Project Risk Quantification Methods That Work
The legend John K. Hollmann, PE ,CCP, CEP, DRMP, FAACE, a well-recognized industry thought leader and Honorary Life Member of AACE® International, conducted a live webcast on October 19, 2018, in collaboration with Project Control Academy on “How to Conduct Practical and Realistic Cost & Schedule Risk Analysis.”
John Hollmann shared his research on cost growth, schedule slip, and accuracy and presented an integrated set of project risk quantification methods “that work” for every project, program and portfolio. The presentation was based on John’s recent book: “Project Risk Quantiﬁcation: A Practitioner’s Guide to Realistic Cost and Schedule Risk Management”.
Over 670 people across the globe enrolled for this informative webcast and learned a new way of looking at project risks. We had such a dynamic & engaging audience from all over the globe.
Dinah Sylvester, PMI-RMP, PMI-SP, PMP, one of the webinar attendees provided a great summary of what was discussed.
According to Dinah, a wealth of knowledge was presented. The presenter, John Hollmann, mentioned that Probabilistic modeling should include the integration of both cost and schedule. It should also be integrated with Business (Capex) and Commercial aspects. Hollmann went on to share that one common occurrence in risk analysis is that we fail to quantify escalation risks. Escalation risks are economically driven price changes. However, “Systemic Risks”, or those risks that are inherent in our process should be our focus, as they are usually the most significant risks to the project.
Mr. Hollmann mentioned that there is research to support that if we improve our tools, strengthen our people, processes, etc., we can expect better outcomes. When quantifying the impact of risk events, the focus should be on the Risk Responses, meaning, “What will we do if a particular risk materializes/occurs?”; the response forms the scope of the impact estimate. Also, if a risk is treated, the treatment must be listed in both the risk register and in the estimate and schedule (i.e., coordinate with Change Management).