ACOSTE CONFERENCE 2011 50th Anniversary 2011... · Booz Allen Hamilton ... 1 –NPD 1000.5 - ......

The Association of Cost Engineers

ACOSTE CONFERENCE 2011

50th Anniversary

www.acoste.org

Integrated Cost and Schedule Risk Analysis

Graham Gilmer

Booz Allen Hamilton (USA)

Booz | Allen | Hamilton

1

The Association of Cost Engineers Booz | Allen | Hamilton

Integrated Cost and Schedule Risk Analysis (ICSRA)

Outline

• Integration of Cost, Schedule, and Risk Management Activities

• NASA’s Approach to Integrating Cost and Schedule Risk

• What Goes Into ICSRA?

• Questions Addressed by ICSRA

• Analytical Program Management (APM) Modeling

• Insights Provided by APM Modeling

• Demonstration of APM Modeling

2


Cost, Schedule and Risk Activities Are Rarely Integrated on Programs

Cost, schedule, and risk management activities are not typically integrated on programs;

oftentimes these teams have little interaction outside of program reviews

This lack of integration has tangible consequences

– When cost growth is identified, it almost always implies schedule growth

– When the schedule growth is identified, it almost always implies cost growth

– When risks are identified, they almost always imply both cost and schedule growth

– The program manager’s ability to mitigate cost and schedule growth is lessened when these functions aren’t integrated

The lack of standard methodologies and tools for producing integrated artifacts has been a

consistent roadblock for integration

Integrated Cost and Schedule Risk Analysis provides a framework for integrating cost,

schedule and risk using existing artifacts to produce a cohesive analysis

3


What is Integrated Cost and Schedule Risk Analysis?

NASA’s Definition: Integrated Cost and Schedule Risk Analysis generates a joint bivariate

probability distribution relating cost and schedule in a way that allows the analyst to

determine the confidence level for meeting both target budgets and schedules

simultaneously

Traditional cost or schedule risk analysis generates a

distribution of potential final costs and durations from which

confidence levels for budgets and schedules can be derived

– Confidence levels are generated and reported separately

Integrated Cost and Schedule Risk Analysis creates a

bivariate distribution of final cost and schedule pairs

– The confidence level of any cost and schedule pair represents the probability of the program finishing both under cost and ahead of schedule

– These are known as Joint Confidence Levels

Cost

Pro

ba

bil

ity

70% Joint Confidence

Level Curve

4


James Webb Space Telescope (JWST)

5


Stratospheric Observatory for Infrared Astronomy (SOFIA)

6


Next Generation Human Exploration

7


NASA’s ICSRA Policy

Integrated Cost and Schedule Risk Analysis has gained significant momentum recently

– NASA is leading the way in the development of this methodology

– NASA Policy Directive 1000.5 mandates that programs will be baselined at the “70 percent confidence level” using a “joint cost and schedule probability distribution”1

– The goal is to provide stronger assurance that NASA can meet cost and schedule targets2

– A recent GAO report cites NASA’s policy as an effort “to provide transparency on the effects of funding changes on the probability of meeting cost and schedule commitments” 3

– NASA Cost Analysis Division (CAD) has developed a handbook to provide more information and guidance on this topic

– Programs conducting this analysis include James Webb Space Telescope and SOFIA

While the methodology has made substantial strides, the cost and schedule communities must

overcome political and technical obstacles before full adoption

1 – NPD 1000.5 - http://www.hq.nasa.gov/office/codeq/doctree/10005.htm - January 15, 2009 2 – JCL Status Report - http://www.nasa.gov/pdf/421542main_JCL%20Status%20Report-2010%20Feb.pdf – February 2010 3 – GAO Report – “NASA – Assessments of Selected Large-Scale Projects” - http://www.gao.gov/new.items/d11239sp.pdf - March 2011

8

Risk

Cost/EVM

Schedule


What Goes Into ICSRA?

ICSRA is performed by existing program staff

using the following artifacts:

– The program schedule (Integrated Master

Schedule (IMS) or higher-level schedule)

with uncertainty bounds on task durations

• Uncertainty bounds can be applied at the parent or child level and informed by Earned Value Management (EVM) data

– The cost estimate with uncertainty bounds

that map to the schedule at any level

• Uncertainty bounds informed by EVM data

– The quantified risk register (probabilities,

cost and schedule impacts) where each

risk is mapped to a task in the IMS

Analytical Program Management

9


Questions Addressed by ICSRA

What risks have the greatest effect on my cost and schedule?

– What are the primary, secondary, tertiary… impacts of these risks?

– What is my optimal mitigation strategy and how much will it decrease my cost and schedule risk?

How will schedule growth impact my costs? How will cost growth impact my schedule?

– What are my potential critical paths?

– How can I manage the cost impacts of change orders on contracts/subcontracts?

How much management reserve do I need, where do I need it, and in what years?

How can I best manage my portfolio of programs? Which combination has the best chance

of providing maximum capability on time and on cost?

10


Analytical Program Management (APM) Modeling

Booz Allen has collaborated with NASA to build a standardized process and model for ICSRA

– The result is an Adobe Flex-based decision tool called “DICE”, which integrates cost, schedule and risk artifacts

11


APM Provides Unparalleled Insight Into the Relationships

Between Cost, Schedule and Risk

APM provides a range of potential cost and

schedule outcomes (including costs by FY)

Allows Program Managers to set reserves

based on confidence levels

– Dept. of Defense / Intelligence Community /

NASA requirement

Details relationship between cost and schedule

– Reveals the range of potential costs for any schedule outcome and vice versa

All analysis is provided at every level of cost and

schedule

APM’s standardized outputs allows combination

of multiple programs into a portfolio-based

analysis

12


APM Provides Actionable Analysis Used to Prevent Cost and

Schedule Growth

Most risk management methods use a simple “likelihood x impact” metric to rank risks

– This ignores downstream risk effects

APM shows the impact of each task

and risk on cost and schedule

– …including secondary and tertiary risk impacts

– E.g. risks creating a new critical path or causing standing-army cost impacts elsewhere in the schedule

APM also details a probabilistic critical

path

– Calculates the probability that each task ends up on the critical path

13


Additional Benefits of APM Modeling

Demonstrates the secondary/tertiary effects of risks through integration with the cost/schedule

estimate

– Ensures comprehensiveness of risk register and improves mitigation plans

– Mitigates cost growth from change orders or subcontracts

Improves the quality of program artifacts (schedule, cost estimate, risk register)

– Flexing the schedule in APM reveals inherent weaknesses not uncovered by traditional schedule health check tools

– Linking cost estimates to the schedule increases their accuracy and precision

Opens lines of communication between cost, schedule and risk staff

– Producing integrated artifacts requires teams to work together and fosters relationships

Includes templates and export functions for performing APM using artifacts that should

already exist for the program

– If artifacts don’t already exist, APM acts as a catalyst for their creation

14


Demonstration of APM Modeling

15

Thanks

www.acoste.org


Booz | Allen | Hamilton

Graham Gilmer Lead Associate

Booz Allen Hamilton Inc.

Arlington, VA

Tel (703) 526-2413

[email protected]

16

Date post:	16-Apr-2018
Category:	Documents
Upload:	phamphuc
View:	219 times
Download:	6 times

ACOSTE CONFERENCE 2011 50th Anniversary 2011... · Booz Allen Hamilton ... 1 –NPD 1000.5 - ......

Documents