WBS RISK ASSESSMENT

Product Risk Assessment

Work Breakdown Structure is usually based on various deliverables (or) products in the project. Production of a deliverable has two constituents. They are the product itself and the process used to produce the product.

These products can be analyzed, in detail to find out the risk avenues. In this analysis following are the risk areas that are usually covered: design and engineering, technology, logistics, production, hardware and software. Details of prior project data can be of good use in performing the analysis. However, the key to successful analysis is the expert knowledge that should be skillfully tapped to identify various areas, risk scenarios, their impact and the probability that the risk will happen. Sometimes in-house resources may not be skilled (or) experienced enough to analyze some of the WBS product areas. At these times outside help needs to be sought.

Depending on the criticality and need, some advanced techniques like Hazard analysis, Decision analysis, and Fault tree analysis can also be used.

 

In hazard analysis, the WBS product is systematically analyzed – usually with the help of questions, attributes and guidewords to find what risk scenarios can arise related to the product itself. Let us say that the project involves procurement of a special type process vessel. The material that is to be used for manufacture is of special kind and requires permission from the government for importing. The material is also not readily available in the world market and the product manufacturing itself requires skilled personnel.

Let us do a hazard analysis:

Guide word

Causes

Consequence

Not

Government refuses to give import license.

The product can not be manufactured

 

Skilled personnel not available

-Same as above-

Delay

Government delays granting of license.

Manufacturing is going to be delayed.

 

Delay in locating the material in the market and procuring

- Same as above-

 

Delay in shipping and transportation process

- Same as above -

 

Delay in getting the right skilled personnel.

- Same as above -

Other than

Material available is similar but other than the one required.

The material available has to be tested and studied for suitability. Either the product can not be manufactured (or) its going to be delayed.

A team usually conducts hazard analysis. The team leader should be an experienced person in this kind of analysis. Once causes and consequences are detailed further questions need to be asked to find when the event might occur and what needs to be done to reduce the risk associated with each identified risk hazard.

 

Probability of the risk event happening is one the key elements in risk assessment. The risk level depends on this parameter. One of the methods to find the probability of a risk event occurring is fault tree analysis (FTA). FTA is a top down approach meaning that the top event – here the risk scenario is taken and analyzed to find the probable causes and their relationship to the top event. Thus we get the basic events that result in the top event and are related to the top event. This relation is depicted with the help of logic diagrams and Boolean algebra. This can be used in a quantitative and qualitative way to understand the scenarios. Take the case of “TV goes dead” as the top event. The reasons can “TV switched off” OR “Power failure” OR “TV defective”. These are the bottom events. Each of these events can have a number of further bottom events, which when analyzed can provide the details of what events need to occur to result in “TV goes dead”, how they are related and in what sequence they need to occur. If the probability of the bottom events occurring is available then the probability at which the top event will occur can be computed based on the sequence and logic.   

Consider the hazard analysis example. Let us try to understand about the event “The product can not be manufactured” and what is the probability of this event occurring.  Here is an attempt to build a fault tree:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From the fault tree above, we can understand how the bottom events are related to the top event. Here the product cannot be manufactured if any of the bottom events happen. Depending on the probability of each event happening, the overall probability that the product cannot be manufactured can be determined. FTA because of its quantitative nature can bring about objectivity to the risk assessment.

Further objectivity can be attained by decision analysis. Decision analysis also uses a tree structure – but its horizontal. Decision analysis helps compare between alternatives based on the utility value. The alternative, which provides higher utility, is usually selected as the best one. Initially the first decision node is identified and the various options available branch out from there resulting in more nodes and more branches. Each final branch results in an outcome. Here apart from assigning probabilities to the events, expected value of each event happening is also provided. Based on both these values the value of each outcome is determined and summed up to get the overall value of the particular event happening in the project. Let us again take the same vessel-manufacturing example to develop the decision tree. Let say the cost of manufacturing under normal condition is $50,000. The two abnormal scenarios that can occur are:

-        The product cannot be manufactured. Assume this has a cost value of $400,000 and the probability of this event happening is 0.3.

-        There is a delay in manufacturing the product. Assume the cost value of the delay is $25,000 and the probability is 0.2.

Since there should be an alternative, let us consider that the process design can be modified to avoid this vessel at all. But the total modification cost is say 200,000.

 

 

 

 

 


                                   

                                                                                                        

 

 

 

                                                                                                         

 

                                                                                                        

 

 

 

 

                                                                                                                

 

 

 

Since the total cost of present design is less than the design change, in spite of its risks present design is a better choice. As can be noted the method provides the relationships and a utility value to alternatives, but getting and gathering of the data needed for the analysis usually poses a problem. So risk quantification is not possible in all the cases.

 

Process Risk Assessment

In order to produce WBS products there should be a standard process in place. These processes should either be internationally recognized or tried and tested by the company. Take the case of software development. There are a few internationally recognized and recommended processes. Some are:

-        Spiral model

-        V shaped model

-        Water fall model etc.,

The selection of the model suited for the particular project depends on the requirement and purpose. Firstly, the model used in the project and the model recommended by the industry needs to be analyzed for differences. These can be areas of risk. Secondly, each model prescribes various phases in the development lifecycle. These phases are usually further broken down into Work breakdown structure elements. These elements are related and inter-linked. Risks posed by these process elements needs to be identified and assessed. The people who can do these kinds of assessments are usually experts.

 

For further details mailto:rmp66@singnet.com.sg