PBSi

Specialists in Managing Uncertainty

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Cost and Schedule Risk Analysis

Check out the cost and schedule risk analysis resource page.


Cost and schedule risk analysis is a proven tool for reducing risk to projects.


Budgets and  schedules with high uncertainty are primary causes of failure for projects. Establishing realistic budgets and schedules for projects is a major risk mitigation action that significantly improves the likelihood of delivering what is required, on time, and within the budget or other management constraints.

When the schedule,  requirements, and the planned budget are not aligned there will probably be demands for substantial schedule compression  (with impacts on quality and costs), or substantial reductions in scope to maintain cost and schedule (with impacts on performance and functionality).  

Mapping project risks  to project schedules, work breakdown structures and cost accounts facilitates  qualitative analysis of risks to project contingencies. The potential impacts of the risks are modelled to derive probability curves that enable "what-if" analysis.  The outcome is an increased likelihood of achieving critical milestones and of staying within allocated budgets.

Typical examples from actual analyses are shown here:
  • Probability of achieving costs less than budget plus reserve are no better than 50%.  It would be prudent to Increase reserves to a more reasonable level.
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  • Probability of achieving three major milestones shows that the third milestone is highly optimistic without major adjustments to the plan.
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The PBSi Cost and Schedule Risk Analysis process provides a simulation capability enabling predictive analysis for projects involving hardware, software, microelectronics and lifecycle support cases.  This process helps Companies right -size proposals and plans for New Business.  It helps existing programs and change initiatives to be sustainable and successful.

 


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