Schedule Risk Analysis (SRA) is a valuable tool for managing complex projects. In practice, it is used most often at the Final Investment Decision (FID), to build confidence in the robustness of the project and help Decision-Makers be comfortable with making the investment. While this is a very useful practice, the full value of SRA can only be captured when it is embraced as a decision-support tool throughout the lifecycle of a project. We believe SRA should be used throughout the lifecycle of a project to enhance Decision Quality and maximize value realized.
Concept Selection
In the earliest stages of a project, there are usually varying concepts for the project that are considered and evaluated. These often include basic elements such as the type or size of a facility, the project business objectives, construction methods, business partners and the like. It is a best practice to consider multiple alternatives at this stage. While schedule is not the only ‘value metric’ to be considered it is often a very important one, and the risk profiles of alternatives can vary greatly. It can be highly insightful to employ SRA during the selection of alternatives. Even though a formal detailed schedule may not yet exist –subject matter experts can still identify and quantify the key differentiators between alternatives and perform an SRA – one focused on supporting alternative selection. This is the notion of a ‘fit for purpose’ SRA – focused on just what is needed to yield insight between competing decision alternatives.
Concept Definition
One a concept is selected, projects often go through a period of definition – essentially the process of further defining the concept and maturing it to a state where it can be proposed for final investment. During this process, there are a multitude of decisions that must be made. These can include things like contracting strategy, pipeline size or routings, facility locations, ancillary facilities, construction methodologies and the like. All of these are fundamentally decisions, with inherent tradeoffs between schedule, cost and value. While cost typically gets the highest scrutiny, the impact on schedule and schedule risk should be considered as well. As with concept selection – this doesn’t mean that an SRA on all elements of a detailed schedule needs to be conducted. Again, the focus can be on the differentiators between options, and the analysis can be done only on the relevant scope for the decision.
Final Investment Decision
The vast majority of SRAs are done to support project approval, or the final investment decision. We advocate that these also be conducted with a ‘decision support’ frame of mind. For example, the project should use the SRA to support key decisions such as how much schedule contingency to include, what targets are communicated to external stakeholders, and when the appropriate time to update the SRA will be.
Project Execution
After project sanction, the focus rightly change to action and execution rather than consideration of alternatives. However – there often decisions that ‘arise’ as part of execution that benefit from considered thought around alternatives and tradeoffs. These include things like dealing with unexpected disruptions or claims, decisions around weather windows or other constraints, and contingency planning for potential risk outcomes.
In addition, SRA can serve as a ‘health check’ by being updated periodically during the project. The decision aspect here becomes whether the project is progressing fundamentally as planned, or if some significant intervention is required based on the evolution of the SRA results.
Summary
Ultimately, much of the value created by a project is the sum of all of the decisions along the way, from the initial concept to finishing execution. For most projects, schedule is an important value metric. SRA can be an important contributor to the Decision Quality of many important decisions through the lifecycle of the project. Consider ‘fit for purpose’ SRA as a resource to support decision-making throughout a project.
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