New Course Launch - Practical RMP with Oracle Primavera Risk Analysis

Considering the key interest that management professionals have on risk management and risk management being of high importance in many industries, this new course has been launched. It an unique program combining both theory and practical. This program prepares you fully for Risk Management Professional certification (RMP®) from PMI with hands-on practicals on Oracle Primavera Risk Analysis®.

Why this course? 
The Risk Management Professional (RMP) certification from PMI is widely accepted as the global benchmark to recognize proficiency in Project Risk Management. However, the Practice Standard for Project Risk Management, on which the RMP certification is based, is theoretical. In the real world, while theory is important, it is equally important to know the practical aspect, i.e., how to apply the risk management practices in the real world. 

Also, many risk or project management professionals use various tools such as Microsoft Project or Oracle Primavera, to create project plans and for risks, use a different tool. But they not for complete risk management or risk analytics. 

For example, in real life, you need to know:

1. How to create a risk register and have the risk governance parameters for analysis?
2. How to create risk break down structure or perform risk probability and impact assessment? 
3. How to perform risk sensitivity analysis such as Monte Carlo analysis?
4. How to conduct risk response planning with various strategies for negative and positive risks?
5. How to continuously find the effectiveness of your risk responses?

How this course helps?
In all the above cases, Practical RMP with Primavera Risk Analysis helps - for both a risk management professional and a project management professional. 

Primavera Risk Analysis (PRA) from Oracle is a widely used risk management tool to manage large scale, multifaceted project risks and conduct detailed risk analytics. It covers the entire set of Risk Management processes – Plan Risk Management, Identify Risks, Qualitative Risk Analysis, Quantitative Risk Analysis, Risk Response Planning and Control Risks. 

This program not only covers the 5 major processes with its input,tools & techniques, outputs, various tasks, knowledge and skills as needed to be Risk Management Professional, but also how with the helps to integrate with scope management, schedule management, cost management et al.

In Short: Practical RMP with Primavera Risk Analysis is combination of theory - from Practice Standard for Project Risk Management and practical - with Oracle Primavera Risk Analysis software. In addition, this course is synchronized with PMBOK Guide, 5th Edition.

What it contains?
This course is moduralized and has 11 modules. It is built on with a number of hands-on practicals and has taken a step by step approach. In the practicals where you learn a whole gamut of Risk Management practices practices. They will be applicable across various processes for Risk management and multiple Inputs, Tools and Techniques and Outputs.

Some of the items, used in real world, that you will know through multiple hands-on practicals are:

• Risk Register - Both Qualitative Risk Register and Quantitative Risk Register  as well the Risk Register post response planning
• Probabilistic Distribution and Monte Carlo simulation
• Sensitivity Analysis - Tornado Diagram/Chart  
• Risk Adjusted S-Curve Analysis
• Risk P-I matrix in a graphical way and finding out what the important risks to look into

Detailed course is outlined here - Link.

For more details about the program, following reference links will help:

1. Practical RMP with Primavera Risk Analysis R8.x - Course Overview (Link)
2. Practical RMP with Primavera Risk Analysis R8.x - Complete Course Detail (Link)
3. Practical RMP with Primavera Risk Analysis R8.x - Course Benefits (Link)
4. Practical RMP with Primavera Risk Analysis R8.x - Certification Process for RMP (Link)
5. Practical RMP with Primavera Risk Analysis R8.x - Who Can Attend (Link)
6. Practical RMP with Primavera Risk Analysis R8.x - Frequently Asked Questions(FAQ) (Link)

The details of this course is also available at - Practical PMP with Primavera Risk Analysis.

Eligibility criteria:

The eligibility criteria is in sync with PMI's Risk Management Professional certification criteria. It is outlined here - Link

How to get access to this course?

Please drop me a mail at my mentioned contact details in About section or you can use the Quick Contact form - displayed on the top right hand corner of this blog.

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• Primavera Risk Sensitivity Analysis with Torando Diagram
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Primavera Risk Sensitivity Analysis with Torando Diagram

In my interactions with management professionals across various industries, questions come in - what risk sensitivity analysis is and how to conduct them. Professionals cutting across industries - specifically in construction, manufacturing and IT – are taking a keen interest in risk management as I have seen, since last year. 

When I introduce Torando diagram - a special bar chart used in sensitivity analysis for comparing relative importance of activities (or activity costs) as compared to the project's objectives, they get a certain idea, but do not fully understand.

In this post, I’ll explain about risk sensitivity analysis along with Torando Diagram in a practical way with the help of Oracle Primavera Risk Analysis software. This also will be of helpful for aspiring professionals who are taking the Risk Management Professional (RMP) exam or Project Management Professional (PMP) exam as both in Standard for Risk Management and PMBOK Guide, torando diagram has been mentioned to be risk sensitivity analysis technique.

Risk and Risk Sensitivity Analysis:
First, a few lines on risk:

• It can be uncertain event or condition
• It is in the future and has not occurred when identified and analyzed
• If it occurs, it will have an impact or effect
• It impacts positively or negatively the project’s objective. (Project objective can be schedule objective, cost objective, scope objective and so on)

Now, what is risk sensitivity analysis? Why conduct it?
As per PMBOK Guide, 5th Edition:

Risk Sensitivity analysis helps to determine the risks that will have most potential impact on the project. It informs how the variations in project’s objectives correlate with variations in different uncertainties. Conversely, it helps to find out the extent to which uncertainty of each project element affects the objective being studied, when all other uncertain elements are held at their baseline value. 

So, the key items that we are trying to know by Sensitivity Analysis are:

1. Which risks will have the highest potential impact on the project?
2. What is the correlation of uncertainty of each project element on the project objective?
3. What is the correlation of variations in project objectives with variations in different uncertainties?

Risk sensitivity analysis is a quantitative risk analysis technique. Torando diagram is used to display the data for post the sensitivity analysis. I'll take Item 2 (correlation of uncertainty of each project element on project objective), to explain more in this post. This will be easy and simple to understand.

In sensitivity analysis, you are checking the impact on the project objective, e.g., schedule objective, due to change in duration of a work package or an activity. Also, you can check impact that one activity can have on other activities. As with schedule objective, you can check on the project’s cost objective, too. It means you can check on the impact on the project's cost, if the cost of an activity or cost of a work package changes. 

Tornado Diagram:
Torando diagram/chart  is a horizontal bar chart with high impact activity/work package duration items (or cost items) listed on top and low impact activity/work package duration item (or cost items) listed below in a gradual manner. Because the shape of the sensitivity analysis graph looks like a tornado, it is called torando diagram. A tornado, if presented in a graphical view will look as shown below.

Image Credit - http://www.clker.com/

The sensitivity analysis diagrams also look like torandos. In it, the Y-axis has the uncertainty (duration items or cost items considered) at base value and the X-axis  has the correlation (or spread) of the uncertainty as compared to a project objective. 

Example:

I have used Primavera P6 project-portfolio management software to create a simple project plan. This plan is then imported to Primavera Risk Analysis (PRA), earlier known as Pertmaster. One can create the plan in PRA. However, as I have seen, most use Primavera or MS Project (which also can be used) to create a plan. Hence, taking this route.

The test project has 6 activities (Activity 1 to 6) and 2 milestones (Start and End milestones). There are 3 resources – all labor resources – assigned to these tasks. I have not taken any work package, to keep it minimal and simple. The Gantt Chartt, from Oracle Primavera P6 software is as follows.

Gantt Chart in Primavera P6

Resource 1 and Resource 2 have the following rates. Resource 3 is deliberately not having any standard rate, impact of which we will see in cost sensitivity torando.

Labor Resources - Resources screen in Primavera P6

I have created this plan (Test Project.XER) in Oracle Primavera P6 R8.4 and exported it. Next, I imported this file into Oracle Primavera Risk Analysis software (R8.7). Now, applying a probabilistic distribution for the activities, I'll get the the following chart.

Gantt Chart with Distribution values in Primavera Risk Analysis (Pertmaster)

I have applied triangular distribution, but other distributions such as Beta, Uniform etc can also be applied. In our case, we have the PERT estimate of Minimum duration, maximum duration and most likely duration.

The formula used in triangular distribution is as described below:

• Minimum duration is 75% of remaining duration
• Most likely (or simply likely) is 100% of remaining duration
• Maximum is 125% of remaining duration

It can be understood by looking at few activities. 

1) For “Activity 4”, remaining duration is 4 days; 75% of it will be 3 days. 125% will be 5 days.

2) For “Activity 2”, remaining duration is  3 days; 75% of it will be 2.25 days (~2days) and 125 % will be 3.75 days (~4days)

No baseline has been performed, as I am analyzing the sensitivity of the activities and their associated costs, before doing any baseline.

Now let us check on the analysis using the Tornado diagram. I ran through 1000 iterations by changing the values of activities (1 to 6) in the project, i.e., applied the Latin Hyper-cube Simulation (LHS) technique. One can also use Monte Carlo simulation techniques. But by default in the tool, LHS is enabled. 

Duration Sensitivity:

The Duration Sensitivity of a task/activity is a measure of correlation between its duration the duration of the project. It also can be with respect to another key task/activity or summary task/activity.

Here, we are  checking the correlation between the duration of the activity with that of the project. This is how the duration sensitivity is represented in a torando diagram. Simulation used is latin hypercube.

Duration Sensitivity Torando Diagram in Primavera Risk Analysis

Interpretation: 

• Activity 3 and 4 are on critical path and will of course have the most impact on project's duration, i.e., at 67%
• Milestone Start and Finish have the least impact – at 0%
• Activity 2 and Activity 6 - have low as well high impact 
• Looking differently, activities having total float and free float as zero will have high impact, whereas activities with certain total float and/or free float values, will have less impact on the project's duration

Cost Sensitivity:

The cost sensitivity of a task/activity is a measure of correlation between its cost and the cost of the project. It also can be with respect to cost of another key task/activity or summary task/activity.

Here, we are  checking the correlation between the cost of the task with the project. The cost sensitivity is shown with the below torando diagram. Simulation used is latin hypercube.

Cost Sensitivity Torando Diagram in Primavera Risk Analysis

Interpretation: 

• Activity 6 and 2 have the highest impact on project's cost, i.e., at 59% and 58%, respectively 
• Activity 1 and Activity 5 have lesser impacts 
• Activity 3 and 4 have no impact - as we do not have any cost associated with these activities! (Remember for Resource 3, I had not provided any standard rate deliberately)

Conclusion:

Estimates are uncertain. Hence, we apply the probabilistic distribution to get a range and iterate enough to get a set of possible data with the help of Latin Hypercube Simulation technique (or Monte Carlo Simulation technique). With uncertainties in estimates and hence uncertainties in duration of activities or work packages - there will be variations on the project's objectives, such as schedule objective, cost objective. This in turn asks for risk analysis and management. As we saw in this post, torando diagram in risk sensitivity analysis helps to know the impact these uncertainties will have on the project's objectives.

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