one ting at least.

Darrell

You lot are too hard on Charlie...

I’d like his opinion on Monte Carlo -v- Latin Hypercube.

Regards

David

Darell

Monte Carlow ????

Monte Carlo

I would like to see the answer from one of those who really use Monte Carlo simulation.
What is the necessary number of iterations that are necessary to run for receiving the reliable probability curve for the project consisting of 10000 activities, 1000 resources and 50 potential risk events?
All activity durations, resource productivities and other data in this project are naturally uncertained.
I already asked this question earlier but did not receive any answer. I came to the conclusion that Monte Carlo simulation users don’t think about it about it at all. I hope that I am wrong.

Sorry Darrell
Got it now you were referring to the gamberling mecca just outside Dublin ???

Sheeck with Guiness

C**ist I get away with nothing on this forum......

Back to the original Q. & A?
Apart from taking a good stab at it all, or using some onerous software.

Risk Analysis - Has anyone got "An Idiots Guide" to assessing risk?? Maybe its an unanswerable question.

Regards,

Darrell

Hi Darrell,

The first step is identifying risk factors. This requires experience and foresight/imagination.

The second step is evaluating the potential impact of the risk factors. There are several methods for doing this via software such as Monte Carlo, event chaining, PERT, etc. but you need to remember that they are an input-output equations. If you don’t identify the right factors (or model them correctly), it won’t mean much.

Stacy
Participate at the Project Management Knowledge Base!

Love the idea of the Dorian project!

So many questions in a single forum!

Latin Hypercube was essential when machines were slow. Its a compromise to allow fewer iterations to be used without skewing the distibution. Computers are now fast enough to allow the Monte Carlo method to be used unaltered.

How many iterations before convergence? Well if you are using good software e.g. Pertmaster, it will tell you!!

An Idiots guide? You would let an idiot do Risk analysis? We may need medical help here...

Rule 1. Differentiate betwen "risks" and "uncertainty"

Risks are events - say you are building foundations in an historic city, there is a risk you will uncover something of archeological value and have to stop digging. A risk register should be created to list these "objects"

Uncertainty is an attribute of an existing "object" e.g. a construction activity may have a minimum/optimum/maximum duration. These uncertainties may or may not be inherited from the risk register.

OOOPS I may have started writing an idiots guide, and you don’t even know my day rate!

David,
"the software will tell you" is not an answer to the question on the expected number of necessary iterations. I understand that it depends on the project risks structure but still my question was concrete enough and I asked about an estimation. I suspect that I will not have enough time for waiting if the software will answer me or not at all. This number also depends on the accuracy that is needed. So let’s suppose that there is a need for the estimation of the probability to meet project target date that have 0.1% percent accuracy.
Best Regards,
Vladimir

Yes, I suppose "the software will tell you" is hardly a scientific answer. I always use far more iterations than the software itself requires - I do not have a scientific formula for pre-determining how many iterations. I always start with 1000, and even though I do not remember the last time I was working with a project that did not converge at about 200. Typically I stick with 1000, even though it is not strictly necessary. There is no harm in using more iterations than necessary, so my approach is to guess ( we must never loose sight of the fact we are guessing) high rather than low.

Having spent ages planning and closed a considerable number of bids my assesment of tender risk follows the following pattern

1. Do we want the job risk = 0
2. do we need the job? yes! risk = -10 actually its opportunity
3. Does the estimator undertsand the job refer to 1 or 2
4. What does the planner say? dont know still hasent finished the risk analysis risk = 0
5. This is a job we dont want! risk = infinity
6. The client dosent like us risk = 10

Monte Carlo, love it, risk dont care
Is the planner a risk = yes
Do we saCK HIM IF HE DOSENT SHUT UP RISK = 100%

RISK ANALYSIS GOOD FO A SEMINAR AND FREE LUNCH

oscar

Thank you, David.
But I am afraid that the number of necessary iterations and corresponding time is too high for the project consisting of 10000 activities and for 1000 too.

I have to admit I was shocked when I read that you had a 10000 activity network and 1000 resources, ALL of which were subject to uncertainty from 50 risks. These are big numbers.

I first used software to help with risk assesment in 1976, and although I have been on some very large capital projects over the years, I guess $10bn in one year would be the biggest, I have never needed to work with so many activities risk affected.

On one occasion a 36,000 activity network for a 10 day turnaround had less than 100 activities ( those associated with heavy lifts in high winds) that we required to risk assess - quite the opposite of your huge example. The second thing I do when I start to create a risk plan is focus on as short a list of risks and uncertainties as judgement allows.