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(RISK-2505) Fully Integrated Cost Schedule Model – A Stochastic Alternative

Level: Intermediate
Author(s): Liwen Ren; Gustavo Vinueza C.
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: The proposed fully integrated Cost and Schedule Contingency Model incorporates several major inputs in a multibillion project: Cost Budget, Tasks Duration in a Gantt chart, Risk Registers, and Contingency Calculation. On top of this blend, a probabilistic layer was included, which internally integrates all these elements.

The model permits configuration of the different modules and by using Monte Carlo Simulation, makes the stochastic calculation possible. Important to consider is that simultaneously generates samples for Cost and Schedule Uncertainties, Risk Register Occurrences and Impacts, and generates potential Tasks occurring in the future, related to specific risks. The result is a probabilistic forecast of project contingency, with strong capability to drill down into each individual item and analyze its significance level to the contingency.

This work describes the design and development process with collaboration between a modeling specialist (consultant) and a project risk management specialist (owner), and proposes a methodology to replicate into any infrastructure project. This methodology will help Risk Analysts to keep focus on risks, and support Senior Management decision making and project approval.

Part I describes the company and the rationale for the model to be built, Part II describes the Model itself and Part III describes a series of improvements that could be applied to the Model in order to improve it.