Publication:
Monitoring Risk Response Actions for Effective Project Risk Management

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Authors
Kujawski, Edouard
Angelis, Diana
Subjects
risk analysis
technical risk
risk response actions
decision tree
risk curves
risk dependencies
correlation
risk dynamics
microscopic analysis
Monte Carlo simulation
design of experiments
Advisors
Date of Issue
2010
Date
Publisher
Wiley Periodicals, Inc.
Language
Abstract
Complex projects typically involve high-consequence, project-specific risks that require detailed analysis and for which risk response actions (RRAs) need to be developed and implemented. The risk picture is dynamic. The sources and consequences of risks evolve and change over the project lifecycle; thus, it is necessary to constantly monitor risk. RRAs that do not keep pace with the changing project situation are a major cause of risk management failures. This paper extends traditional cost risk analysis from a purely macroscopic perspective by evaluating and tracking project-specific risks and RRAs at the microscopic level. The key elements of the method are (i) develop risk scenarios, (ii) model them using generalized decision trees, and (iii) quantify the risks using Monte Carlo simulation. For each risk the probability and cost values are conditional on the specific RRA and the preceding outcomes. The use of fractional factorial design provides a subset of all possible RRA combinations for efficiently determining the preferred total project RRA solution. Risk curves are generated to provide the necessary information to analyze, track, and manage the performance of the selected RRAs over time. Project managers and team leaders can use this information to dynamically manage the RRAs to keep pace with the changing project situation, thereby increasing the probability of project success in a cost-effective manner. The approach is detailed using a realistic but simplified case of a project examined first with one and then expanded to three technical risks.
Type
Article
Description
The article of record as published may be found at http://dx.doi.org/10.1002/sys.20154
Series/Report No
Department
Systems Engineering
Organization
Identifiers
NPS Report Number
Sponsors
Funder
The research presented in this paper was supported in part by the Acquisition Chair of the Graduate School of Business & Public Policy at the Naval Postgraduate School.
Format
Citation
Systems Engineering, Vol 13, No. 4, 2010
Distribution Statement
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
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