Project Risk Quantification Volume 2 by John K. Hollmann

A Practitioner's Guide to Realistic Cost and Schedule Risk Management

Since Project Risk Quantification was published in 2016, John Hollmann has continued to be very active in the risk quantification field. We thought that a second edition might be a good idea and started down that path, but if we added all of the new material, the book would be over 700 pages long! And much of the new material is targeted towards cost and schedule risk analysts, whereas Volume 1 focused on the project manager and owner company management.

Therefore we decided to add a second volume. Volume 2 contains over 300 pages of supplemental readings and updates building on concepts introduced in Volume 1.

List price: $39.95! The Kindle version is available on Amazon for $9.95. Please call or e-mail for quantity order discounts and shipping costs.

Print book ISBN: 9781941075159 / 1941075150; Kindle book ISBN: 9781941075166 / 1941075169. Library of Congress Number: 2024952571

Important note 01/20/2025: The first print books are sold out (thank you!); more are expected from the printer next week.

USA Orders:

TX and FL residents: we have to collect Sales Tax.

International Orders (including Canada): Please contact us (or purchase from Amazon).

Purchase via PayPal (Domestic USA only)!

PayPal is quick, efficient, and you don't have to have an account with them to use it.

Free shipping (USA only)!

Prices

Hollmann PRQ Vol 2 USA Price $39.95 USD

From the Publisher...

We sincerely thank all of you who purchased Project Risk Quantification. We especially appreciate those of you who took the time to leave reviews on Amazon! We also appreciate John's ability to continue to expand and elaborate on the material covered in the book as the state-of-the-art progresses.

As noted above, our original thoughts were to publish a second edition of Project Risk Quantification. We started working towards that goal and got about half way through the book. However, there was an issue with that approach: John had a lot of new material that he wanted to present, and the original book was already quite thick. We did not want to publish a book that was three or four inches thick! Also, some of the updates we were making, although technically correct, did not add clarity to what was already well covered. So, after spirited and productive discussion, we decided to leave the first book alone and add a second volume.

As with Volume 1, we are making Volume 2 available on the Kindle platform so that it can be inexpensively purchased anywhere in the world. Even though printing and shipping costs have gone up, we are pricing Volume 2 low enough that if you prefer the printed edition, it is still affordable.

Note that we used ChatGPT to edit some of the text in this book, however, ChatGPT was not used to develop or write any of the content itself.

About the Cover

My oldest daughter, Haesel, did the cover drawing. She used a technique called "Scratchboard," which, according to Wikipedia.com, "refers to both a medium, and an illustrative technique using sharp knives and tools for etching into a thin layer of white China clay that is coated with black India ink..." She then inked the board.

From Project Risk Quantification Volume 2, Table of Contents

Contents
Volume 1 Reviews.......................................................vi
Preface andAcknowledgments.............................................ix
About QR Codes..........................................................x
Publisher Note.........................................................xi


1 Introduction..........................................................1
  What is Covered in Volume 1?..........................................2
  What is New in Volume 2?..............................................3
  A Phase-Gate Rosetta Stone............................................4
  Who Should Read This Book?............................................6
  Is Anything About QRA Getting Better?.................................6
  Acronyms..............................................................7
2 Accuracy and Phase-Gate for Various Non-Process Industries..............9
  Cost Accuracy Data for Various Industries.............................9
  Interpretation of the Various Industry Cost Accuracy Data............14
  Industry Schedule Data...............................................22
  Summary..............................................................36
  Questions............................................................36
  Volume 2 Perspective.................................................37
3 Accuracy and QRA Methods for Contractors...............................39
  Contract Strategy....................................................41
  Risk Quantification by Contractors for Owners........................49
  Risk Quantification for Contractor Bidding...........................51
  Tactical Risk Quantification (and Optimization) by Contractors.......59
  Data and Machine Learning/Artificial Intelligence (ML/AI)............60
  Summary..............................................................61
  Questions............................................................62
  Volume 2 Perspective.................................................62
4 Hybrid Parametric plus CPM-based QRA Method.............................63
  Schedule Contingency and Buffers.....................................65
  Concepts Behind P+CPM................................................66
  Applying Hybrid Parametric Modeling with Risk-Driven CPM with MCS....69
  Applying P+EV for Quantifying an Intermediate Buffer (Special Case)..74
  Questions............................................................75
  Volume 2 Perspective.................................................75
5 Program and Portfolio QRA Methods.......................................77
  Program Risk Quantification..........................................78
  Program-Level Pass Risk Quantification Process.......................81
  The Program-Level Risk Quantification Process Steps and Methods......82
  Special Considerations for a Program.................................87
  Portfolios/Strategic and Sustaining Capital Management...............91
  Summary..............................................................97
  Volume 2 Perspective.................................................98
  Questions............................................................98
6 Multi-Option and Long Range Estimate QRA Methods.......................101
  The Multi-Option and Long-Range QRA Gap.............................101
  Use Cases for Long-Range Estimates..................................103
  Probabilistic Decision Analysis Method Context......................105
  Risk Quantification Methods for Class 10 and Class 5 Estimates......109
  Questions...........................................................116
  Volume 2 Perspective................................................116
7 ValidRisk® QRA Software................................................119
  ValidRisk® Implementation...........................................121
  Systemic Rating Matrix Customization................................121
  Asset Types.........................................................123
  Model Calibration Background........................................125
  Operations..........................................................126
  Model Calibration Steps.............................................128
  Data Analysis/Calibration Factor Determination......................132
  ValidRisk Application...............................................135
  Questions...........................................................139
  Volume 2 Perspective................................................140
8 Getting Ready for Machine Learning (Advanced Data Analytics)...........141
  Premises............................................................141
  It is Not AI Yet....................................................142
  ML Background.......................................................144
  Lack of Structured Data: the ML Achilles Heel.......................146
  Examples of ML in Project QRA Practice (as of 2024).................151
  ML Opportunities for Better QSRA....................................154
  ML Opportunities for Cost Risk Analysis.............................156
  Conclusions.........................................................160
  Questions...........................................................161
  Volume 2 Perspective................................................161
9 Risk Analysis Case Histories (Examples)................................163
  Case History A: Mining Project......................................164
  Case History B: Gas Pipeline........................................172
  Case History C: Hydroelectric Power.................................178
10 Volume 1 Appendix: Updates and Miscellany.............................191
  Chapter 1 Perspectives (Introduction)...............................192
  Chapter 2 Perspectives (Risk: God of the Gate)......................193
  Chapter 3 Perspectives (Phase GateCapital Project Systems)..........193
  Chapter 4 Perspectives (Accuracy: Confidence and Credibility).......197
  Chapter 5 Perspectives (Investment Decision Making at the Gate).....198
  Chapter 6 Perspectives (Budgeting for Risk).........................199
  Chapter 7 Perspectives (Risk Quantification Methods)................202
  Chapter 8 Perspectives (Organizing for Risk Quantification).........207
  Chapter 9 Perspectives (Base Cost Estimating and Scheduling)........209
  Chapter 10 Perspectives (Statistics and Models).....................210
  Chapter 11 Perspectives (Systemic Risks and the Parametric Model)...213
  Chapter 12 Perspectives (Project-Specific Risks and the EV Method)..214
  Chapter 13 Perspectives (Escalation and Currency Exchange)..........217
  Chapter 14 Perspectives (The Tipping Point).........................218
  Chapter 15 Perspectives (Estimate Accuracy).........................222
  Chapter 16 Perspectives (Communicating RQ Outcomes).................222
  Chapter 17 Perspectives (Budgeting for Risks and Account Control)...225
  Chapter 18 Perspectives (Closing the Loop)..........................226
  Volume 2 Perspective Wrap-up........................................226
Appendix 1: Example Hybrid Parametric plus CPM-based Method..............229
  Background..........................................................229
  General CPM Tools, Methods, and Preconditions.......................230
  Worked Example: Rail Extension Project..............................237
  Parametric Model Results............................................245
  Assessment of P+IRA Cost and Schedule Contingencies.................257
Glossary.................................................................261
Index....................................................................269
Other Probabilistic Publishing Books (table).............................289