1. Risk and Scheduling R.J.Monson, PhD

2. Summary Why include risk? Why include risk? How do we want to accomplish this? How do we want to accomplish this? Example schedule Example schedule How is it traditionally done? How is it traditionally done? Conclusions Conclusions

3. Why include risk? Risk represents our inability to assess tasks and estimate durations effectively Risk represents our inability to assess tasks and estimate durations effectively We make a variety of assumptions when estimating a task We make a variety of assumptions when estimating a task The worker will do it the same way The worker will do it the same way They will work at the same productivity I would They will work at the same productivity I would They understand the task They understand the task They are available They are available They will not be interrupted They will not be interrupted Etc… Etc…

4. Are these realistic? We include risk We include risk To quantify these inaccuracies To quantify these inaccuracies To give a better assessment of when we think we will be completed To give a better assessment of when we think we will be completed To establish for everyone that this is an inexact science To establish for everyone that this is an inexact science To manage expectations To manage expectations

5. Risk calculation Given a project of four tasks Given a project of four tasks Each of ten day duration Each of ten day duration Each worked consecutively Each worked consecutively No delays or float included in the work No delays or float included in the work Estimate of work completion Estimate of work completion Nominally – 10 days Nominally – 10 days What will we ask for from management? What will we ask for from management?

6. Tasks Time 10

7. We know we must include something else… To represent these invalid assumptions To represent these invalid assumptions To better estimate what we feel will be the actual delivery of the system To better estimate what we feel will be the actual delivery of the system To make sure everyone understands that not everything goes perfectly in the real world To make sure everyone understands that not everything goes perfectly in the real world

8. We must make additional estimates Given perfect world estimates already Given perfect world estimates already We estimate ‘worst case’ additionally We estimate ‘worst case’ additionally This will give us a confidence region This will give us a confidence region We feel the nominal estimate is low probability We feel the nominal estimate is low probability We feel ‘worst case’ is very high probability We feel ‘worst case’ is very high probability Reality is probably someplace in between these two estimates Reality is probably someplace in between these two estimates

9. Tasks Time 10 13 20 10 15

10. This demonstrates a new estimate The worst case is now 58 days The worst case is now 58 days Nominal is 40 days Nominal is 40 days Standard deviation is approximately 6 days Standard deviation is approximately 6 days Task Start Nominal Task End

11. This demonstrates a new estimate The worst case is now 58 days The worst case is now 58 days Nominal is 40 days Nominal is 40 days Standard deviation is approximately 6 days Standard deviation is approximately 6 days Task Start Nominal Task End

12. This demonstrates a new estimate The worst case is now 58 days The worst case is now 58 days Nominal is 40 days Nominal is 40 days Standard deviation is approximately 6 days Standard deviation is approximately 6 days Task Start Nominal Task End

13. This demonstrates a new estimate This provides confidence intervals This provides confidence intervals Using approximate S.D. is okay for a schedule made up of guesses in the first place Using approximate S.D. is okay for a schedule made up of guesses in the first place Task Start Nominal Task End 50% 67% 95% 99.7% 40 46 52 58

14. This demonstrates a new estimate This provides confidence intervals This provides confidence intervals Using approximate S.D. is okay for a schedule made up of guesses in the first place Using approximate S.D. is okay for a schedule made up of guesses in the first place Task Start Nominal Task End 50% 67% 95% 99.7% 40 46 52 58

15. We can negotiate a reasonable estimate We feel 40 days is unrealistic We feel 40 days is unrealistic 58 days is a bit too conservative 58 days is a bit too conservative We can live with something in between We can live with something in between 52 days has a 95% chance of being correct 52 days has a 95% chance of being correct We like those odds, and are willing to gamble that most of the time we will meet or exceed this date We like those odds, and are willing to gamble that most of the time we will meet or exceed this date But now we have an additional problem But now we have an additional problem A schedule that shows 40 days, when we want to show 52 days… A schedule that shows 40 days, when we want to show 52 days…

16. Tasks Time 10 13 20 10 15

17. Tasks Time 10 13 20 10 15 12 Management Reserve

18. How are things traditionally done? Critical Path Method (CPM) and the Project Management Institute (PMI) recommend a method Critical Path Method (CPM) and the Project Management Institute (PMI) recommend a method Utilizes three estimates Utilizes three estimates Best case, optimistic Best case, optimistic Nominal case Nominal case Worst case, pessimistic Worst case, pessimistic

19. Task Start Nominal Task End T(o)T(n)T(p) T(e) = [T(o) + 3 * T(n) + T(p)] / 5

20. Task Start Nominal Task End 80100T(p)? T(e) = [T(o) + 3 * T(n) + T(p)] / 5

21. Conclusions CPM does not give us a realistic estimate CPM does not give us a realistic estimate We have a tendency to remove all risk We have a tendency to remove all risk Because we do not recognize human factors Because we do not recognize human factors We don’t like to believe our estimates are not perfectly accurate We don’t like to believe our estimates are not perfectly accurate We feel when schedules are not met, this is just a case of unusual circumstances We feel when schedules are not met, this is just a case of unusual circumstances Risk is about better ‘projecting’ the future, the essence of project management Risk is about better ‘projecting’ the future, the essence of project management