QRA in industry - Roger Garrini

Quantitative Risk Analysis in Industry

Roger Garrini Selex ES Ltd

2 © 2016 Selex ES Ltd – All rights reserved

Roger Garrini

• Started working life as a planner for AI Radar in 1976

• Project Manager for non-core radar work

– Cars, Laser Radar TDP, Space studies

• 1997 Moved to EW Division as a Project Manager

• 1998 Responsible for introducing new planning tools and PM processes ( EVM)

• 2004/5 Introduced Professional Risk tool

• 2012 Finmeccanica Faculty - Risk Management SME

• Currently UK IPR Manager

Introduction


• Support to Bids

• Support to Contracts

• Special Cases

Summary

Summary

© Copyright Selex ES Ltd 2016 All rights reserved

Bids


Risk on Bids

• Calculate the Project Risk Factor

• Low values may mean no analysis is required

• Project brainstorms the risks

• Often just causes are noted down and worries

• Sometimes there is a schedule

• Think about opportunities

• Scratch them into a tool

• Usually a mixture of spreadsheets, direct entry and some who don’t want to

• Cost focus

• Run the analysis

• Done!

Bids


Here is the Answer! Or is it?


Garbage in, Gospel Out?

• Produced an answer

• ...............................but usually fail the review

• Check it Out

• Listen to the risk bloke

• Review the risks

– Schedule data

• Who did the Estimates?

• Are there realistic plans for recovery? Or just a number!

• Are the risks focussed on/attached to deliverables and Events in the programme?

• Mitigation plans in place?

• Risk adjusted schedule or not?


Here is the Answer! Or is it?

• Smart Reviewer Questions • How Many Iterations?

• Spiky? • Look out for dinosaurs

• It says Residual? • Or Pretend?

• How Big is the Gap to Current

• How much is the mitigation going to cost

• Most Likely answer about 250 days?

• Calendar or Working time?

• Long Tail?


A Cost Risk Distribution

• 5000 Iterations, not too spiky, may be

stable • Eyes Glaze Over

• Most Likely around £100K • Too little, too much

• Long Tail?


Start again

• Derive a deliverable based schedule on a page • Logic or requirement

• It can be a big page

• What is our estimating error?

• Now try and add the risks to the schedule • Where do I put the risks?

• Is this really a risk?

• …………………… or what we’re supposed to do?

• What really is the impact ? The repair time and cost?

Bids


Gantt

• First pass shows plan for failure?

• Residual or Current?

• Risk Optimised Schedule or Original? • Or just the requirement

• Where did the Durations come from?

• Updated with Progress or the Original?

• Progress on Schedule or not

• Have the risks been updated in PRC


More Garbage in, Gospel Out?

• Why is the Risk Analysis showing 250 days delay

• And the Gantt shows 2-3 weeks

• Float!

• Total Float or Free Float?

• There is a strong case for ensuring that the schedule is risk adjusted and includes enough float

• Criticality and Cruciality help

• So is the Schedule Risk Adjusted?

• Do we care about the answer from the Gantt

• Or does this show we can meet the deadline after all

• 3 weeks delay may be ok if the we aimed to be early


So Gospel In?

• Analysis of Schedule Risk picture is a process of

work and you need to know where you are

• Original derived from logic

• Compatible with Bottom-up plans

• Has the Risk model been Adjusted for Risk and

Uncertainty


Current and residual shown together

• Pattern very different for

each

• Shows Mitigation must be

done • Must afford it

• Some Low Probability high

Impact risks – the tail

• Where are we in the

process?


Contingency

• Do you feel Lucky?

• What is the answer?

• It Depends!!

• Feel lucky and must win, Little or no

contingency – low confidence, high risk

• Not price sensitive, or feel unlucky high

contingency – high confidence

• The choice is yours

• But…


Contracts


Progress Reviews

At least quarterly

• Update the risks (should be done monthly)

• Adjust the schedule if needed

• Update progress against the schedule model

• Run the cost analysis against both Current and Residual

• Run the schedule analysis

• Risk and Contingency

• Are we where we think we should be?

• Explain the surprises in a calm way!

• Progress on mitigation is key and is the controllable variable

Contracts


Special Cases


Scenario

• Sub sub-contractor on a major aircraft programme

• Some slip meant the sub contractor declared we were the critical item

• Prime declared we would cause slip of the aircraft integration programme!

• Director promised a schedule risk analysis

Special Cases


What did we do?

• Created a detailed schedule for the three months left in the programme

• Produced a list of risks

• Some surprises

• Main risk - Acceptance based on Prime customer supplied test equipment

Only one, replacement lead time, 1 year

• Customer demanded 60 day approval lead time from the last documents prior to ATP

• Schedule Analysis

• One month late without risk –

Critical path documentation

• 14 months late with the risks


Next Step

• A grown-up conversation!!

• Finger pointing stopped , all worked to solve the problem

• Prime accepted the risk regarding test equipment

• Parallel approval of documents implemented

• Deletion of 60 day requirement

• Revised schedule and risk

• New Analysis showed completion– most likely now on time

Special Cases


Result

• Engineering team completed to best case

• Delivered early!

• Started time based support contract early

• Main programme delayed by some months by Prime not due to us!

Special Cases

THANK YOU FOR YOUR ATTENTION

Selex ES Ltd

Sigma House - Christopher Martin Road, Basildon

Essex SS14 3EL

Tel: +44 (0) 1268 823400 www.selex-es.com

Roger Garrini

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QRA in industry - Roger Garrini