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(RISK-1317) Conducting Risk Assessments Using a Combined Cost and Schedule Model

Primary Author: Mr Timothy J. Havranek
Co-author(s): Ms Leigh Hostetter

Audience Focus: Basic
Application Type: Application
Venue: 2013 AACE International Annual Meeting, Washington, DC, USA

Abstract: Risk management is becoming increasingly important in the world of project management. Traditional risk management focuses primarily on evaluating and managing cost risk; while schedule risk is seldom or only marginally addressed. Schedule delays increase project carrying costs and in some cases introduce contract penalties and reduced project return on investment. In addition, there are many projects that are schedule driven rather than cost driven, such as having a major project complete in time for a scheduled event. Since both cost and schedule risk are important and often correlated, the ability to conduct both assessments concurrently using one model is ideal.
This paper presents a hypothetical case study that is used to illustrate recommended modeling practices and to demonstrate the application and value of a combined cost and schedule risk assessment (CSRA) model. This case study involves a combined demolition / remediation project to prepare an industrial property for mixed use redevelopment. The CSRA model includes the use of probabilistic modeling to address risk events and uncertainties associated with project costs, materials, and durations.