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Introduction to Quantitative Project Cost and Schedule Risk Analysis

The "Introduction to Quantitative Project Cost and Schedule Risk Analysis" course is designed to help those who wish to apply quantitative risk analysis modeling to project planning and cost estimation problems.

Goals:
  • Learn how to better understand a project's risk and uncertainty, and improve the operational management of risks during the execution of a project.
  • Learn how to employ risk modeling to increase the likelihood of winning profitable bids!
  • Understand the most important modeling techniques, methods and software tools available to perform and interpret project cost and schedule risk analyses using risk analysis and risk modeling techniques (including Monte Carlo simulation);
  • Learn and practice key project risk analysis techniques that will allow you to support more informed and aggressive bids as well as better manage risks on upcoming or existing projects.
  • Gain expert insight from EpiX Analytics; a world renowned risk analysis consultancy company with vast experience consulting to some of the nation's largest corporations as well as with numerous smaller, more specialized firms.
Who should attend?

The Project Cost and Schedule Risk Analysis course will be beneficial for all project managers, project analysts, cost estimators and consultants who would like to gain a greater insight into how risk analysis can increase the likelihood of winning profitable bids, better understand a project's risk and uncertainty, and improve the operational management of risks during the execution of a project.
Previous risk modeling experience is helpful, but not necessary. The course is designed to be beneficial for both experienced and non-experienced Excel and risk modelers

Prerequisites

Participants will be primarily using @Risk (version 5.0 or newer) or alternatively CrystalBall (v 7.0 or newer) with Microsoft Excel to solve the exercises. However, participants can also choose to use another Monte Carlo package of their choice. It is important that participants have basic working knowledge of Excel. However, no prior experience using @RISK, Crystal Ball, or other simulation tool is required. Trial versions of @Risk can be found from Palisade's website herehere and trials of CrystalBall can be downloaded from Oracle's websiteOracle's website. As the trial licenses last 15 days, participants should install it only a few days before the course. In addition to @Risk/CB and MS Excel, participants are required to bring laptops with Microsoft Word and PowerPoint installed, and with a functional CD drive.

In case participants prefer to use a particular software package, please let us know This email address is being protected from spambots. You need JavaScript enabled to view it."> and we will make all example models and exercises available in the relevant software package.

Course Outline

The course will start every day at 9:00am and end at 5pm. During both days of the course, numerous relevant costs and schedule estimation example situations and example risk analysis models will be used and developed. All of EpiX Analytics' courses aim to help the participants understand risk analysis from the bottom-up, which can only be achieved through a relaxed, informal and interactive environment. To achieve this goal, plenty of examples and hands-on exercises will be used so participants will get to apply and adapt what they have learned.

Day 1 – Morning session
The goal of the first morning session is to provide a solid understanding of the techniques and methods used in this course. Understanding the thinking is important before actually starting to use the software. In addition, an overview is given of the main steps in performing project cost and schedule risk analyses.

  • Introduction to Quantitative Risk Analysis, risk analysis software and Monte Carlo simulation
  • Why risk models can give more realistic targets than single point estimate models
  • Overview of main steps in planning and performing a Project Cost and Schedule Risk Analysis:
    • Obtaining data and inputs
    • Developing an accurate model
    • Presenting the results
    • Updating the model
  • Simple Project Cost Risk Analysis example & exercise

Day 1 – Afternoon session
The goal of this session is to understand the basic principles of developing accurate Monte Carlo models. In addition, we will review how to accurately interpret and present the most important results of a Monte Carlo simulation

  • The basics of building Project Cost and Schedule Models: 
    • Distributions to use to reflect uncertainty
    • Assumptions and Forecasts
    • How to accurately interpret and present model outputs:
      • Standard graphics: relative and cumulative plots, tornado charts
      • Standard statistics: Mean, percentiles, probabilities, etc.
    • Second exercise for participants

Day 2 – Morning session
During the second morning, two critically important aspects of Project Cost and Schedule Risk Analysis are explained. First, we discuss why to include correlations, what methods are available and how to use those. Second, we focus on how to correctly obtain expert opinion and take them into account in quantitative risk analysis models.

  • How (and when) to accurately model correlations:
    • Probabilistic branching
    • If/Then branching
    • Rank-order correlations
  • Incorporating external influence variables
  • How to take into account expert opinion:
    • Interview techniques
    • Combining expert opinion
    • Third exercise for participants

Day 2 – Afternoon session
During the final afternoon, we put together all the techniques and methods covered in the course to construct an integrated project cost and schedule risk analysis model. We discuss different techniques to take into account project costs and schedules simultaneously. We also cover good practices and common mistakes.

  • Linking and analyzing cost and schedule models together: 
    • Different approaches and techniques
    • Additional output charts
    • Good practices
    • Common pitfalls
    • Fourth and final exercise for participants, and course wrap-up

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Brief History of EpiX Analytics

EpiX Analytics was founded in 2003 in Princeton, NJ under the Vose Consulting name, and among its offerings it included specialized software to perform Monte Carlo simulations. Read More >>