Questions Any Risk Histogram Should Answer

The Risk Distribution Graph (Risk Histogram and S Curve) is one of the primary outputs of any Quantitative Risk Analysis. It looks like this from Primavera Risk Analysis.

The bars/bins on the Histogram indicate the number of iterations that land on a specific date. For this analysis, I did 1000 iterations and about 90 of the iterations fell on 1st September 2006.

On the Right side, we see the Probability of meeting a particular date, called P-values or Confidence Levels. P80 date means 80% chance of hitting the date, 06 Oct 2006.

When you perform quantitative risk analysis or participate in a risk meeting where the analysis is being carried out, there are questions this diagram should answer and they are:

1. What is our chance of the ENTIRE PROJECT finishing on or before a particular date such as the 12th May 2008??
2. What chance is there of finishing a PARTICULAR ACTIVITY within the project on or before a date. Example Activity A230 (Building Demolition) on the 31st of December 2007?
3. What date do I have an 80% chance or confidence of finishing the project by? That is what is my Project's P80?
4. What date do I have a 90% chance or confidence of finishing a particular Activity by? That is my P90 for a particular Activity?
5. What date can I be 90% confident of starting this Activity?
6. What amount of contingency do we need if we want to have a certain level of confidence say 90% confidence (P90) or finish on a particular date?

For a particular course I did, here is the sample question that was posed

"For a Project, we need a plant shutdown (an external work) to carry out the Hook-Up task on our schedule. The shutdown is done annually every December 1st to 10th. What is the probability that we can complete the hook-up activity in our project’s schedule on or before December 10th before the Shutdown is over?"

I will show how the risk histogram answers the questions in my next article.

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