W1_RW_Contingency Analysis Part 1

Problem Analysis

Program/Project Manager and project team member very often are in doubt in accepting the project cost contingency stated in project cost report done by project cost control/analyst, they thought that project cost contingency is only a cost control team gut fell without considering current project risk, conditions and situations. Project team member is very seldom being involved in calculating the project cost contingency; project cost control/analyst thought that other project team member has their own role in the project and none of the business in cost matters. Some of Project Cost Control/Analysis’s products were push backed by project team and many of them were ignored. This could be a project’s catastrophic where the control system is un-trusted by project team, the project will have no early warning system for the project team.


Project Risk Analysis

Risk and changes from the plan is a nature to the project, it occurred during each stage in the project since initiation until project completion, revisiting the risk analysis and recognizing the change over the project time is a must. Risk identification could be initiated by all team members from the top level until the worker level, sensitivity to the risk awareness mostly driven by the people experience. It is almost impossible that one person could recognize and identity all the risk and changes, that is why other people or expert is require to give the input on risk and changes.

Expert judgment on risk identification could be gathered from those who directly involved and experienced in certain activity. Delphi Technique is one of the approaches that could drive the various judgments into one single team consensus. All team members have an equal judgment score without seeing the organizational hierarchy and top down influence, team member will positively contribute and be honored when they are being involved in. The team consensus result is part of their contribution to the process and mostly it will consistently be followed.


Will be Continues….to part 2


-Ridwan Wibiksana-












3 thoughts on “W1_RW_Contingency Analysis Part 1

  1. Hi Ridwan,
    Not sure what this is, but it it isn’t following the Step by Step outline shown on page 7. Let’s master that format first.

    If you call me, we can discuss what you are doing and see if we can work together to structure it more in line with the step by step process….

    Dr. PDG, Jakarta

  2. Hi Again, Ridwan,
    Couple of suggestions-
    Step 1- Reduce the problem statement to a single sentence or at most two. “Oil and Gas projects consistently run late and/or over budget”.

    Then do a root cause analysis to find out the reasons WHY oil and gas projects run late and over budget?

    Step 2- What are some of the feasible alternatives to fix this problem?

    Step 3- Run an analysis on each of those feasible alternatives. (HINT: I would urge you to do a quick review of Chapter 14 in Engineering Economy and see if multi-attribute decision making would work better than cash flow analysis?)

    Step 4- What are the criteria/criterion you want to use as the basis for your selection? (What is the minimum score for an alternative to be considered viable or acceptable?)

    Step 5- Summarize the results of your quantitative analysis (using Multi-attribute or other decision making tools)

    Step 6- Explain your selection and why you made it.

    Step 7- Tell us how you plan on monitoring your decision to see if it was a good one or not. Do the actual results match what you calculated in your analysis in Steps 3, 4 or 5? Were you “right” or “justified” in the choice you made in Step 6?

    Does this help you some in restructuring this blog posting? (BTW, it should be W2, not W1. If you wish, delete it and do it over again?

    Dr. PDG, Jakarta

  3. PSS: From your root cause analysis, you may end up with 3 or 4 possible alternatives to explore and you could do one a week………… So this whole process does NOT have to be done in one posting…….

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