Risk factor analysis a new qualitative risk management tool
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Risk Factor Analysis - A New Qualitative Risk Management Tool. PMI Connections 2000 Project Management Institute Seminar & Symposium September 12, 2000 - Houston, TX John Kindinger Probabilistic Risk and Hazard Analysis Group (TSA-11) Los Alamos National Laboratory

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Risk Factor Analysis - A New Qualitative Risk Management Tool

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Risk factor analysis a new qualitative risk management tool

Risk Factor Analysis - A New Qualitative Risk Management Tool

PMI Connections 2000

Project Management Institute Seminar & Symposium

September 12, 2000 - Houston, TX

John Kindinger

Probabilistic Risk and Hazard Analysis Group (TSA-11)

Los Alamos National Laboratory

LA-UR 00-3444 Approved for public release; distribution is unlimited


Presentation topics

Presentation Topics

  • Background and Objectives for Risk Factor Analysis (RFA)

  • General Approach for Performing RFA

  • Example RFA Results

  • Integration of RFA with Quantitative Risk Analysis


Objectives for the development of rfa

Objectives for the Development of RFA

  • Capable of evaluating technical risks in conceptual design, before schedule & cost baselines are available

  • Easy to perform and adaptable to different projects & programs

  • Systematic, objective and sufficiently comprehensive to produce meaningful specific insights

  • Useable to support quantitative risk analysis


General approach for performing risk factor analysis

General Approach for Performing Risk Factor Analysis


Tasks for risk factor analysis

Tasks for Risk Factor Analysis

  • List activities, tasks or other elements that make up the project

  • Identify the applicable risk factors

  • Develop risk-ranking criteria for each risk factor

  • Evaluate each activity and rank risk for each risk factor

  • Sum results across risk factors for each activity


Activity identification

Activity Identification

  • Follow the logical progression of tasks or process steps being used by the project team

  • Define tasks at the level of detail needed to reveal unique risk issues and important dependencies between tasks

  • Document results with a simple flow chart


Identifying risk factors

Identifying Risk Factors

  • Risk factors are the drivers that will ultimately determine performance measure results

  • Risk factors need to be relevant to the specific activities to be examined

  • For LANL facility projects, we have developed a generic set of risk factors and grouped them into four categories


Example qualitative risk factors

Example Qualitative Risk Factors


Risk ranking criteria

Risk Ranking Criteria

  • The assessments of risk for a given risk factor need to be made consistently across differing types of activities

  • Therefore, for each risk factor, qualitative criteria are needed that define risk in each category (low, medium, high)


Example qualitative risk ranking criteria

Example Qualitative Risk Ranking Criteria


Example qualitative risk ranking criteria1

Example Qualitative Risk Ranking Criteria


Risk evaluation

Risk Evaluation

  • Evaluate each task or activity against each risk factor using the ranking criteria and assess the risk level appropriately

  • All risk factors may not be applicable for any specific activity

  • Record the results on a worksheet, including justification for the assessment


Example task worksheet

Example Task Worksheet


Risk summation

Risk Summation

  • Also, record the risk rankings in a table format using numbers (0-3) to represent the risk rankings

  • Then sum across the risk factors for each task to get risk category and the total task score

  • All risk factors are weighted equally in this process


Example risk factor ranking summation

Example Risk Factor Ranking & Summation


Example results from risk factor analyses

Example Results from Risk Factor Analyses


Example risk factor analysis results

Example Risk Factor Analysis Results


Example risk factor analysis results1

Example Risk Factor Analysis Results


Integration of rfa with quantitative risk analysis

Integration of RFA with Quantitative Risk Analysis


Integrated qualitative and quantitative risk analysis tasks

Integrated Qualitative and Quantitative Risk Analysis Tasks


Input distribution development

Input Distribution Development

  • Risk Factor Analysis results provide a basis for the development of distributions used in the quantitative risk model.


Format of quantitative risk assessment results

Format of Quantitative Risk Assessment Results

  • Cumulative probability distributions provide a complete picture of uncertainty, it is not ignored or assumed to take on extreme values.

  • Results provide a basis for setting risk-based performance targets and contingencies.

  • Sensitivity analyses identify contributors to risk


Example risk reduction recommendations

Example Risk Reduction Recommendations


Conclusions

Conclusions

  • Risk factor analysis is a qualitative risk analysis technique aimed at identifying and assessing the drivers that will determine overall project performance

  • RFA has been used at Los Alamos for the early assessment of technical risks in conceptual design and later as part of integrated qualitative and quantitative risk analyses


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