November 5-6, 2009 Copyright © 2009 PMI RiskSIG A collaboration of the PMI, Rome Italy Chapter and the RiskSIG “Project Risk Management – An International Perspective” RiskSIG - Advancing the State of the Art Bayesian Networks: A Novel Approach For Modelling Uncertainty in Projects By: Vahid Khodakarami November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 2 Outline: What is missing in current PRM practice? Bayesian Networks Application of BNs in PRM Models Case study November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 3 Conceptual steps in PRMP Risk Identification Qualitative Analysis Risk Analysis (Risk Measurement) Quantitative Analysis Risk Response (Mitigation) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 4 Project Scheduling Under uncertainty (CPM) PERT Simulation Critical chain November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 5 What is missing? Causality in project uncertainty Estimation and Subjectivity Unknown Risks (Common cause factors) Trade-off between time, cost and performance Dynamic Learning November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 6 Bayesian Networks (BNs) Graphical model Nodes (variables) Arcs (causality) November 5-6, 2009 Probabilistic (Bayesian) inference Copyright © 2009 PMI RiskSIG Slide 7 Bayesian vs. Frequentist Frequentist Bayesian Variables Random Uncertain Probability Physical Property (Data) Degree of belief (Subjective) Confidence interval Bayes’ Theorem Inference November 5-6, 2009 Copyright © 2009 PMI RiskSIG only feasible method for many practical problems Slide 8 Bayes’ Theorem P( B / A) P( A) P( A / B) P( B) ‘A’ represents hypothesis and ‘B’ represents evidence. P(A) is called ‘prior distribution’. P(B/A) is called ’Likelihood function’. P(A/B) is called ’Posterior distribution’ . November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 9 Constructing BN Prior Probability On time 0.95 High 0.7 Late 0.05 Low 0.3 Conditional Probability Sub-contract Staff Experience On time High Low No 0.99 0.8 Yes 0.01 0.2 Late High Low 0.7 0.02 Delay November 5-6, 2009 0.3 0.98 Copyright © 2009 PMI RiskSIG Slide 10 Inference in BN (cause to effect) With no other information P(Delay)=0.14.4 Knowing the sub-contract is late P(Delay)=0.50.7 November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 11 Backward Propagation (effect to cause) Prior probability with no data (0.7,0.3) Posterior (learnt) probability (0.28,0.72) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 12 BNs Advantages Rigorous method to make formal use of subjective data Explicitly quantify uncertainty Make predictions with incomplete data Reason from effect to cause as well as from cause to effect Update previous beliefs in the light of new data (learning) Complex sensitivity analysis November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 13 BNs Applications Industrial Processor Fault Diagnosis - by Intel Auxiliary Turbine Diagnosis by GE Diagnosis of space shuttle propulsion systems - by NASA/Rockwell Situation assessment for nuclear power plant – NRC Medical Diagnosis Internal Medicine Pathology diagnosis Breast Cancer Manager November 5-6, 2009 Commercial Software troubleshooting and advice – MS-Office Financial Market Analysis Information Retrieval Software Defect detection Military Automatic Target Recognition – MITRE Autonomous control of unmanned underwater vehicle - Lockheed Martin Copyright © 2009 PMI RiskSIG Slide 14 Bayesian CPM CPM Calculation ES Max[EFj | j one of the predecessor activities ] EF ES D LS LF D LF Min[LS j | j one of the successor activities ] Slack LS ES LF EF Predecessors Duration Model Predecessor Activities D ES LS EF Successor Activities Successors November 5-6, 2009 LF Copyright © 2009 PMI RiskSIG Slide 15 BCPM Example ES=5 ES=0 D=5 D=4 EF=9 ES=9 D=2 EF=11 B D LS=9 Slack=4 LF=13 LS=13 Slack=4 LF=15 EF=5 ES=15 D=5 EF=20 A E LS=0 Slack=0 LF=5 LS=15 Slack=0 LF=20 ES=5 D=10 EF=15 C LS=5 Slack=0 LF=15 November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 16 Activity Duration November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 17 Trade off November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 18 Trade off November 5-6, 2009 (Prior vs. required resources ) Copyright © 2009 PMI RiskSIG Slide 19 Known Risk November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 20 Known Risk (Control) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 21 Known Risk (Impact) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 22 Known Risk (Response) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 23 Unknown Factors November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 24 Unknown Factors (Learning) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 25 Learnt distribution November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 26 Total Duration November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 27 Case Study (construction Project) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 28 Case Study (Bayesian CPM) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 29 Case Study (predictive) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 30 Case Study (diagnostic) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 31 Case Study (learning) November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 32 Summary Current practice in modelling risk in project time management has serious limitations BNs are particularly suitable for modelling uncertainty in project The proposed models provide a new generation of project risk assessment tools that are better informed and hence, more valid November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 33 Questions? Thank you for your attention November 5-6, 2009 Copyright © 2009 PMI RiskSIG Slide 34