Friday Nov 21, 2014

Are your projects missing milestones or running over budget? Practice these simple risk management steps to avoid these pitfalls
by Marius van Ettinger

The fundamentals of project management are to complete the project on time, within budget and according to the prescribed standards and quality. Projects are often completed late due to a lack of proper risk analysis and risk management.

Projects should always employ a problem solving technique to approximate the probability of certain outcomes. By using the Monte Carlo Simulation, you can conduct these trails known as simulations with random variables. These simulations will furnish you with possible outcomes and probabilities and will enable you to account for risks.

It doesn’t matter whether the new PBXs are geographically local or remote.

One key element is to build a risk impacted baseline schedule to indicate the projects P100, P80 and a P50 schedules. This should be done throughout all the project phases and not only when at execution phase.

  • P100 schedule refers to 100% probability to achieve the completion date
  • P80 schedule refers to 80% probability to achieve the completion date
  • P50 schedule refers to 50% probability to achieve the completion date
Figure 1

An effective way to ensure that key milestone are achieved is to base your schedule and key milestones on the P80 schedule while tracking progress and reporting dates to the project execution team & contractors on the P50 schedule. The variance between P80 and P50 will be your float and can be managed if there are any slippages on the project.

Risk can also be defined as the intentional interaction with uncertainty. Having a controlled risk register and risk matrix, provides reporting capabilities to facilitate mitigation decision-making. Having mitigation plans in place is essential, however, analyzing the cost of these plans is crucial as they might end up being costlier to implement than simply accepting the risk.

Primavera Risk Analysis helps you to run these simulations for risk uncertainties and risk events on your risk log. All risks can also be fully managed, and mitigation plans’ impact can be investigated to ensure that you manage and mitigate the correct risks.

Figure 4

Cost control, minimizing project impacts, meeting key milestone dates and preventing project repairs and failures are just some of the benefits you will gain when managing risks early in your project. Make risk management part of your day-to-day operations, include it in your project meetings and communicate all risk factors to all stakeholders. Identify risks early in your project by engaging with the experienced staff on your project and plan for the risks that often creep in on similar projects. Prioritize and analyze your risks, some risks will have greater impact than others and will need to be accounted for in various phases of your project. Keep a detailed risk log that contains risks descriptions, clarifies ownership issues enables you to carry out some basic analyses with regard to causes and effects.

Continuously measure the effects of your risk management efforts and continue to implement improvements to make it even better. By simply using various methods, like the one mention above, and running Monte Carlo Simulations often, you will be in a position to proactively deal with risks and avoid big impacts/slippages on your project.

Marius Van Ettinger

Marius van Ettinger studied Industrial Engineering at University of Pretoria, he completed his BSC degree in 2002 and started working as a process engineer in the manufacturing sector, after a couple of years he started focusing on managing the improvement projects for his company, thereafter he decided to focus on project planning on large construction projects whilst also completing his Honours degree in Industrial Engineering. He worked on the Transnet Expansion projects and gained experience in the Rail, Infrastructure and Harbour areas.
Marius then moved to Dubai to work as a project controls manager for large development projects, he moved back to South Africa in 2008 and has since be consulting on large projects in the project control area, focusing on risk and schedule analysis.
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Monday Feb 27, 2012

Scheduling Options in Primavera P6 by David Kelly

These options are made available by choosing the Options button, from the scheduling dialogue.

In a properly configured P6 environment, where projects are created by copy/paste from an official template created by the central project controls group, these settings will be correct.

Ignore relationships to and from other projects

In almost all circumstances the default, not to ignore such relationships, would be correct. An example of where this toggle switch is valuable is if all scope variations were held in a separate project. With both projects open, scheduling shows the combined projects. With just the original project open and this option switched on, the original scope only is scheduled. This is one of thimge simplest ways to switch between original scope and current scope.

Make open ended activities critical

This is a not just a display option, it changes the float on any path with an open end.

Use Expected Finish dates

Expected Finish is a controversial way to report progress. Effectively, rather than telling a P6 activity how much work has been done by reporting a per cent complete and allowing P6 to calculate when we can expect the activity to finish, we input an expected finish date and P6 calculates how much work has been done. Many project controls professionals think this is the wrong way round. Even if such dates have been added in the Status tab of the Activity screen, they will not be used if this option is unchecked. The arithmetic is NOT commutative. It will NOT put the original values back if you un-check this. Be careful!

Schedule automatically when a change affects dates

Switching “real-time” scheduling on such that the schedule recalculates with every significant change to the data is not advised. This feature is the preserve of light-weight single-user planning systems.

Level Resources During Scheduling

This is largely a matter of style. Some planners prefer to see the results of the schedule before resource levelling, others having satisfactorily set the levelling parameters would rather both processes were run together.

Recalculate assignment costs after scheduling

It is hard to imagine a scenario where one would NOT want to recalculate an activity’s costs based on the new dates that the activity may have once scheduled.

Retained Logic vs. Progress Override

None of the above settings creates as much discussion as this one. The controversy arises when there is out-of-sequence progress.

The above Barchart shows two projects which are identical in every respect except for that setting. The only progress that has been achieved is that the site has been prepared. Using Progress Override means that the remaining duration of the activity “Prep site and Erect” starts at the data date. This is clearly nonsense. Note that the whole project now finishes earlier than the Retained Logic project which leaves the remaining duration in the position that its predecessors demand. What is going on here, why do these options exist?

In the real world most planners add relationships to a project for two reasons:

  1. The laws of physics. If you are going to put a pipe in a trench, you must make the trench first.
  2. Not enough resource information. If I need to machine two valve blocks, and I do not know all or any of:
  • Exactly how much machine time and labour time is required for each of them.
  • My resource dictionary does not properly describe the availability of the equipment and labour to do the job,
  • I do not have clear guidance from management about the priority for allocation of resources
  • BUT, I “know” I can only do one at a time – Then I add a finish to start relationship between the two activities.
  • In case 2) above it does not matter if we start the successor activity first, and is we did start it first we would need to finish it before starting on the predecessor. In a perfect world case 2) above is easily dealt with by resource levelling, but quite a lot more information is required to do it the correct way.

    Calculate start to start lag from

    Clearly Actual Start may calculate more realistic dates. Probably Early Start calculates more optimistic dates if the schedule is slipping.

    Define Critical Activities as

    The definition of Critical in textbooks of CPM methodology is where float is less than or equal to zero. The longest path through the network always shows red bars in the barchart for the so-called Critical path, and is a more popular choice.

    Calculate Float based on Finish date of

    When scheduling multiple projects – perhaps a portfolio that represents a single contract – how many float paths? Does each project have its “own” float, or is float “owned” by the whole portfolio of projects? Before considering this question we would need to know how the projects' inter-project relationships are structured, how many open ends there are in how many of the projects, and an understanding of the commercial/contractual implications. It is unlikely that the planner on the project can answer this question alone.

    Compute Total Float as

    The author admits defeat here. Apparently in some circumstances an LoE or WBS Summary activity can have different Start and Finish Floats. There is no Primavera documentation that describes the circumstances or justifies the arithmetic. Choose Finish Float.

    Calendar for calculating relationship lag

    This is very important. Best practice is to always use 24hour, and always enter lags in hours. E.g. if the lag is 5 days, enter 120h into the lag dialogue. This way no changes in any calendar will change the wall-clock time of any lag

    NOTE: When you schedule in P6 all open projects are scheduled at the data date selected for each project. If only one project is open, then you can change the data date for that project. If multiple projects are open then you can only change their data date in the Projects screen, where you can even “Fill Down” a new data date to multiple projects.

    About the Author:

    David Kelly

    Dave Kelly delivers Oracle Primavera training courses at Milestone in Aberdeen; Milestone is an Oracle University Authorised Education Centre and offers the complete Oracle Primavera course curriculum. Dave has been involved in Planning and Scheduling software training and consultancy for many years he is well known and respected as an expert in delivering Primavera and associated solutions as both an experienced consultant and trainer.


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