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Risk Ology Manual

This document provides instructions for using Riskology, a Monte Carlo simulation tool for modeling project risks and estimating project completion dates. It describes what Riskology can and cannot do, how to set up and run a basic simulation, how to toggle individual risk factors on and off, how to override the core risk factors with your own data, how to add custom risk factors, and plans for future enhancements. The goal of Riskology is to show the impact of uncertainties and risks in order to determine the appropriate window to allow for project completion.

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Gregory
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48 views2 pages

Risk Ology Manual

This document provides instructions for using Riskology, a Monte Carlo simulation tool for modeling project risks and estimating project completion dates. It describes what Riskology can and cannot do, how to set up and run a basic simulation, how to toggle individual risk factors on and off, how to override the core risk factors with your own data, how to add custom risk factors, and plans for future enhancements. The goal of Riskology is to show the impact of uncertainties and risks in order to determine the appropriate window to allow for project completion.

Uploaded by

Gregory
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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THE ATLANTIC SYSTEMS GUILD TDM: 10/22/04

USING RISKOLOGY (VERSION 4)

The purpose of this note is to make the Riskology simulator accessible to you
and give you some idea of how to tailor it for your own needs.
What riskology is not
First of all you need to know that riskology is not a parametric estimator.
That is, it does not have the logic built into it to tell you how long your project
will take or how much it will cost. All it can tell you is how wide a window
you’ll need to leave in order to cover all the uncontrollable risks of your project.
You will still have to use a parametric analyzer or equivalent in order to calculate
the most optimistic delivery date. Once you have come up with that, it becomes
an input to riskology.
Riskology is also not a free-standing program. You need to purchase a copy
of Excel or other compatible spreadsheet program to run the simulator.
Riskology was constructed using Office X, so a version of Excel or equivalent
from 2002 or beyond will probably be sufficient.
Basic use of the simulator
Open the spreadsheet called RiskologyV4.xls. If your version of Excel
queries about macros, click to enable. This should present you with a workbook
of a dozen or so pages. In the yellow boxes on the first sheet, fill in the name of
your project, its start date, and its most optimistic end date. In order for this
exercise to have any meaning at all, it is essential that the end date you offer not
be totally unreasonable; there has to be at least some possibility of achieving the
date. It should represent the best case scenario, a date achievable if and only if
all variables break in your favor (no turnover, maximum productivity, virtually
no change of spec, etc.).
Once these three basic parameters are filled in, click once on the Run
Simulation button. After a short delay, the graph will present the result of 500
simulations of your project. The graph should be interpreted as an uncertainty
diagram, showing delivery in different date ranges due to differing impact of the
five core risks on the project.
Toggling risk factors on and off
Next, click on the tab for the second page of the workbook, entitled “Risk
Factor Setup.” This page is where you enable or disable up to ten risk factors, the
five core risks plus customized risks of your own.
You can disable any of the risks and then run the simulation again by
returning to the first page. You must click on the Recalculate button (back on the first
page) each time you want to see the result of your changes, since calculation mode is
set to Manual. By toggling a risk factor off and on, you can see the impact it is
having on your result.
Overriding the core risks with data of your own
Worksheet tabs 4-8 show the data and logic used to implement that portion
of the simulation associated with each of the five core risks.
• Tab 4: Schedule Flaw

RISKOLOGY SIMULATOR USER NOTES 1


THE ATLANTIC SYSTEMS GUILD TDM: 10/22/04

• Tab 5: Employee Turnover


• Tab 6: Size Inflation
• Tab 7: Specification Flaw
• Tab 8: Productivity Variation
You can override any of our data if you have more reliable data of your own.
Fill in your own assessment of minimum, maximum, and most likely penalty
factor in the yellow input boxes provided, and these will be used in place of the
built-in industry database for that factor. By using company data instead of
industry-wide data, you can expect to narrow the spread of results somewhat,
since the variation across the entire industry is likely to be greater than for any
one country.
By supplying only three points on the risk factor uncertainty curve, you are
causing the simulation to assume a triangular distribution rather than the more
traditional Rayleigh shaped curve. This simplification introduces some error
into the simulation, but it should be small compared to the intrinsic noise in the
process.
You need to be extremely wary about your overrides, since the presumption
of the simulation is that the factors are independent of each other. So, for
instance, since turnover typically decreases when productivity trends upward,
you need to define your notions of turnover and productivity with the overlap
between them removed. In general, the five monikers given to the core risk
factors need to be understood in the this light. Productivity variation, to take just
one example, needs to be understood as variation due to everything but the
secondary effects of the other factors.
Remember that each time you alter one or more of the factors, the results will
not show until you press the Recalculate button on the first page (or use the
Manually Calculate keyboard shortcut, typically F9).
Adding in your own customized risks
You can add up to five custom risk factors of your own. Go to the RF Setup
page and choose an unused risk factor. Enter a short name and a brief
description for that risk in the associated yellow boxes. Toggle the risk on using
the button to the right side of your new risk factor.
Next click on the page tab associated with your chosen risk factor. E.G., if
you are adding Risk Factor 6, click the RF6 page tab. Click to select either binary
or continuous risk type. Enter your data in the yellow boxes provided. Hit the
Recalculate button to make the simulator take account of your changes.
Daunting information for the undauntable
Riskology is trying to do something — Monte Carlo simulation — that
spreadsheet tools really and seriously don’t want to do, so it has taken a bit of
jumping through hoops to pull it off. For this reason the logic of the
spreadsheet—should you decide to go into it—is complex. Our apologies for
that. Feel free, if inclined, to alter and improve the simulation as you like.
Enhancements planned
Version 4: Additional five custom risk factors
Version 5: Interface to receive direct input of company turnover data
Version 6: Dollar and effort impact analyser

Send comments and feedback to: [email protected] .

RISKOLOGY SIMULATOR USER NOTES 2

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