Project Risk Analysis in Aerospace Industry

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Information about Project Risk Analysis in Aerospace Industry

Published on May 7, 2014

Author: Intaver



Overview of schedule and cost risk analysis methodology for aerospace industry.

Intaver Institute Inc. 303, 6707, Elbow Drive S.W., Calgary AB Canada T2V 0E5 Quantitative Risk Analysis for Aerospace Industry

Common Issues with Space System Projects • Multiple risks and uncertainties • Many uncertainties are event-driven • Historical data mining should include relevance analysis

Existing Methodologies • PERT • Monte Carlo Simulation • Bayesian approach • Scenario analysis and Decision Trees

Project Example Laser Interferometer Space Antenna (LISA) project Calendar Year ==> Project Phasing NASA HQ Milestones Mission Reviews SE&I Contractor Acquisition Technology LISA Test Package (SM2) ST7 DRS (SM2) Interferometry Measurement System System Verification Disturbance Reduction System Payload Spacecraft Observatory I&T Constellation Testing Launch Campaign Pre-Phase A Phase A Phase B Phase C/D FAD ICR/CA NAR ESA MOU (F) PCA FAD HQ Briefing MDR SRR SCR TRR PDR CDR S/C1 PER Obs 1 PER MOR ORR PSR MRR FRR LRR Prep Phase Execution PhasePartnering Phase RFI RFP D Sel RFP Sel LISA Demo CDR Deliver to SM2 SM2 Launch DRS Demo PDR CDR Deliver to SM2 SM2 Launch Trades Subs Assy Test TRL5 TRL6 Model Envr R1 Model Envr R2 Model Envr R3 Testbed Demos Trades Tgt Std Subs Assy Test GRS TRL5 GRS TRL6 Rqts/Architecture/Trades Design Build / Test PDR CDR EM 1 2 3 ESA Definition Phase ITT Award ITT Award PDR CDR ESA Implementation Phase EM 1 2 3 Preps Observatory I&T EM 1 2 3 Preps 1 2 Constellation Testing 3 Launch Preps LRD 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 The document is courtesy of NASA/Goddard Space Flight Center

Heuristics and Biases in Project Management The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel 2002 Daniel Kahneman Decision makers use “heuristics”, or general rules of thumb, to arrive at their judgments. In certain instances, this will lead to systemic biases.

Examples of Heuristics in Project Management • Representativeness – unwanted appeal to detailed scenarios • Availability – access the probability of an event by the ease with which instances can be brought to mind • Anchoring – human tendency is to remain close to the initial estimate

Event Chain Methodology Event Chain Methodology is a method of modeling uncertainties for different time-related business and technological processes including project management for space systems.

Moment of Risk and State of Activity An activity (task) in most real life processes is not a continuous uniform procedure. Tasks are affected by external events, which transform an activity from one state to another.

Event Chains Events can cause other events, which will create event chains. These event chains can significantly affect the course of the project.

Monte Carlo Simulations Once events and event chains are defined, quantitative analysis using Monte Carlo simulation can be performed to quantify the cumulative impact of the events. Information regarding the uncertainties expressed as an event is supplemented with distributions related to duration, start time, cost, and other parameters

Critical Chains of Events The single events or the event chains that have the most potential to affect the projects are the “critical events” or “critical chains of events.”

History Matching and Relevance Analysis • Similar events or event chains are found based on historical data • Analysis based on Bayesian approach is performed and relevance parameter is calculated • Project manager defines relevance of each event or event chain for the current project • Both calculated and user defined relevance parameters are used to determine probability and impact of the events for the current project

Performance Tracking with Event and Event Cha During the course of the project, the probability and time of the events can be recalculated based on actual data. Actual performance data and original estimate is used forecast duration of activity with risks

Event Chain Diagrams Event Chain Diagrams are visualizations that show the relationships between events and activities and how the events affect each other

Repeated Activities Common scenario for real life projects: sometimes a previous activity must be repeated based on the results of event in a succeeding activity

Event Chains and Risk Mitigation Mitigation plan can be assigned to an event or event chain. These small schedules will be triggered when an event chain occurs.

Resource Allocation Based on Events Event: the reassignment of a resource from one activity to another Example: if an activity requires more resources to complete it within a fixed period, this will trigger an event to reallocate the resource from another activity.

Project Management Workflow using Event Cha Methodology 1. Define a detailed project schedule with resources and costs assigned to the activities 2. Define a detailed risk breakdown structure and assign risks to the activities. The probability of each event can be taken from historical data. 3. Define the activities associated with mitigation efforts and then assign costs and resources to them.

4. Perform a quantitative risk analysis using Monte Carlo simulations. 5. Analyze the results of the quantitative risk analysis: perform a sensitivity analysis and identify the crucial tasks and critical risks. Project Management Workflow using Event Chain Methodology

6. Perform reality checks: compare the results of analysis with outside independent expert reviews and historical experience. 7. Monitor the course of the project on a regular basis, perform repeated quantitative risk analysis, reassess the event and event chain parameters Project Management Workflow using Event Chain Methodology

Acknowledgements Intaver Institute Inc. is thankful to Kevin N. Miller, Deputy Project Manager/Resources, Laser Interferometer Space Antenna (LISA) Project, NASA/Goddard Space Flight Center, for providing data necessary to illustrate the methodology discussed in the paper.

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