QRA in industry - Roger Garrini

Quantitative Risk Analysis in Industry
Roger Garrini Selex ES Ltd

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© 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

3
• Support to Bids
• Support to Contracts
• Special Cases
Summary
Summary

© Copyright Selex ES Ltd 2016 All rights reserved
Bids

5
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

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Here is the Answer! Or is it?

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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?

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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?

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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?

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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

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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

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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

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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

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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?

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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

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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

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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

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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

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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

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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

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