Schedule Risk Analysis – GleeYM https://www.gleeym.com GleeYM offers complete risk management , PMO, Mind Mapping, Training and Digital Transformation Servces! Tue, 14 Jan 2025 03:59:32 +0000 en-CA hourly 1 https://wordpress.org/?v=6.9.4 https://www.gleeym.com/wp-content/uploads/2022/01/cropped-gleelogo-1-1-32x32.png Schedule Risk Analysis – GleeYM https://www.gleeym.com 32 32 166212591 Sink or Swim? Exploring the Hidden Factors that Cause Startup Failure https://www.gleeym.com/2023/08/19/startup-failure/ https://www.gleeym.com/2023/08/19/startup-failure/#respond Sat, 19 Aug 2023 05:33:16 +0000 https://www.gleeym.com/?p=6133

Sink or Swim? Exploring the Hidden Factors that Cause Startup Failure

  1. Summary
  2. Introduction
  3. Startup Failure Reasons
    1. Lack of Market Demand
    2. Insufficient Financial Planning
    3. Ineffective Leadership and Management
    4. Failure to Adopt and Innovative
    5. Inadequate Marketing and Customer Acquisition
  4. Mitigation Strategies
  5. Conclusion
  6. Case Study 1
  7. Startups Fail – HBR Article
  8. Top 20 Reasons Startup Fails

Summary

There are many reasons why startups fail. According to a Harvard Business Review article, two-thirds of startups never show a positive return. The author, Tom Eisenmann, a professor of entrepreneurship at Harvard Business School, set out to discover why so many startups fail. He interviewed or surveyed hundreds of founders and investors, read scores of first- and third-person published accounts of entrepreneurial setbacks, and wrote and taught more than 20 case studies about unsuccessful ventures. The outcome of his research culminates in the publication of a book titled Why Startups Fail. Within its pages, he discerns recurring patterns that shed light on the reasons behind the lackluster performance of numerous startups.

According to the article, many venture capital investors oversimplify the situation by blaming the founders for the failure of the startup. However, Eisenmann identified six patterns of failure, two of which are the most common avoidable reasons why startups go wrong.
Another source, Startups.com, lists the top 13 reasons why startups fail based on an analysis of 101 startup “postmortems” by CB Insights. According to their findings, the number one reason for startup failure is “No Market Need” (42%), meaning that the startup created a product that the market just didn’t want.


These are only a few of the explanations behind the failure of startups. It is a multifaceted problem with numerous contributing factors.

Introduction

Startups are synonymous with innovation, ambition, and the pursuit of entrepreneurial dreams. However, the reality is that not all startups succeed. Many face challenges that lead to failure. In this article, we will explore the common causes of startup failure, supported by statistical data, and provide actionable mitigation strategies for aspiring entrepreneurs.

Startup Failure Reasons

Lack of Market Demand

A significant factor contributing to the failure of startups is the absence of market demand. Without a validated market, startups risk investing time, effort, and resources into products or services that customers do not want or need. Several startups have fallen victim to this, including Juicero (Juicero – Wikipedia), a company that developed an expensive juicer, only to discover that consumers preferred affordable alternatives. According to a study by CB Insights, 42% of startups fail because of this.

Startups Fail blog: https://www.gleeym.com

Insufficient Financial Planning

Inadequate financial planning is a significant contributor to startup failure. Many startups struggle with funding and managing their cash flow, leading to financial instability. According to a report by Small Business Trends, 29% of startups fail due to running out of cash. For example, the company Clinkle (Clinkle – Wikipedia) raised $30 million in funding but failed due to excessive spending without a sustainable revenue model.

Ineffective Leadership and Management

Leadership and management play a pivotal role in the success or failure of a startup. Poor decision-making, insufficient experience, and ineffective team management can have detrimental effects. For instance, Theranos (Theranos – Wikipedia), a high-profile startup, faced significant backlash due to leadership issues and false claims about their blood-testing technology.

Failure to Adapt and Innovate

Startups must be agile and adaptable to survive in a competitive landscape. Failure to adapt to changing market dynamics, emerging technologies, or customer preferences can lead to irrelevance and failure. An example is Blockbuster (Blockbuster (retailer) – Wikipedia), which failed to embrace streaming services like Netflix, resulting in their demise.

Visit the link to read the complete article on Why do startups fail?. The Link is: https://www.gleeym.com/2023/08/19/startup-failure/

Inadequate Marketing and Customer Acquisition

Effective marketing and customer acquisition strategies are crucial for startup success. Inadequate brand positioning, poor targeting, and ineffective marketing campaigns can lead to low customer acquisition rates. For instance, Quibi (Quibi – Wikipedia), a short-form streaming platform, faced challenges in attracting and retaining subscribers due to a lack of compelling marketing strategies. I will discuss more about Quibi in Case Study 1.

Mitigation Strategies

  • Conduct thorough market research to validate demand and identify niche opportunities.
  • Build a strong financial foundation with careful budgeting, securing funding, and monitoring cash flow.
  • Develop strong leadership skills and surround yourself with a competent team.
  • Embrace adaptability and innovation, staying ahead of market trends and customer needs.
  • Invest in effective marketing strategies, brand positioning, and customer acquisition efforts.

Conclusion

Startup failures can be attributed to various reasons, including lack of market demand, insufficient financial planning, ineffective leadership, failure to adapt, and inadequate marketing strategies. By understanding these common causes and implementing mitigation strategies, aspiring entrepreneurs can increase their chances of success. Remember, failure can be a valuable learning experience on the path to achieving entrepreneurial goals. Through careful planning, risk analysis, continuous improvement, and adaptability, startups can navigate the challenges and thrive in the dynamic business landscape.

Case Study 1

One example of a failed startup is Quibi, a short-form, serialized video content platform that was founded and led by a group of knowledgeable and experienced executives. Despite raising a staggering $1.75 billion, Quibi failed to attract a large audience and ultimately shut down.

According to an article on TMS, Quibi launched their app in April 2020, right at the beginning of the Corona pandemic. Quibi offered a monthly subscription plan priced at $5, while an ad-free option was available for $8 per month. Although the COVID-19 lockdowns had impacted the entertainment industry, they were not solely responsible for Quibi’s failure. Right from the start, the project faced insurmountable challenges and despite receiving substantial investments from prominent media companies, it ultimately met its demise.

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Startups Fail - HBR Article

There are many reasons why startups fail. According to a Harvard Business Review article, two-thirds of startups never show a positive return. The author, Tom Eisenmann, a professor of entrepreneurship at Harvard Business School, set out to discover why so many startups fail. He interviewed or surveyed hundreds of founders and investors, read scores of first- and third-person published accounts of entrepreneurial setbacks, and wrote and taught more than 20 case studies about unsuccessful ventures. The outcome of his research culminates in the publication of a book titled Why Startups Fail. Within its pages, he discerns recurring patterns that shed light on the reasons behind the lackluster performance of numerous startups.

According to the article, many venture capital investors oversimplify the situation by blaming the founders for the failure of the startup. However, Eisenmann identified six patterns of failure, two of which are the most common avoidable reasons why startups go wrong.

visit Why Start-ups Fail (hbr.org) to read the complete article.


Another source, Online Startup Accelerator | Startups.com, lists the top 13 reasons why startups fail based on an analysis of 101 startup “postmortems” by CB Insights. According to their findings, the number one reason for startup failure is “No Market Need” (42%), meaning that the startup created a product that the market just didn’t want.
These are only a few of the explanations behind the failure of startups. It is a multifaceted problem with numerous contributing factors.

Top 20- Reasons Startup Fails

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]]> https://www.gleeym.com/2023/08/19/startup-failure/feed/ 0 6133 Are Caring about the Penalty Clause in a Mega Construction Project? 3 Questions Need to be Addressed! https://www.gleeym.com/2021/02/21/penalty/ https://www.gleeym.com/2021/02/21/penalty/#respond Mon, 22 Feb 2021 00:00:10 +0000 https://www.gleeym.com/?p=2844

Construction Project - Better way to Envisage Your Project's Future. How? 4 Graphs are Enough to Illustrate!

Key Words

Construction, penalty, Delay, Contractor, Client, Owner, Construction Project, Project Delivery, Project Controls, Brown Field, Green Field, Cost Estimates, Schedule, Integrated Cost Risk Analysis, Risk Register, Execution, Planning, Remote Area, Skilled Labor, Material Handling, Bulk Material, Construction Equipment

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QUANTITATIVE RISK ANALYSIS

Summary

Delays in construction projects can lead to hefty penalties. These cost implications shouldn’t be overlooked and should be planned for in a variety of ways by both contractors and subcontractors. The importance of understanding and planning for these delays shouldn’t be underestimated, considering that contractors and subcontractors are often the ones responsible for paying the penalties. By understanding the consequences of delays, you can work to prevent those delays and avoid paying the penalties!

Read article on Project Cost and Risk analysis: 

https://www.gleeym.com/2021/02/16/accessroad/

Case Study

Access Road Construction Project that is required to be done well before commencing process plant construction. The project schedule, schedule and cost risk analysis have already been discussed in the previous article.

As per the penalty clause in the contract, $5,000/day penalty will be imposed to the contractor in case of delay for each day after the target date. Interestingly, there is no cap on penalties.

Top Risks

The top identified risks are:

  1. Flash Flood
  2. Delay in Delivery of Material
  3. Unavailability of Skilled Labor

 

Is it important to focus on Access Road Construction for mega Complex remote project? 4 Figures Depict a Complete Story!

Important Consideration

The construction industry is a high-risk, high-reward industry. It’s important for builders, contractors, and subcontractors to have a thorough understanding of the full cost implications of delays in construction projects. Understanding the potential penalties for delays can help your business plan better and potentially reduce your overall cost.

Construction delays can be a result of many different factors, but they are rarely the fault of the contractor doing work. The best way to avoid being placed in that situation is to make sure your project is documented with proper project controls. One of the factors to consider when maintaining project controls is the role that cost plays. It’s hard to estimate cost without knowing the impact of the delay you’re facing, which is why it’s so important to analyze the cost risks before projects begin. It’s also vital to integrate the risk analysis into your schedules and plans so that you can have well-executed plans that are also cost conscious. By making sure you understand cost implications before you plan, you can be sure that you have a plan that works well for your business!

Risk assessment for a mega complex construction project-www.gleeym.com/qra
Pic. 1 - Risk Assessment for Mega Complex Projects

Delays can happen to anyone who’s involved in construction projects. Contractors, subcontractors, and builders are required to understand the cost implications of delays. Knowing the penalties associated with uncompleted projects can provide valuable insight into how much money is available to complete a project. If you’re involved in a construction project, you should be aware of the different types of penalties that may be implemented. The most notable of these penalties are completion delays, mobilization delay, and liquidated damages.

Construction risk assessment-www.gleeym.com/qra
Pic. 2 - Construction Risk Assessment Services by GleeYM

Project Scenario

Project complete target date is 26-8-2021 with the cost estimates of $9 M.

The project owner put a penalty clause that if the project delays after the contractual deadline i.e., 26-9-2021, then there will be a penalty of five thousand ($5,000) dollars per day.

This analysis provides an equal opportunity to the client and the contractors including subcontractors to revise the schedule accordingly and negotiate the timelines and the budget.

Why to develop a model and run a Monte Carlo simulation? The simple answer is to forecast your project execution while planning in present.

QUANTITATIVE RISK ANALYSIS

There are three important questions that can be addressed for a client and a subcontractor:

  1. What are the chances that the project schedule will be delayed, and cost overrun?
  2. What will be the 50th percentile for a penalty in case of project delay?
  3. What will be the probabilities of occurrence of different possible outcomes for a penalty?

Quantitative Risk Analysis

GleeyM Offer services to identify risks and perform Quantitative Schedule Risk Analysis (QSRA) and Quantitative Cost Risk Analysis (QCRA) for mega complex projects!
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Probability distribution graph by www.gleeym.com/qra
Pic. 3 - Probability Distribution for a Project Schedule

There is 50% (mean) chance that project will be delayed by 62 days. Furthermore, there is 80% chance that project will be delayed by 85 days.

Project cost overrun distribution graph by www.gleeym.com/qra
Pic. 4 - Probability Distribution Graph for a project Cost

There is 50% chance that the project cost overrun will be $4.474 M. Whereas cost overrun will be $3.194M between P50 – P80.

Penalty

Penalty S-Curve by www.gleeym.com/qra
Pic. 5 - Penalty S-Curve

It’s crystal clear that based on the current schedule and mapped uncertainties and risks; the penalty will be substantial.

As per the contract, the penalty will be $5,000 per day. Therefore, there is a 50% chance that the penalty will be $160 K in case of project delay beyond the contractual deadline of 26-9-2021.

What if a project delays further? Then from a distribution graph, there is an 80% chance that the penalty will be $325 K.

The question is what will be the monetary benefit to the contractor? How to address it while negotiating the contract and mitigate plans during the project planning? In case of delay, will there be an impact on CAPEX? Will there be an impact on OPEX?

Kindly give your comments and like our articles for more updates!

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Conclusion

Integrated risk analysis is an equally important for both Client and Contractor. Risk Based Decision Making is required to demonstrate ALARP/ALARA. By incorporating what if analysis in ITB, contracts and planning will definitely help to forecast project health and EVM.

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]]> https://www.gleeym.com/2021/02/21/penalty/feed/ 0 2844 Is it important to focus on Access Road Construction for mega Complex remote project? 4 Figures Depict a Complete Story! https://www.gleeym.com/2021/02/16/accessroad/ https://www.gleeym.com/2021/02/16/accessroad/#respond Tue, 16 Feb 2021 18:56:01 +0000 https://www.gleeym.com/?p=2646

Real Estate Development Project - Better way to Envisage Your Project's Future. How? 4 Graphs are Enough to Illustrate!

Keywords

Access road construction, Mega complex project, Construction project, Schedule delay, Cost overrun, Sensitivity analysis, Uncertainty, Risks, Weather, Flash flood, Energy, Oil & Gas, Mining, Monte Carlo simulation, What if analysis, Distribution graph, Cost risk analysis, Risk drivers, Schedule risk analysis, Integrated risk analysis

Summary

Energy and mining projects are complex and mostly being executed in remote areas. Site accessibility, weather, uneven terrain, and mobility are the factors that make it more difficult to execute remote area projects. After asset acquisition and getting all necessary permits, the construction of an access road to actual site area is a topmost priority.

Flash flood is unpredictable and can be showstopper in hilly terrain. Analyzing the impact of flash flood, using Monte Carlo simulation, helps to examine the various scenarios and plan mitigation actions to minimize the risk.

Case Study

The construction of access roads is an extremely important that needs to be done at the right time. Any delay in construction can delay the site access and mobilization of team and equipment for field development, and It also needs to be done with the best equipment and materials available, keeping in mind the specific needs of the client.

Flash Floods are unpredictable. Mostly, water follows its path, but it changes its direction depending upon the water quantity and pressure, etc.

Project Schedule

Level I project schedule is shown in fig. 1:

Level I Schedule developed by Gleeym for schedule and cost risk analysis
Fig. 1- Level 1 Schedule

Uncertainty and Risk

There can be a long list of  risks but considered only three (3) top risks.

  1. Flash Flood – Recurring flash flood from May to Sep to hamper Access Road Construction and Plant site.
  2. Delay in delivery of Bulk Material to site
  3. Unavailability of Skilled Labor

Risks were mapped to the activities along with the uncertainties.

Monte Carlo Simulation

After schedule check, mapping uncertainties and risks to schedule activities ran the Monte Carlo Simulation. The “Distribution Graph” is showing the results for a schedule in fig. 2:

Access Road S curve performed by GleeYM
Fig. 2 - Distribution Graph (S Curve) for a Schedule

With uncertainties and risks, the chances of meeting target date are almost 0%. The distribution graph shows that there will be a 50% (mean) chance that the project will be completed on 22-10-2021 i.e., 57 days.

What about the time-phased cost? The “Distribution Graph” is showing the results for a cost in fig. 3:

Time phase distribution graph for cost by Gleeym
Fig.3 - Distribution Graph (S Curve) for a Cost

With uncertainties and risks, the chances of meeting target estimated costs are almost 3%. The distribution graph shows that there will be 50% (mean) chance that extra cost will be $ 1,445,705. Furthermore, there will be an 80% chance that total project cost will be around $11.72 M.

Probability Cash Flow performed by Gleeym
Fig. 4 - Probabilistic Cash Flow (PCF)

What if to visualize the impact of Flash flood to schedule only? The “Distribution Graph” is showing the impact of Flash flood to a schedule in fig. 5.

Analyzing impact of single risk to a schedule. What if analysis
Fig. 5 - What if Analysis with Flash Flood Risk Only

With only Flash flood risk, the chances of meeting target date are almost 0%. The distribution graph shows that there will be 50% (mean) chance that schedule overrun will be 29 days. Furthermore, there will be an 80% chance that project completion date will be 29-10-2021 i.e., 34 days.

 While access roads can be constructed by any means necessary, it is much more cost-effective to use specialized contractors trained in their construction. Each contractor has specific standards that must be met before they begin any work.

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Conclusion

Access roads are crucial for any oil and gas project, not just for safety but also to allow construction equipment to enter the site, move materials, and complete the project. 

This is a story of a project that will be started out with a big dream and ended with great success. Nothing is easy; everything is challenging, but the results will be rewarding.

Question

Question: What if to build a bridge to over come the impact of a Flash Flood?

 

Answer: I will discuss it in the next article.

 

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]]> https://www.gleeym.com/2021/02/16/accessroad/feed/ 0 2646 5 Ways Risk Management Software Can Help Your Business. Are You Still Not Considering Risk Software? https://www.gleeym.com/2021/02/11/5waysrisk/ https://www.gleeym.com/2021/02/11/5waysrisk/#respond Fri, 12 Feb 2021 03:50:08 +0000 https://www.gleeym.com/?p=2368

Real Estate Development Project - Better way to Envisage Your Project's Future. How? 4 Graphs are Enough to Illustrate!

Keywords

Risk Management Software,  Software Implementation, Risk, Schedule Risk Analysis, Cost Risk Analysis, Monte Carlo Simulation, Risk Register, ERM, Qualitative Risk Analysis,  Quantitative Risk Analysis, Schedule, Cost, Dashboards, Data, Business Risk, Financial Risk

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Summary

Risk software is the most important asset of your business’s overall risk management system. You can’t afford to implement this technology without first understanding how it works, why you need it, and how it fits into your overall risk management strategy?

Mind Map for risk software by GLEEYM
Pic 1- Risk Implementation

Introduction

It’s not always easy to predict what the future will hold, so it can be difficult to understand how to manage risks in your business. However, with a risk management software solution, you’ll save time and money and help your company run more efficiently. 

Before an employee’s fingers hit their keyboard, they must make a decision about what kind of risk management software to use. Here are some tips on how to choose the right risk management software for your business and get started with implementing it.

GleeYM can help you with a valuable service to pick and incorporate risk management software for decision making and meeting strategic goals. Risk management software is critical to meet strategic goals. However, in this era of uncertainties, the best results happen when you implement risk management software that is easy to use, customizable, and fully integrated. While software selection, consider these following five points (5 ways) for more profitability, productivity, and sustainability:

  • Decision Making.
  • Schedule Risk Analysis.
  • Cost risk Analysis.
  • Project, Business and Financial Risk Analysis.
  • Key Risk Indicator.

Whether you want to select and implement a standalone or enterprise level software, we will walk you through the planning process and implementation methodology.

Contact GleeYM for more discussion.

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https://www.gleeym.com/software for details

Schedule Risk Analysis

Risk software is the most important asset of your business’s overall risk management system. You can’t afford to implement this technology without first understanding how it works, why you need it, and how it fits into your overall risk management strategy.

While software selection, consider these five (5) following points for more profitability, productivity and sustainability:

1- Decision Making

Risk software can help to make decision making under uncertainty. Quantitative Risk analysis software has the capability to specify input and associated uncertainties and risks. After performing Monte Carlo simulation, decision makers can get the numbers to make decision. 

2- Schedule Risk Analysis

Schedule risk analysis helps assign uncertainty and risk(s) to a specific activity. It helps to understand the impact of activity delay and immediate milestone.

visit https://www.gleeym.com/qra

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3- Cost Risk Analysis

Cost risk analysis helps to identify key cost drivers after performing Monte Carlo simulation. Advanced what-If analysis helps to simulate various scenarios and compare results.

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https://www.gleeym.com/blog for more details

4- Project & Business, Financial Risk Analysis

In this era of 2nd machine age, change is inevitable. Cost of doing business, sustainability and meeting strategic goals are becoming challenging. Therefore, businesses are continuously evaluating uncertainties and risk associated with project and business by assessing NPV, IRR (Discounted cash flows), Loans, Credit risk, currency risk, trading and market risk etc.

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https://www.gleeym.com/blog for more details

5- Monitor Key Risk Indicator (KRI)

Risk software helps to monitor key risk indicator (KRI). Analyzing KRI trends, helps to adapt decisions accordingly. 

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]]> https://www.gleeym.com/2021/02/11/5waysrisk/feed/ 0 2368 1 big reason, why to choose Long Lead Item as a “Focused Activity”? https://www.gleeym.com/2021/01/31/llirisk/ https://www.gleeym.com/2021/01/31/llirisk/#respond Sun, 31 Jan 2021 23:55:47 +0000 https://www.gleeym.com/?p=2154

1 Big Reason, Why To Choose Long Lead Item As A “Focused Activity”?

Keywords

Construction Procurement, Procurement Strategy, Long Lead Item, Gas Process Facility Construction, Sensitivity Analysis, Monte Carlo Analysis, Procurement Risk,  Distribution Graph, Cumulative distribution graph, Quantitative Schedule Risk Analysis, Quantitative Cost Risk Analysis

Summary

In mega complex project, managing risk is a necessity to ensure that your project is not derailed by unexpected events.

The world of construction procurement is a complex one. New processes, regulation, complex supply chain and complicated standards are popping up rapidly, making it difficult for construction companies and even for clients to stay on top for smooth execution.

Procurement (including contracts) is a key focus activity, especially the long lead items. Project schedule provides only a deterministic value. What if there is a delay in delivery of Long Lead Items to a site?

The distribution graph is showing, there is only a thirty three percent chance to meet the target date. If the anticipated risks occur, then What will happen? Of course, the construction, pre-commissioning, commissioning, and operations will be delayed. It will not only hamper CAPEX, but OPEX will also be impacted.

Quantitative Schedule Risk Analysis (QSRA)

Quantitative risk analysis is a computer-based method of analyzing the probability of a risk occurring and quantifying its effect on the project. It can be used to estimate expected costs and rate schedules for various projects i.e. Quantitative Schedule Risk Analysis (QSRA) & Quantitative Cost Risk Analysis  (QCRA)

Quantitative risk analysis (QRA) is a set of techniques that helps to prioritize and manage risk within a quantitative project. QRA tools assist decision makers in identifying the most critical risks and cost drivers for their projects, enabling them to make informed decisions about the future course of action.

Quantitative risk analysis (QRA) is the process of determining how likely it is that a particular investment decision will be successful. To do this, you need to quantify the potential risk in your project and assign a probability to each risk.

Procurement of Material and Long Lead Item (LLI) - A Focused Activity

It is important to understand that the quantitative risk assessment process will allow you to determine the level of risk that your project faces. What is the probability of events occurring? How likely are things to go wrong? In order to make sound decisions about strategic direction, you must have accurate information about the risks facing your project. 

A Gas process facility is a mega complex Greenfield construction project. According to the level-I schedule; a deterministic project completion duration is 966 days. After validating schedule, validate the schedule followed by Monte Carlo Simulation (MCS). Procurement of Material and long lead item was considered as “Focused Activity.” It’s second main driver after the construction for schedule delay and cost over run.

It’s a common phrase that “Knowing Long lead Items (LLI) early will speed up the construction execution.” It’s nota reality in areal world of executing mega complex projects. There are many factors internal and external that influence timely delivery Long Lead Item (LLI) to site. Few factors are:

  • Design data
  • Purchase Requisition (PR)
  • Purchase Order (PO)
  • Shipment
  • Load and Unloading
  • Damage during shipment
  • Damage during road transportation
  • Insurance
  • Manufacturing location
  • Single source/sole source
  • Long lead Item dates are missing in schedule
  • Various versions of schedule within the project – very common in mega complex projects.
  • Date for delivery at a site
  • Shop drawing submittal
  • Date plus design data
  • Shop drawing approval data
  • Fabrication/manufacturing schedule
  • Fabrication start
  • Quality control, inspection and third party inspections
  • Manufacturing Site visit
  • FAT
  • Fabrication completion
  • Shipping Date
  • SAT
Above all the procurement process time line set by the procurement department should also be known. Normally for a mega project to issue a PO might take six (6) months.
Gleeym offers Quantitative schedule & cost risk analysis using Monte Carlo Simulation.
Fig 1 - A Cumulative Distribution Graph for a Finish Date

A Table -1 is showing percentile, cost and contingency reserved required for making risk-based decision regarding schedule. It’s the management choice to choose P50 or P80 for a cost contingency reserves. 

Table 1 for Schedule contingency reserve
Table 1- Schedule Contingency Reserve
Fig 2- A Cumulative Distribution Graph for a Cost

A Table -2 is showing percentile, cost and contingency reserved required for making risk-based decision regarding cost. It’s the management choice to choose P50 or P80 for a cost contingency reserves.

Cost Contingency Reserve
Table 2 - Cost Contingency Reserve

Conclusion

It’s the management choice to choose P50 or P80 for a contingency reserve. The Organization usually prefers P80. Determine the contingency reverse is the one (1) biggest reason!

During a project start the level of information is low and risk is high. Therefore, it is recommended to run the Monte Carlo Simulation (MCS) at the beginning of project phase or before gate approval of a previous phase. It will support management to make a decision under uncertainty. A monte Carlo simulation is a requirement for making risk-based decision. It’s not optional!

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]]> https://www.gleeym.com/2021/01/31/llirisk/feed/ 0 2154 Digital Product Development and Decision Making Under Uncertainty https://www.gleeym.com/2020/10/20/digitalproduct/ https://www.gleeym.com/2020/10/20/digitalproduct/#respond Wed, 21 Oct 2020 03:05:26 +0000 https://www.gleeym.com/?p=1961

Digital Product Development and Decision Making Under Uncertainty

Digitization is dominating in this era of 2nd machine age. A webinar. Worth watching it. Isn't?

The failure rate is high in case of product Development. Technology, competitors, and market dynamics are the key factors, but one can’t ignore cost and schedule.
Cost and schedule model development is the starting point to plan the development of a digital product.
Whether it’s agile, scrum, or waterfall, planning is utmost to avoid financial loss.

@RISK helps to model uncertainty to cost and schedule. @RISK has the capability to analyze the schedule without using any scheduling software and apply uncertainty.

Whether it’s agile or scrum or waterfall methodology, developing schedule and cost estimate are essential.  

 

<div id=”wi105″><div class=”sq_wiki_content” style=”position: relative;clear: both;background: white;font-size: 14px;color: #333;max-width: 500px;margin: 5px auto 5px auto;padding: 13px;border: 1px solid #DDD;-webkit-box-shadow: 0 1px 0 #DDD;-moz-box-shadow: 0 1px 0 #ddd;box-shadow: 0 1px 0 #DDD;”><a id=”w_0″ class=”sq_wiki” href=”//en.wikipedia.org/wiki/Decision_theory” title=”Decision theory” style=”display: block;font-weight: 700;color: #0074B7;line-height: 1.4em;margin-bottom: 5px;text-decoration: none;”>Decision theory</a><div class=”sq_wiki_text” style=”font-style:italic;color: #333;”>re-evaluation of what useful <span class=”searchmatch”>decision</span>-<span class=”searchmatch”>making</span> requires. The area of choice <span class=”searchmatch”>under</span> <span class=”searchmatch”>uncertainty</span> represents the heart of <span class=”searchmatch”>decision</span> theory. Known from the 17th</div></div></div><div><br style=”clear:both” /></div>

<a href=”https://www.gleeym.com/2021/02/11/5waysrisk/” title=”5 Ways Risk Management Software Can Help Your Business. Are You Still Not Considering Risk Software?” style=”font-style:italic;color: #333;”>https://www.gleeym.com/2021/02/11/5waysrisk/</a>

Also visit following link to watch recorded webinar

Capital Project Petrochemical Process Plant, IRR, and NPV Analysis – Webinar

Digital product development and decision making under uncertainty - www.gleeym.com/qra
Pic-1 Digital Product Development
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]]> https://www.gleeym.com/2020/10/20/digitalproduct/feed/ 0 1961 Capital Project Petrochemical Process Plant, IRR, and NPV Analysis – Webinar https://www.gleeym.com/2020/08/25/capitalproject/ https://www.gleeym.com/2020/08/25/capitalproject/#respond Tue, 25 Aug 2020 22:10:20 +0000 https://www.gleeym.com/?p=1607

Capital project for the petrochemical process plant (downstream) is slightly different from other capital projects. It requires estimating Total Installed Cost (TIC) plus Owner cost in order to find the complete project cost. Cost estimation for petrochemical process plant is comprised of equipment specification and definite plant facility information.

In this case study, there are 2 products that will be sold in two regions. The price strategy is different so the IRR and NPV will be calculated for base case and under uncertainties and risks. Then we’ll compare the IRR and NPV under different scenarios.

Also visit following link to watch recorded webinar

Digital Product Development and Decision Making Under Uncertainty

Petrochemical plant project management - www.gleeym.com/qra
Pic-1 Project Management
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]]> https://www.gleeym.com/2020/08/25/capitalproject/feed/ 0 1607 Risk Register – Doodle https://www.gleeym.com/2020/07/15/riskrdoodle/ https://www.gleeym.com/2020/07/15/riskrdoodle/#respond Wed, 15 Jul 2020 04:37:03 +0000 https://www.gleeym.com/?p=1557

RIsk Register - Doodle, a Visual illustration! How?

he Risk Register, risk log, a repository to record, analyze and store risk data.

According to IRM’s A Risk Practitioners Guide to ISO 31000: 2018:

“The nature and extent of communication of the information contained in the risk register throughout the risk architecture of the organization also help define the risk management context.”

The Risk register is a proportionate, aligned and dynamic document to tell risk stories to all the stakeholders. contained key risk information for risk assessment.
The risk register communicates and provides information to the stakeholders both ways. Top management looks for project risk (as a whole) and Key performance indicators to visualize overall project health. It is only possible by connecting the dots and present data in the form of interactive charts. Focus on risk analytics to quantify, measure and envisage uncertainties to deal with upcoming challenges of global expansion and fourth industrial revolution or second machine age. Counter challenges of digitizing with digital data. Risk visibility with infographics in risk register can be a game-changer.

GleeYM offers strategic planning with Mind Maps.

Risk Register – Doodle , a visual illustration in an easy way!

Also read: https://www.gleeym.com/2019/11/20/communicate-with-risk-register/

My post related to Risk Register template was viewed by 30,000 people and more than 15,000 people have downloaded the template. I have made this doodle to describe the simple steps required to capture information in the risk register.

QUANTITATIVE RISK ANALYSIS

RISK MANAGEMENT SYSTEM

TRAINING THAT WORKS FOR YOU. HOW? DISCUSSES

MIND MAPPING SOLUTIONS

 

Quantitative Risk Analysis

GleeyM Offer services to identify risks and perform Quantitative Schedule Risk Analysis (QSRA) and Quantitative Cost Risk Analysis (QCRA) for mega complex projects!
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Webinar - Watch it for Free

Capital Project Petrochemical Process Plant, IRR, And NPV Analysis – Webinar
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]]> https://www.gleeym.com/2020/07/15/riskrdoodle/feed/ 0 1557 Risk Management with Mind Maps https://www.gleeym.com/2020/05/26/webinarmm/ https://www.gleeym.com/2020/05/26/webinarmm/#respond Tue, 26 May 2020 20:37:09 +0000 https://www.gleeym.com/?p=1525

It was a great interactive risk management process walk through with real examples. Discussed:

1- Risk Management plan along with its components

2- Risk Identification. Using sticky notes digitally.

3- Qualitative Risk Analysis. Discussed in details Risk Matrix and who aligned it with Enterprise Risk Management.

4- Quantitative Risk Analysis. Discussed schedule, schedule audit, cost estimates and Monte Carlo simulation in considering real example that is ” Digital Risk Management Project”.

5- Risk Responses: What to consider and how to plan a mitigation actions. Discussed Risk Contingency and how to calculate it.

6- Risk Register: Shown risk register with example

7- Risk Communication: Stakeholder Identification, Stakeholder Analysis and communication with them on a priority basis.

8-Risk Mitigation Actions: SMART, avoid ensure and meetings words. Planned Vs Actual.

Last but not the least ” Threat To opportunity”. Develop new type of simplified BowTie with Mitigation actions instead of impacts.

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RISK MANAGEMENT SYSTEM

QUANTITATIVE RISK ANALYSIS

MIND MAPPING SOLUTIONS

TRAINING THAT WORKS FOR YOU. HOW? DISCUSSES

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Schedule and cost estimates after creating mind map
Pic - Schedule and Cost Estimate with Mind Map

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Areas of expertise in Mind mapping, but not limited to:

  1. Project Risk Management; qualitative and quantitative risk analysis for cost and schedule using Monte Carlo Simulation. Enterprise Risk Management (ISO 31000)
  2. Facilitating project planning, risk and project management. Experienced with both physical and virtual)
  3. Visual project management by integrating Mind maps with MS Projects
  4. PMO set up, process Improvement
  5. Enterprise Project Management software planning, deployment and implementation
  6. IT project within Agile, scrum and waterfall (hands on experience with JIRA and Confluence)
  7. Digital Risk Management (Integrating risk management with Cyber security)
  8. Process Safety, HSE and Fire Safety for Oil & Gas
  9. Product Development Physical and Digital
  10. Digital Transformation and Change Management
  11. Training (Experience with both in person and virtual. )

This webinar was recorded for the Biggerplate PRO members.  To find out more, visit https://www.biggerplate.com/PRO

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]]> https://www.gleeym.com/2020/05/26/webinarmm/feed/ 0 1525 Integrated Cost and Schedule Risk Analysis (IRA). Why? 5 visuals explain it! https://www.gleeym.com/2020/03/12/ira/ https://www.gleeym.com/2020/03/12/ira/#respond Thu, 12 Mar 2020 15:42:02 +0000 https://www.gleeym.com/?p=1423

Summary

In Oil & Gas industry projects are always complex whether onshore or offshore. Remote locations, site access, communities, resource constraints and long lead items (LLI), etc. can be challenging to execute the project. Performed schedule and cost risk analysis with uncertainty using Monte Carlo simulation for Condensate Process and Storage Facility Project. 

Developing a schedule model for a level-I schedule is challenging and time-consuming. Then level-II & level-III schedule models will take more time and effort. After developing the model, it is a common understanding to use “index finger” to run simulations and that’s it. Although it’s required to run simulations many times to analyze the data and spread of the distribution. Adding time-dependent cost plays an important role in displaying the Schedule –cost Joint confident level (JCL). 

It is more challenging when schedule using different calendars and assign weather probabilistic calendar to one specific activity. Developing a schedule and cost stochastic model for risk analysis using Monte Carlo simulation requires time to work with key stakeholders including planners. Activity links also play a vital role in output.

visit www.gleeym.com/qra for more details

Keywords

Oil & Gas, Condensate, Processing Facility, Schedule, Cost, Level -1 Schedule, JCL, Risk, Risk Register, Quantitative, Qualitative, Quantitative Schedule Risk Analysis (QSRA), Quantitative Cost Risk Analysis (QCRA), Integrated Cost & Schedule Risk Analysis (IRA), Probability distribution, Cumulative probability Distribution, Monte Carlo Simulation (MCS) , Iteration, Uncertainty, Data, Data Analysis, data gathering, Calendar, Construction, Engineering, procurement, FEED, Resources, Resource Risk, 

Project Schedule for Condensate Storage Facility

Schedule risk analysis (SRA) helps to analyze the uncertainty in the project schedule using Monte Carlo Simulation. Deterministic schedule duration and finish date don’t provide enough information to answer the following questions:

  1. What is the probability of completing the project on the target date?
  2. What if the predecessor of an activity finishes late?
  3. What is the eighty (80%) chance of finishing the project?

SCR scope is:

  1. Schedule Risk Analysis (SRA) to analyze uncertainty
  2. Correlating the activities
  3. Probabilistic Branching
 

Level – I schedule is required to perform cost and schedule risk analysis during the feasibility or initial stage of the project. Level – I schedule is given with cost estimates below:

Level Schedule for Integrated cost and schedule risk analysis. www.gleeym.com
Pic 1 - level - I Schedule

Project Uncertainty and Risk

uncertainty to project activity can be a result of lack of information, sudden market up and down, inflation and inaccurate estimation etc. 

Following risk events has been identified after risk workshop with key stakeholders. risk management is an iterative process and new risks are identified during the complete project life cycle.  List of identified risk is:

Pic 2 - Schedule Risk
Cos risk - www.gleeym.com
Pic 3 - Cost Risk

Quantitative & Schedule Risk Analysis

Cost and schedule risk analysis is performed using Monte Carlo simulation. cost and schedule risks are linked to activities. Activities are correlated to avoid merge biased. It is very important to re-run the simulation and visualize the result. Before running simulation perform checking:

1- Schedule activity relationship and linkage.

2- Check for any soft and hard constraint. 

3- validate cost estimate.

4- Resource allocation, resource over allocation and resource leveling.

5- Project calendar(s) and linking of calendar to project activities.

6- It is recommended to perform DCMA 14 points analysis to validate the schedule.

Results are:

Probability Density Chart - www.gleeym.com
Pic 4 - Quantitative Schedule Risk Analysis Results
S curve - ww.gleeym.com
Pic 5 - Quantitative Cost Schedule Risk Analysis Results

Joint Confidence Level (JCL) is an integrated uncertainty analysis of   joint cost, schedule, uncertainty and risk. It helps to visualize schedule and cost results to make decision under uncertainty. 

Joint Confidence level for cost and schedule - ww.gleeym.com

Conclusion

Integrated Cost and Schedule Risk (IRA) is performed to analyze the complete project scenario as a whole with associated uncertainty and risk. It also helps to validate the project estimates and budget. It also useful to calculate contingency reserves to manage risks.

Thank You

@RISK

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