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| Risk Analysis
Tools Successful in Project Management
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by Paul S. Ray, Ph.D., PE, CSP,
C. Eng. (U.K.),
Surya Prasanna Kumar Chodimella, Balaji Pattabiraman
and Ramji Srinivasan
Tuscaloosa, Alabama
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Over the last two decades, risk analysis has emerged
as an essential tool for success in project management
[Ref. 1], and interest in risk analysis has expanded
enormously since the Challenger Space Shuttle
accident in 1986. The traditional way of deriving
knowledge about risk from a known precedent or
accident is no longer acceptable. The focus now
is on anticipation of hazards, and judging the
total risk of a system or product has become the
requirement of industry in general.
As a result, the application of risk analysis
has become a norm in decision-making for major
projects. Uncertainty is inherent in every facet
of our lives, and decisions have to be made while
taking into account the risk of the uncertainties.
As risk analysis has been applied in many different
industries, the selection of risk analysis tools
needs to match the individual projects. The objective
of our recent study was to identify the tools
that might be suitable in seven major types of
industrial projects.
For systems where established knowledge is limited,
the need for risk assessment and risk management
assumes a higher priority. As more and more explorations
are attempted in new fields, and the number of
potential adverse effects from mishaps reaches
new heights, risk assessment has become a regular
job for many safety and reliability specialists,
and the professionals in different fields are
adapting new analytical tools to make it suitable
for their particular industries. There appears
to be no communication between the engineers of
the different organizations, and the lessons learned
from the applications remain confined to their
individual organizations.
Several new risk analysis techniques have been
developed in the U.S. Department of Defense (DoD)
and in the National Aeronautics and Space Administration
(NASA) in recent years for management and support
systems [Ref. 2]. Continuous Risk Management (CRM),
developed by Carnegie Mellon University, is a
software engineering practice with processes,
methods and tools for managing risks in a project
[Ref. 3]. NASA's Space Station Project practiced
the risk assessment matrix successfully [Ref.
4]. The practices developed by private industries
are not published and usually remain confined
within their organizations. The Technique of Operation
Review (TOR) was originally developed by D.A.
Weaver of the American Society of Safety Engineers
in 1970, but for 20 years its user documentation
was not readily available for application [Ref.
5].
This study attempted to disseminate the knowledge gained from
successful applications that can be helpful in selecting
proper tools to ensure success in risk management of
individual projects.
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"Uncertainty is inherent
in every facet of our lives, and decisions have
to be made while taking into account the risk
of the uncertainties."
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Methods
The first step of the study was to determine the
data required for the project and the sources
from which data might be collected. A form was
developed in consultation with NASA to collect
information on (a) the background of the project,
(b) the most significant risks taken, (c) the
risk mitigation action, (d) the results of the
action, (e) the risk management approach, and
(f) significant factors that contributed to the
success of the risk management technique. An illustration
of the data collection form is shown in Table
1. The first four columns of the form were devoted
to collecting information about the details of
the successful cases. The last two columns recorded
the risk management techniques used and the significant
factors that contributed to the project's success
in managing the risk of failure due to various
conditions. A memory aid for the risk assessment
techniques and their abbreviated names was given
at the bottom of the form.
The major sources of data were the University
of Alabama library database and the Internet.
Relevant published papers on risk management were
found on the Internet using keyword links to identify
the success cases. For each success case, an in-depth
review was conducted to collect information on
all of the six items listed in the form.
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