PMA presented at the 2022 International Conference & Expo hosted by the Association for the Advancement of Cost Engineering.
2022 AACE International Conference & Expo
June 26-28, 2022
San Antonio Marriott Rivercenter, San Antonio, TX
PMA’s Francisco Cruz and Gino Napuri presented “The Importance of Doing a Risk Assessment in Every Project Early and Often.” Gino explained how developing and executing a risk assessment early in a project reduces the possibility of dealing with project threats and opportunities in an unprepared and disorderly fashion. He also spoke about applying risk management processes across the project life cycle and engaging stakeholders according to their risk management maturity level. Francisco provided in-depth information on how to conduct a risk assessment, explanations for qualitative risk assessments and quantitative risk analyses, and the importance of undertaking a calibration assessment.
The Importance of Doing a Risk Assessment in Every Project Early and Often
Presentation by: Francisco Cruz, PE, PMP, RMP, SP, VDC, VMA and Gino Napuri, PMP, EVP, PMI-SP
PMA’s Francisco Cruz presented his research on calibration assessments (RISK-3824) which explored the limitations of current elicitation approaches to collecting and using subjective probabilities and impact ranges to assess uncertainty and risks. Risk analysts and project teams have relied heavily on expert judgment to collect subjective probabilities and potential cost and schedule impact ranges. SMEs’ lack of reliable historical data associated with risk impacts is the reason for using SMEs. Research shows that subjective probabilities and risk impact ranges consistently yield overconfident and underconfident results, which, in turn, generate inaccurate cost values at selected confidence levels and confidence intervals.
Presentation by: Francisco Cruz, PE, PMP, RMP, SP, VDC, VMA
With several examples of different calibration assessment results, participants learned more about their adequate use to minimize bias and improve the strength of risk input data during a quantitative risk assessment. Calibration assessments, as a structured elicitation tool, were shown to be applicable in various modeling approaches using subjective inputs, whether decision trees, parametric models, Monte Carlo simulation, reference class forecasting, or system dynamics.