5.4.6 Quantified Schedule Risk
126.96.36.199 Description. This technique provides a means to
determine program-level schedule risk as a function of risk associated with
various activities that compose the program. It estimates the program-level
schedule by developing probability distributions for each activity duration
and aggregating these distributions using a Monte Carlo simulation or other
analytical tools. The resulting program-level schedule is then analyzed to
determine the actual schedule risk and to identify the schedule drivers.
This technique expands the commonly used Critical Path Method (CPM) of
developing a program schedule to obtain a realistic estimate of schedule risk.
The basic CPM approach uses single point estimates for the duration of program
activities to develop the program's expected duration and schedule. It
invariably leads to underestimating the time required to complete the program
and schedule overruns, primarily because the point estimates do not adequately
address the uncertainty inherent in individual activities. The uncertainty can
be caused by a number of factors and may be a reflection of the risk present
in the activity.
The quantified schedule technique accounts for uncertainty by using a range
of time that it will take to complete each activity instead of single point
estimates. These ranges are then combined to determine the program-level
schedule estimate. This approach enables PMs to estimate early in a program if
there is a significant probability/likelihood of overrunning the program
schedule and by how much. It also identifies program activities that are on
the "highest risk path."
This technique can be used in any acquisition phase beginning with the
completion of the first statement of work. The schedule probability
distribution function for each key activity should be developed as soon as the
activity is included in the master schedule. The distribution functions should
be periodically reviewed and revised, if necessary, at least once per phase.
The technique should be applied by a small Government-industry team consisting
of schedule analysts and technical experts who understand the significance of
prior risk performance assessments.
Next, the contractor should construct a CPM schedule for these activities.
To develop the activity duration probability distribution functions, the team,
working with the prime contractor's WBS element managers, determines and
analyzes duration range for each activity being investigated. This analysis
should be done by schedule analysts working closely with knowledgeable
The activity duration probability distributions are aggregated using a
Monte Carlo simulation program, such as İRisk, Risk + for Microsoft Project,
or Crystal Ball. The result of this step is a program-level schedule and
distribution function that shows the cumulative probability associated with
different duration values. These outputs are then analyzed to determine the
level of schedule risk and to identify the specific schedule drivers. Risk is
determined by comparing the program-level schedule with the deterministic
schedule baseline developed as part of the acquisition program baseline. The
fact that the schedule and distribution are developed from WBS element risk
assessments makes it possible to determine the schedule risk drivers. These
drivers can also be related back to the appropriate performance risks. The
results of the analysis (schedule risks and drivers) should be documented in
RIFs. The analysis requires continued close cooperation between the schedule
analysts and technical personnel familiar with the details of the