A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Palisade Risk & Decision Analysis Conference
A REFINED APPROACH FOR
DEFINING CONSTRUCTION PROJECT
UNCERTAINTY
Slide
Slide No.
No. 1
1
www.engcomp.ca
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis
Palisade Risk & Decision Analysis Conference
Outline
• Introduction
• Project Risk Analysis (PRA) Overview
• The ENGCOMP PRA Process
• Project Case Study
• Wrap-up
• Questions
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 2
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Introduction
• Who am I?
– 1995 U of S Grad – B.Sc. Civil eng.
– Consulting Engineer in Heavy Industrial sector
– Permission to consult in Saskatchewan, Alberta
and British Columbia
– Worked for 8 years before starting ENGCOMP
in 2004
– Managing projects for over 10 years
– Researching project risk for over 6 years
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 3
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
1
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
ENGCOMP Overview
Slide No. 4
–Slide
No. 4
www.engcomp.ca
“A Refined Approach for Defining Construction Project Uncertainty”
–Presenter: Jason Mewis,
Mewis P.Eng.
Palisade Risk & Decision Analysis Conference
ENGCOMP Overview
•
•
•
•
Small Firm – 15 People
Founded June 2004
Conducting projects in Sask, Alta, BC and NWT
Front End Project Planning (FEPP) with a focus
on Cost Engineering
• Estimating
• Scheduling
• Risk Analysis
• Cost Control
• Heavy Industrial Structural and Mechanical
Detail Engineering
Find out more about our services on our website
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 5
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Summary of Cost
Engineering Services Offered
• Preliminary engineering for cost estimating
• Detailed Capital Cost Estimate Preparation using
•
•
•
•
•
•
•
WinEst & Modelogix
Labour Rate Analysis
Custom Estimate Reports to suit client’s needs
Third party independent evaluation and validation
Escalation Modeling Support
Facilitated Project Planning & Schedule Development
Facilitated Risk / Contingency Analysis
Cost Control Setup / Budget Conversion
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 6
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
2
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Audience Poll
•
•
•
•
Owner / Operator Representatives?
Consulting Representatives?
Engineering Background?
Familiar with the Project Management
Institute (PMI)?
(PMI)?
• Familiar with the Association for the
Advancement of Cost Engineering (AACE)?
(AACE)?
• Using Monte Carlo for budgeting on Capital
Construction Projects?
Projects?
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 7
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Outline
• Introduction
• Project Risk Analysis (PRA) Overview
• The ENGCOMP PRA Process
• Project Case Study
• Wrap-up
• Questions
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 8
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• How is Project Risk Analysis (PRA) typically done?
–
–
–
–
Qualitative not Quantitative
Often conducted after budget approval stage
Usually sits on shelf after completion
Even with a Risk Manager in place most projects are at
risk of failure in terms of Budget & Schedule
• Many experts concur that if you don’t do some
sort of quantitative analysis, you’re not really
doing risk analysis at all and in a lot of cases you
may even be wasting your time.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 9
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
3
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
What is Risk Analysis
• The evaluation and quantification of
uncertainty on a given process where uncertainty
is defined as;
– “the lack of complete certainty, or the existence of more
than one possibility.”
– The true outcome/state/result/value is not known.
(Ref. “How to Measure Anything – Finding the Value of Intangibles in
Business”, Douglas Hubbard.)
• Risk is a subset of uncertainty implying a
negative outcome, however positive outcomes
are also considered in a Project Risk Analysis
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 10
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
What is Risk Analysis To Projects
• The evaluation and quantification of
uncertainty on Cost and Schedule
– What can adversely affect my project?
– Does it impact time or money or both?
– All estimates and schedules have uncertainty
until the project is completed.
• Quantification means statistical modeling
using Monte Carlo Simulation
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 11
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Why Do Risk Analysis On Projects
• An important part of the management of cost and
schedule is risk analysis which includes the
estimation of contingency and Risk reserve
using Monte Carlo Simulation.
• Although this concept has been around for many
years, it is not widely used on Projects.
• In cases where it is used, it is usually only
applied to capital cost estimation.
• Risk analysis helps you reduce uncertainty in
your budget, increasing your likelihood for
achieving project success.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 12
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
4
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
The Scrutiny
– The process is too subjective – nothing but
guesses
– The real world is much more complicated
– It’s too difficult or costly to accurately quantify
risks
• Accuracy is not the intent here.
• The reality is that any level of uncertainty
reduction is beneficial to your project.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 13
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
The Scrutiny
• In the scientific world measurement is
defined as “a set of observations that
reduce uncertainty where the result is
expressed as a quantity”
(Ref. “How to Measure Anything – Finding the Value of Intangibles
in Business”, Douglas W. Hubbard).
– Exactness should never be expected
– Even a simplistic approach improves your
understanding of your level of project
definition putting you in a much better position
than if you do no analysis at all.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 14
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
The “Risk” of Qualitative (Only)
• Pitfalls of not doing a Quantitative
analysis;
– Financial decisions won’t be as educated
– Quantitative analysis usually tells you
something you wouldn’t have expected (i.e.
project definition is not what you thought)
– A qualitative analysis does not tell you the
impact of risks on your bottom line
– You don’t get the collective project team
knowledge of project uncertainty built into
your budget.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 15
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
5
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Project Measures of Success
• Need to understand
what you want in
order to set your
parameters for
project success
Quality
Cost
Schedule
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 16
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Life Cycle
Concept
Scope
Definition
Design
Construction
Key to success:
• Define the project well and execute
according to PMI or similar principles
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 17
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Why Projects Go Wrong
• If we know how to execute projects
successfully, why do they sometimes fail to
meet targets?
• Pre-conceived deadlines
• Deficiency in project definition
• Project execution breakdown
• Unusual market conditions
• Etc…
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 18
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
6
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Project Definition
•
•
•
•
•
•
•
Planning & Basic Engineering
Cost Estimating
Capital Cost Contingency Analysis
Schedule Development
Project Risk Analysis
Field Studies & Investigation
Detailed Design / Engineering
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 19
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Typical Scope Development for
Construction Projects
Process
Design /
Conceptual
Planning
Facilitated
Planning
Session
Basic
Engineering
Project
Schedule
Finalize Project Scope
Evaluate
Schedule
vs Scope
Evaluate
Cost vs
Scope
Capital Cost
Estimate
Develop Risk
Register
Contingency
Analysis
Project Risk
Analysis
- Conceptual Drawings
- Major Equipment Specifications
- Engineering Scope Of Work
- Cost Estimate with Confidence
Level
- Schedule Milestones with
Confidence Level
Proceed to Detailed
Engineering Phase
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 20
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Outline
• Introduction
• Project Risk Analysis (PRA) Overview
• The ENGCOMP PRA Process
• Project Case Study
• Wrap-up
• Questions
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 21
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
7
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Budget Definition
• 5 Types of Costs in Budget;
– Detailed estimate - has some level of definition and its
amount has some level of backback-up for its quantification.
quantification.
– Allowances
Allowances-- can be defined but there is no detailed
back--up (drawings or specifications) for it’s
back
quantification
– Contingency - allows for all the construction items you
couldn’t define or quantify at the given project stage
– Risk Reserve - this portion of the budget does not
account for any items that are required to be built
– Escalation – Accounting for future cost of amounts
estimated today
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 22
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Two Types of Analysis
• ENGCOMP has developed the process into two
parts – Contingency Analysis & Project Risk
Analysis
– Contingency Analysis accounts for the variability of
cost items in the cost estimate and yields the
appropriate contingency for your project
• This is most often where quantitative analysis on projects
stops in our industry.
– Project Risk Analysis accounts for the same
information as the contingency analysis but takes it to
the next level by incorporating the impact of schedule
variability and outside risks yielding the Risk Reserve,
Schedule Contingency and Project Cash Flow.
Flow.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 23
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Contingency Analysis
• The objective is to determine an appropriate
amount of contingency to be applied to the
project with a given level of confidence that the
budget will not be exceeded.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 24
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
8
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Capital Cost Contingency Analysis
• Monte Carlo Simulation of Cost Estimate.
– Used to establish Contingency based on a
required level of confidence.
• Model is based on a summary of the total
cost estimate;
– Usually rolled up into 20 or 30 lines.
• Spreadsheet Based Model (MS Excel)
– Can tailor the analysis around any existing
spreadsheet based estimate / model.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 25
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Capital Cost Contingency Analysis
• Process:
•
– Study the cost estimate (if not developed by
ENGCOMP)
– Develop Input Model based on summary of
estimate
– Calibrate Project Planning Team
– Facilitate meeting with Project Team to identify
Variability in the model (Triangular Distributions)
– Run simulation
– Generate Results
Total Duration:
– 1 to 4 weeks work depending on complexity.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 26
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Calibration Training
• Process developed by Doug Hubbard, owner of Hubbard
Decision Research
• Area of research - JDM Psychology
• Research has shown that most people, especially
professionals, are weak at estimating uncertainty
• The good news is that studies also show that measuring your
own uncertainty about a quantity is a general skill that can be
taught with a measurable improvement
• Training can “calibrate” people so that of all the times they
say they are 90% confident, they will be right 90% of the
time
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 27
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
9
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Triangular Input Distributions
• Triangular
distributions used
to simulate the
input variability
• Add variability to
the model by using
a P5/P95
estimating
philosophy…
• @Risk Trigen PDF
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 28
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
How a Simulation Works
MARGIN
Lower
Bound
From Class Code
DESCRIPTION
% Min
% Max
-15%
-30%
-23%
-30%
-23%
-30%
-10%
-10%
-15%
-23%
20%
50%
35%
50%
35%
50%
13%
13%
20%
35%
ESTIMATE
Expected
Value
MONTE CARLO ANALYSIS
Triangular Distribution
Std Dev.,
Model Distribution
Upper
Bound
Mean,
Direct Costs
A1 - Demolition SPF
A2 - Restoration SPF
B1 - Demolition ECF
B2 - Restoration ECF
C1 - Demolition CHF
C2 - Restoration CHF
D1 - Insulation Removal (Non-Asb)
D2 - Asbestos Abatement
E1 - Ash Lagoons
E2 - Canals
Total Direct Costs
•
•
•
•
-19%
$4,647,578 $5,467,738 $6,561,286
$935,598 $1,336,569 $2,004,854
$1,533,577 $1,991,658 $2,688,739
$3,220
$4,600
$6,900
$499,748
$649,023
$876,181
$70,533
$100,762
$151,143
$3,487,576 $4,103,030 $4,923,636
$15,424,667 $18,146,667 $21,776,000
$10,624,695 $13,798,305 $18,627,712
$1,120,350 $1,455,000 $1,964,250
$38,347,541 $47,053,353 $59,580,701
$5,558,869
$1,425,675
$2,071,323
$4,907
$674,984
$107,479
$4,171,415
$18,449,106
$14,350,245
$1,513,199
$48,327,201
$392,001
$220,546
$237,499
$759
$77,395
$16,627
$294,167
$1,300,984
$1,645,389
$173,504
$2,207,095
$5,558,867
$1,425,674
$2,071,325
$4,907
$674,984
$107,479
$4,171,414
$18,449,111
$14,350,237
$1,513,200
$48,327,198
Randomly generates a number from each input distribution
Performs model calculations
Records value for output distribution
Repeats these steps for given number of iterations
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 29
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Risk Analysis Output Report
Output
CLIENT NAME:
PROJECT NO.:
PROJECT NAME:
PLANT LOCATION:
CASE:
R es ults
Simulatio n Results for
Con tingen cy An alysis
Contingency @ 75% Confidence =
Contingency @ 80% Confidence =
Contingency @ 85% Confidence =
Contingency @ 90% Confidence =
Distribution for TOTAL T/X57
1 .60 0
Work book Name
Mea n=7.15 89 4E+07
1 .40 0
Values in 10^ -7
72
77
82
Statis tic
Values in Millions
6 6 .8 6 11
9 0%
76 .33 02
Values in 10^ -7
67
72
77
82
Values in Millions
0.400
Re gr es s io n S en s itiv ity for TO T A L T/ X 57
67
72
77
82
Values in Millions
90%
66.8611
5%
76.3302
D - Contracto r I ndirects
(. ../ X32
Asbestos
D2 - Asbesto
Abatem
s Abatement
ent / .. ./ X22
AshE1Lagoons
- Ash Lagoo
/ M odel
ns D. .. /X23
Contractor
D - Contracto
Fees (10%
r Fees
D.. ./ X33
.141
Dem
A1
oli- tiDemol
on S PF
ition
/ Mode.
SP F ../ X15
.139
Insul
D1ati
- Ion
nsulation
Remo valRem
(N...oval
/X 21
. 104
Dem
B1
oli- tion
Demol
ECF
itio/ n
Mo
E CF
de... /X 17
.084
ABC - Con tractor Indi
. .. /X28
rects
. 078
Restorati
A2 - Restoration
on S PF / Mod.
SP F.. /X16
. 078
E&PM
D Fee
E &P(4%
M -Fee
D&I ) / Mo. .. /X34
.062
E2 - Canals / Mo del Di stri ... /X 24 .061
En
ABC
g & -PEng
M F ee
& PM
(8%Fee
D&I. ../ X30
.055
Contractor
ABC - ConFees
tractor
(10%
Fees
.. ./ X29
.055
Owners
E - Owners
Cost (7.Cost
5% D&I). ../ X37
.048
E - E &P M FPee
lanni
inclng..
Pl anning
./ X36
.045
D - Owners
D - Owners
Cost (2%
Cost
D&I) /.. ./ X35
. 031
-1
$66, 861,136
10%
15%
$67, 949,680
$68, 654,392
$2, 829, 246
20%
$69, 173,256
8.00463E+12
25%
$69, 634,912
Skewnes s
0.068250638
30%
$70, 025,688
Kurt osis
2.780789922
35%
$70, 444,368
Median
$71, 522,120
40%
$70, 810,040
Mode
Left X
$70, 271,496
$66, 861,136
45%
50%
$71, 150,264
$71, 522,120
5%
55%
$71, 909,968
$76, 330,160
60%
$72, 280,816
Right P
0 .0 00
62
-0.7 5
-0.5 -0 .25
0
0.2 5
S td b C oe ffi cie n ts
95%
65%
$72, 690,032
Dif f X
$9, 469, 024
70%
$73, 105,176
Dif f P
90%
75%
0
80%
Filter Min
85%
Filter Max
#Filt ered
0
90%
95%
#Errors
. 469
.46
Ra nk
. 35
D - Cont ractor Indirec ts (50% Direct Labr)
0.469
D2 - As bestos Abatement
E 1 - Ash Lagoons
0.459
0.290
#4
0.75
1
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
R egr
#1
#5
0.5
Se nsitiv ity
Na me
#2
#3
#6
“A Refined Approach for Defining Construction Project Uncertainty”
Va lue
5%
$81, 071,584
$71, 589,398
Variance
Right X
0 .2 00
% tile
$63, 366,916
Std Dev
Left P
0 .4 00
5%
00:02: 45
1444223627
Max imum
Mean
0 .6 00
0.000
62
24/11/2003 23:17
Summ ar y Statist ic s
Value
Mini mum
5%
Mea n=7 .1 5894 E+07
0 .8 00
0.200
24/11/2003 23:14
Simulation Duration
Random Seed
5%
0.600
Lat in Hypercube
Simulation Start Time
Simulation Stop Time
67
Distribution for TOTAL T/X57
0.800
1
Sampling Type
0 .40 0
1 .0 00
1.000
21
Number of Outputs
0 .80 0
0 .60 0
Mean=7.15894E+07
1.200
7.07%
8.10%
1
5000
Number of Inputs
1 .00 0
0 .00 0
62
Distribution for TOTAL T/X57
1.400
5.59%
6.30%
$4, 925, 836
$5, 643, 852
Wab Dec om St udy P1 CCE (AMEC
Format).xls
Number of Simulations
Number of Iterations
1 .20 0
0 .20 0
1.600
$3, 894, 756
$4, 385, 484
Summ ary Inform ation
D - Cont ractor Fees (10% D&I)
A 1 - Demolition SP F
E - Owners Cost (7.5% D&I )
0.141
0.128
0.109
$73, 530,200
$74, 020,928
$74, 561,280
$75, 279,296
$76, 330,160
C or r
0.664
0.693
0.398
0.317
0.170
0.247
#7
E - E&PM Fee incl Planning (7% D&I)
0.106
0.244
#8
#9
D1 - I ns ulation Removal (Non-Asb)
A BC - Contract or Indirects (50% Direc t Labr)
0.103
0.091
0.362
0.127
#10
B 1 - Demolition ECF
0.073
0.126
#11
A BC - Eng & PM Fee (8% D&I )
0.068
0.115
Slide No. 30
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
10
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
How to Use the Results
Statistic
Summary Statistics
Value
%tile
$62,089,936
5%
$66,755,652
Maximum
$82,333,624
10%
$67,880,376
Mean
$71,911,390
15%
$68,557,096
$3,143,501
20%
$69,235,000
Variance
9.8816E+12
25%
$69,711,912
Skewness
0.054253676
30%
$70,235,208
Kurtosis
2.850267143
35%
$70,668,328
Median
$71,928,368
40%
$71,126,992
Mode
$69,448,288
45%
$71,539,608
Left X
$66,755,652
50%
$71,928,368
Left P
5%
55%
$72,297,720
$77,156,136
60%
$72,696,424
Std Dev
Right X
Right P
95%
65%
$73,075,776
Diff X
$10,400,484
70%
$73,502,744
Diff P
90%
75%
$74,043,016
0
80%
$74,559,520
Filter Min
85%
$75,192,976
Filter Max
90%
$75,935,504
95%
$77,156,136
#Errors
#Filtered
0
• Establish desired
Value
Minimum
Level of
Confidence and
use the
corresponding
number
• Review the
summary statistics
to establish the
level of risk
– Higher Std Dev
= Greater risk
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 31
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Contingency Analysis
• Contingencies at Varying LOC
Results
Contingency @ 55% Confidence =
$29,494,000
22.9%
Contingency @ 65% Confidence =
$32,625,000
25.4%
Contingency @ 75% Confidence =
$36,134,000
28.1%
Contingency @ 85% Confidence =
$41,112,000
32.0%
Contingency @ 95% Confidence =
$48,942,000
38.1%
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 32
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
How to Use the Results
• Use the S-Curve as a graphical
representation of the possible outcomes
• More usable format
than the histogram
Distribution for TOTAL T/X57
1.000
Mean=7.191139E+07
0.800
0.600
0.400
0.200
0.000
60
66.25
72.5
78.75
85
Values in Millions
5%
66.7557
90%
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
77.1561
5%
Slide No. 33
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
11
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
How to Use the Results
• Use the Tornado
Regression Sensitivity for TOTAL T/X57
E1 - Ash Lagoons / Model D.../X23
D - Contractor Indirects (.../X32
D2 - Asbestos Abatement / .../X22
D - Contractor Fees (10% D.../X33
A1 - Demolition SPF / Mode.../X15
D1 - Insulation Removal (N.../X21
B1 - Demolition ECF / Mode.../X17
ABC - Contractor Indirects.../X28
A2 - Restoration SPF / Mod.../X16
D - E&PM Fee (4% D&I) / Mo.../X34
E2 - Canals / Model Distri.../X24
ABC - Eng & PM Fee (8% D&I.../X30
ABC - Contractor Fees (10%.../X29
E - Owners Cost (7.5% D&I).../X37
E - E&PM Fee incl Planning.../X36
D - Owners Cost (2% D&I) /.../X35
-1
-0.75
-0.5
Graph to establish
which variables
have the greatest
influence
• Can be a useful tool
for managing to
risk or conducting
further analysis
.523
.422
.414
.127
.125
.094
.076
.07
.07
.056
.055
.05
.05
.043
.041
.028
-0.25
0
0.25
Std b Coefficients
0.5
0.75
1
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 34
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Output Comparison
Contingency Analysis Comparisson
• Run multiple
$45,000,000
17.0%
16.0%
15.0%
$35,000,000
13.0%
14.0%
12.0%
i
Contingency
simulations with
different
conditions and
compare the
results
• Provides
confidence in
the model and
helps with the
decision process
$40,000,000
$30,000,000
11.0%
10.0%
$25,000,000
9.0%
8.0%
$20,000,000
7.0%
6.0%
$15,000,000
5.0%
4.0%
$10,000,000
3.0%
2.0%
$5,000,000
1.0%
$0
0.0%
P50
P60
P70
P80
P90
Level of Confidence
Bars = Cost
Lines = Percent
No Correlations, Input PDFs @ P15 & P85 - 15,000 Iterations, 1 Simulation
No Correlations, Input PDFs @ P10 & P90, 15,000 Iterations, 1 Simulation
With Correlations, Input PDFs @ P15 & P85, 15,000 Iterations, 1 Simulation
With Correlations, Input PDFs @ P10 & P90, 15,000 Iterations, 1 Simulation
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 35
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Contingency Breakdown
Approximate Con ngenc y Br eakdown For Tot al Pr oj ect Cos t
Total P rojec t Contingency @ 85% Confidenc e Level = $41,112,129 (32% of Tot al Capital Cos t)
P MO & C o n su ltan t To tal
1. 2%
De m o D 14 1 To tal
1 .4%
In te rim M ove s T otal
-3 .0%
O ffice R en o s Tot al
1 8 .6%
D ec o n t D1 4 1 Total
14 .2 %
De m o D 1 91 B To ta l
0 .2 %
W e st B ay Flo or Total
5 .7 %
Cafe te r ia To tal
2 .0 %
W e st B ay En c lo su re To tal
1 5 .0%
De c o n t D2 13 , D2 6 4 , D2 65 Total
2 4.0 %
Elec tr op la ng Tot al
1 5 .6%
CA NTA SS En c los ur e To tal
4 .0 %
D em o D2 1 3, D2 64 , D 26 5 Total
1 .1%
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 36
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
12
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• Monte Carlo Simulation of Project Schedule.
•
– Used to develop project risk budget called Risk
Reserve and schedule Contingency
– Also used to establish milestone dates based on a
required Level of Confidence.
– Incorporates variability and uncertainty (Risk
Register, cost variability & schedule variability).
– Can model the effects of schedule on cost.
Schedule Based Model (MS Project)
– Can convert P3 schedules to MS Project for the
analysis if required.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 37
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• Process:
– Study the existing schedule (if not developed by
ENGCOMP)
– Prepare the analysis model based on the master schedule
– Calibrate Planning Team
– Facilitate meeting with Project Team to identify Variability
in the model (Triangular Distributions)
– Facilitate Risk Brainstorming session with Project Team
– Create Risk Register
– Build all risk factors into the analysis model
– Run simulation & Generate Results
• Total Duration:
– 2 to 12 weeks work depending on complexity.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 38
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• Schedule Review & RollRoll-up
Task Name
Project Administration and Management (PMO)
WP10: West Bay
WP10 COMPLETE
WP13: Cafeteria &Admin
WP13.3
WP13.2: Admin. Area
WP13.1: Cafeteria Fit-Up
WP13 COMPLETE
WP11: New Electroplating and
WTP/Deconstruction and Decommissioning
Duration
1360
days
1261
days
1221
days
1360
days
900 days
637 days
740 days
WP9g: Deconstruct D191B
140 days
WP9 COMPLETE
4/9
0 days
740 days
WP9d: Deconstruct D141
PHASE IV COMPLETE
11/21
0 days
WP11b: Deconstruction and Decommissioning
of D213, D264, D265
WP 11 COMPLETE
8/2
1261
days
255 days
WP11a: ElectroPlating &WTP Facility
WP9: Deconsruction of D141 &D191B
2008
2009
2010
2011
2012
2013
O ND J F M A M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O ND J F M A M J J A S O N D J F MA M J J A S O
1182
days
0 days
0 days
11/23
0 days
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
4/9
Slide No. 39
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
13
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Project Variability Brainstorming
Group
• Identify
schedule
variability
00 - Milestones
01 - Surface Drilling, Piling, Excavations/Materials Movement
02 - Surface Equipment/Plant/Conveyor Purchases
03 - Surface Conveyor/Sizer System Installation
04 - Surface Dewatering Installation
05 - Cat U/G Mobile Equipment Purchases
06 - U/G Drills/Ground support Equip. Purchases
07 - U/G Misc Equipment Puchases
08 - Conveyor Ramp Development
09 - Total U/G Shop Costs
10 - Access Ramp Development
11 - Bored Raises
12 - Drop Raises
13 - Level Development
14 - Watse X-Cuts
15 - Mine Contractor Indirects/Support
16 - Diamond Drilling
17 - Kimberlite Development
18 - Koala FAR #2 Vent System with Heat Recovery
19 - Misc U/G Ventilation
20 - U/G Material Handling System Purchases
21 - U/G Conveyor Installation
22 - U/G Infrastructure Purchase
23 - U/G Sump Construction
24 - U/G Misc Installation
25 - Owner's Manpower
26 - Owner's Consultant
27 - Owner's Fuel
28 - Owner's Freight
29 - Owner's Accommodation/Flights
30 - Equipment Operation & Maintenance
31 - Explosives
32 - Power
33 - Operations During Capital Period
Total
Duration
1377 days
822 days
1136 days
974 days
904 days
666 days
1142 days
733 days
484 days
1035 days
554 days
252 days
352 days
1078 days
873 days
1154 days
389 days
831 days
720 days
497 days
479 days
472 days
581 days
414 days
1329 days
1006 days
1338 days
273 days
1107 days
273 days
1065 days
273 days
822 days
365 days
Start
Date
1 Nov 04
1 Aug 05
1 Jun 05
2 Sep 05
12 Aug 05
2 May 05
2 Jan 05
3 Mar 05
5 Jan 06
16 Sep 05
1 Aug 05
24 Nov 05
17 Dec 06
3 Mar 05
1 Aug 05
2 Mar 05
13 Dec 05
6 Jan 06
4 Mar 06
4 Mar 06
4 Mar 06
27 Dec 06
2 Aug 05
1 Jun 06
1 Oct 05
1 Aug 05
1 Nov 04
1 Aug 05
2 Aug 05
1 Aug 05
31 Jul 05
1 Aug 05
1 Aug 05
1 Jul 06
“A Refined Approach for Defining Construction Project Uncertainty”
Finish
Date
8 Aug 08
31 Oct 07
10 Jul 08
2 May 08
1 Feb 08
26 Feb 07
17 Feb 08
5 Mar 07
3 May 07
16 Jul 08
5 Feb 07
2 Aug 06
3 Dec 07
13 Feb 08
21 Dec 07
29 Apr 08
5 Jan 07
15 Apr 08
21 Feb 08
13 Jul 07
25 Jun 07
11 Apr 08
5 Mar 07
19 Jul 07
21 May 09
2 May 08
30 Jun 08
30 Apr 06
12 Aug 08
30 Apr 06
30 Jun 08
30 Apr 06
31 Oct 07
30 Jun 07
%Under
%Over
-10
-5
-10
-10
n/a
n/a
n/a
-10
-30
-10
-20
-20
-15
-15
50
20
30
50
n/a
n/a
n/a
25
30
25
50
50
30
30
-10
-20
-10
n/a
100
30
20
n/a
-10
n/a
-10
-10
30
n/a
30
30
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Slide No. 40
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• Risk
Brainstorming
– 73 risks were
brainstormed but
only 10 were
quantified for the
analysis
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 41
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
- Have historical data (But it needs to be evaluated
in terms of applicability.
- Also have record of days not traveled due to
weather
2
L oss of Air Freight Capability
3
Cem en t Powder Availability
4
Geolog y Imp act - "GeoCatastrophy"
RAN K
B ACK GROUND
Ice Road Availability
SCORE
D ESCRIPTION
LIKELIHOOD
1
CONSEQUENCE
ITEM NO
2
2
4
3
1
3
3
N /A
1
1
1
N /A
PROBAB ILITY OF
OCCURANCE
Risk Register
SCORING
(1-Low, 3-Hig h)
9
1
0.1
Crossing the Giant Fault
- Cost - 2 x cost/m affecting 100m of development
per level x 2 levels
- Schedule Impact - Triang(0months, 1month,
4months)
Largest impact is on schedule
Unstable Ground
- Cost: 2 x total cost of excavation
- Schedule: 1 month delay
Run into "Blocky" unstable ground conditions at major excavation.
- Low Probability.
- May have to re-design the the mining layout, but likely will just have to spend more
time and money on rock bolting and other ground support measures.
Pillar Instability in Kimberlite
5
Manp ower Availability /
Produ ctivity Impacts
R elates to Dramatic change in productivity due to
other industry demands. May result in lack of
skilled resources or just qty of resources.
2
3
6
2
6
L oss / Damage of freight in
tran sp ort
Includes things such as truck roll-over, ship
sinking, damage in transfering the load, etc.
2
1
2
N /A
7
Materials Managemen t on Site - Loss of items / stock to other operations, waste,
etc.
1
3
3
N /A
8
Force Majeure Relatin g to
Sup plier / Co ntracto r Delivery
3
1
3
4
9
Ekati Services no t Performing
2
1
2
N /A
3
1
3
5
10
Operations people at Ekati may be too busy with
other work to provide heavy equipment support to
the project as needed.
If the freight doesn't make it in on the ice road the majority of the shipments can be
transported using the Hercules T ransport Plane.
- Max C argo = 40,000 lbs
- Max D imensions = 8'H x 9'W x 52'W
- Costs $1.00/kg to fly from Yellowknife and $0.14/kg to truck from Yellowknife
Score is too low to consider in the analysis. The risk will be controled through mitigation measures.
0.5
3
NOTES
Score is too low to consider in the analysis. The risk will be controled through mitigation measures.
- Water inflows, poor ground stability, etc.
3
IMPACT
- Start and End Dates will be a probability density
function based on historical records.
- If we miss the ice road it will add $0.84 / kg to the
cost of freight and 1 month to the delivery schedule.
Group decided that this would not be a significant risk during the capital period.
In 2007 & 2008 (2006 productivity is f ixed);
It was decided that the productivity for 2006 (rates and availability of required
Apply a range to the productivity f or labour force with expertise) would be relatively constant. F or the labour in 2007, however, there will be
a range of -10% to + 50 %
a modification to the labour in the form of a probability density function.
Score is too low to consider in the analysis. The risk
will be controled through mitigation measures.
--> the risk lies in the fact that BHP is not insured for the damage and the trucking
company will only cover a certain dollar value per kg.
Score is too low to consider in the analysis. The risk will be controled through mitigation measures.
0.05
2 month delay
After discu ssio ns aroun d this risk it was decided that the probab ility and
imp act were to o low to co nsider in th e project simulation.
Score is too low to consider in the analysis. The risk will be controled through mitigation measures.
Imp act of Pan da Op eratio ns on Issues around use of Development Equipment,
Material Resources & Labour.
Ko ala Project.
Treat as an allow ance Task with the f ollowing
duration distribution;
- Triang(2weeks,4weeks,12weeks)
- Cost: Duration of this task will directly increase the
duration/cost of owner's and contractor's indirects.
If there's a problem that affects the operations at Panda and the construction at
Koala, all available resources will be given to Panda to maintain the operations.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 42
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
14
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Modeling Risk
Tools within @Risk for MS Project for modeling risk;
•
Probabilistic Branching: Probabilistic branching lets a project branch from one task
to any number of other tasks during simulation. Account for chance events in your
project plans and see the impact on your outputs!
•
IF/THEN Conditional Branching: Build logic into your project plans. With IF/THEN
Conditional Branching, if a pre-defined condition occurs during simulation, @RISK for
Project will change a project value or branch to another task. Control values and
branching between tasks using logic statements that you define!
•
Probabilistic Calendars: Often you need to model the probability of work
stoppages due to weather, strikes, or other unforeseen events. By setting up
Probabilistic Calendars with @RISK for Project, you can apply working and nonworking probabilities to any calendar event in Project!
•
Global Variables: Global variables can be used to hold values that can be
referenced in @RISK for Project calculations in your project. Variables may be
defined as probability distributions, single fixed values, or even IF/THEN conditions
that reference other variables. Variables are not attached to a specific task or field;
they are attached to the project as a whole.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 43
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Example Risk Analysis Model
Triangular Input Distribution for Schedule Duration (Schedule
Variability Brainstorming Session)
Gantt Chart
Data
Type
Task Description
Analysis
Analysis
Analysis
45
Analysis
W eather Risk (30 % Proba bility
of Occurrin g)
90
30
60
1 20
2 40
90
60
90
1 80
30
15
30
90
90
Base
Analysis
1 50
1 20
Base
Analysis
60
30
15
Base
Con struction Start
Start
Date
60
Base
Detailed En ginee ring
P roject Comp lete
Duration (Work Days)
EV
Max
Base
P roject Ap proval
Con struction Complete
Min
Base
B udget De fin ition
60
90
1 80
Finish
Date
Apr 20 08
May 200 8
Apr 20 08
Jul 200 8
Schedule
Cont.
38
Y
Q
M
2008
2009
1
Q1
2
3
4
Q2
5
6
7
Q3
8
Q4
9 10 11 12
1
Q1
2
3
4
Q2
5
6
7
Q3
8
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Q4
9 10 11 1 2
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
1
0
0
0
0
0
0
0
0
0
0
0
0
Jun 20 08
Jul 200 8
Jul 20 08
Aug 200 8
Jul 20 08
Nov 200 8
Aug 20 08
Jan 200 9
Nov 20 08
Feb 200 9
0
0
0
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
0
0
0
0
0
0
Jan 20 09
May 200 9
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
0
0
0
0
0
0
0
0
Feb 20 09
Mar 200 9
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
May 20 09
Jul 200 9
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
Mar 20 09
Jun 200 9
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
0
0
Jul 20 09
Nov 200 9
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
0
0
Base
Jun 200 9
Analysis
Nov 200 9
Conditional Branching for
Uncertain Events (Risk Register)
15
60
14 3
–Model also incorporates project costs
(Contingency Model) which allows us
to determine the impact of schedule
variability and outside risks on the budget
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 44
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
ENGCOMP RISC Diagram
(Risk Integrated Second SS-Curve)
100%
90 %
85%
80 %
70 %
Expected Project
Cost Before
Contingency
60 %
50 %
40 %
Conti nge ncy = $41,112,000
R i sk R eser ve = $24,190,000
30 %
20 %
Total Project Cost
with Contingency
Total Cost w ith
Contingency &
Project Risk
Reserve
10 %
0%
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 45
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
15
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Schedule
Analysis
Output
• Similar output format to
cost contingency analysis
• Output is in dates and
days rather than dollars
• Use same logic for
calculating the required
contingency for the given
milestone
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 46
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Project Risk Analysis
• Project Completion
Statistic
– With an 85% LOC the project
is expected to be completed on
16 January 2014.
Distribution for FMF Cape Breton - Phase
IV Part II Proj...
1.000
Summary Statistics
Value
%tile
1/9/13
5%
25 Apr 2013
Maximum
9/30/14
10%
27 May 2013
Mean
9/30/13
15%
14 Jun 2013
Std Dev
101.6005291
20%
Variance
10322.66751
25%
Skewness
0.284324135
30%
31 Jul 2013
Kurtosis
2.766652842
35%
14 Aug 2013
9/24/13
40%
28 Aug 2013
45%
10 Sep 2013
50%
24 Sep 2013
Median
Mode
Mean=9/30/2013
Value
Minimum
7/19/13
19 Jul 2013
0.800
Left X
5%
55%
0.600
Right X
3/26/14
60%
22 Oct 2013
Right P
95%
65%
06 Nov 2013
Diff X
335.109375
70%
21 Nov 2013
Diff P
90%
75%
06 Dec 2013
0
80%
25 Dec 2013
Left P
0.400
0.200
#Errors
0.000
10/18/2012
7/12/2013
5%
4/5/2014
90%
4/25/2013
12/28/2014
5%
3/26/2014
4/25/13
03 Jul 2013
08 Oct 2013
Filter Min
85%
16 Jan 2014
Filter Max
90%
14 Feb 2014
95%
26 Mar 2014
#Filtered
“A Refined Approach for Defining Construction Project Uncertainty”
0
Slide No. 47
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Schedule Analysis Output
• Schedule Contingency Output Summary
Task Description
Phase IV Total Project Schedule
Demolish 191B (Under Current EA) - Planned
Completion Sep 2008
TB Approval EPA(R) Phase IV – Planned
Milestone Jan 2009
Construction Contract Award (WP10/11/13) –
Planned Milestone Apr 2009
Data
Type
Start
Date
Duration
(Work Days)
277
Apr 2008
Oct 2008
Aug 2008
Mar 2009
80
101
217
Jan 2009
Apr 2009
Feb 2009
May 2009
Analysis
Apr 2009
Sep 2009
May 2009
Oct 2009
Analysis
Estimate
Estimate
Analysis
Estimate
Estimate
Apr 2009
Jun 2011
558
Analysis
Jul 2009
Nov 2011
621
BOD Electro-Plate Shop – Planned
Completion Jul 2011
Estimate
Feb 2009
Dec 2010
480
Analysis
Jul 2009
Jul 2011
528
BOD Cafeteria & Administration Fit-Up –
Planned Completion Oct 2012
Estimate
Mar 2012
Aug 2012
120
Analysis
Aug 2012
Jan 2013
121
BOD West Bay – Planned Completion Jun
2011
Schedule
Contingency
1360
1562
Analysis
Jan 2008
Jan 2008
Finish
Date
Apr 2013
Jan 2014
Estimate
Y
Q
M
Gantt Chart
2008
2009
2010
2011
2012
2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
155
212
156
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 48
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
16
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Outline
• Introduction
• Project Risk Analysis (PRA) Overview
• The ENGCOMP PRA Process
• Project Case Study
• Wrap-up
• Questions
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 49
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Case Study
• Client: Department of National Defence
• Project: Fleet Maintenance Facility Cape Breton
Consolidation Phase IV Risk Analysis
• Location: Canadian Forces Base Esquimalt, Victoria, BC
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 50
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Background
– Goal: consolidate and upgrade the FMF, which are
currently smaller facilities spread all over the base, into
one large facility.
– Project Stage: The project currently sits in the middle of
Phase IV execution. DND requested evaluation of the
remaining budget and schedule required to complete this
phase.
– Risk Management Plan: Although there has been risk
assessments completed on the project in the past, a true
risk analysis, using Monte Carlo simulation, had yet to be
completed.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 51
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
17
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• ENGCOMP’s Mandate
– Part 1
– Part 2
– Part 3
– Part 4
– Part 5
–
–
–
–
–
Project Evaluation:
Contingency Analysis:
Action Plan:
Project Risk Analysis:
Project Documentation:
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 52
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 1 – Project Evaluation:
– Information gathering mission.
• project documents, toured the facilities,
learned about FMF operations and
interviewed major stakeholder groups for the
project.
– The deliverable included
recommendations on improvements to
project operations and policies.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 53
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 2 – Contingency Analysis
– Site meetings
• estimate review, team
calibration and variability
brainstorming.
– Analysis included
preparation of Custom
reports to suit the specific
requirements of DND.
– The outcome was the required project
Contingency including evaluation of Escalation.
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 54
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
18
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 3 – Action Plan
– ENGCOMP provided Facilitated Project
Planning Services
• Delivered an appropriate schedule and action
plan for the rest of Phase IV.
– This was required as the basis for the
project risk analysis model.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 55
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 4 – Project Risk Analysis:
– Site meetings with the planning team
• schedule variability brainstorming and risk
register brainstorming.
– Outcome was the project Risk Reserve
and Schedule Contingency.
– The results were also used to prepare
the Project Cash Flow.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 56
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 4 – Project Risk Analysis:
– Results showed
a higher level of
uncertainty than
expected
– Analysis helped
to back the PM’s
request for
funds
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 57
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
19
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Part 5 – Project Documentation
– Delivered a complete report outlining Risk
analysis methodology
– ENGCOMP also
provided input
into the
preparation of
an updated
Project Profile
Risk Assessment
report.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 58
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
FMF (CB) Consolidation PRA
• Successes
– DND is very satisfied with the deliverables
– Met with the Senior Review Board at National
Defense Headquarters (NDHQ) in Ottawa to
deliver the results with the Project Manager
– Met with the Financial Analyst at NDHQ to
support the DND Project Manager in defending
the project budget.
– Working with DND to prepare policy on
performing this type of project risk analysis for
all future DND projects.
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 59
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Outline
• Introduction
• Project Risk Analysis (PRA) Overview
• The ENGCOMP PRA Process
• Project Case Study
• Wrap-up
• Questions
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide No. 60
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
20
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
Measures for Validity of Process
– Actual Project Success
– Client perception / satisfaction on
completion of deliverables?
– Secondary benefits;
• Congregation of stakeholders (SME)
• PM Tools
• Highlight areas requiring more work
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 61
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
Where are we going from here?
• Alliance with Doug Hubbard
– Applied Information Economics (AIE)
Approaches to enhance our process
– Currently using calibration
• Working on concept for using Value
of Information Analysis (VIA)
• In the future will look into integration
of Modern Portfolio Theory
“A Refined Approach for Defining Construction Project Uncertainty”
Slide No. 62
www.engcomp.ca
Presenter: Jason Mewis, P.Eng.
P.Eng.
Palisade Risk & Decision Analysis Conference
QUESTIONS
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide
Slide No.
No. 63
63
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
21
A Presentation for Palisade Risk & Decision Analysis
Conference 2008 – North America
17 November 2008
Palisade Risk & Decision Analysis Conference
THANK--YOU!
THANK
FIND US AT
www.engcomp.ca
“A Refined Approach for Defining Construction Project Uncertainty”
Presenter: Jason Mewis, P.Eng.
A Refined Approach for Defining
Construction Project Uncertainty
Presenter: Jason Mewis, P.Eng.
Slide
Slide No.
No. 64
64
www.engcomp.ca
ENGCOMP Copyright 2008
www.engcomp.ca
22