To ensure the service providers in the Indian engineering outsourcing industry to determine the risks which impact their ability to accurately define project scope and schedule, the Larsen & Toubro Institute of Project Management has developed a methodology named @RISK which is a Palisade Monte Carlo simulation tool.
Using @RISK as its solution of choice for quantitative statistical modeling, the Institute, set up a study based on a typical outsourced design project of 800 hours and included 15 key activities that are characteristic of such an assignment - ranging from panel, process and layout studies; fixture design; review of design with simulation and client teams, design quality control, preparation for assembly through to final quality control. For each of these activities, the study considered the impact of eight key risk triggers such as lack of clarity on project requirements from customers, skill resource availability, environmental risks and technology.
Dr Chakradhar Iyyunni, Deputy General Manager and Faculty at the L&T Institute of Project Management said, "We chose @RISK for its ease of use and compatibility with Microsoft Excel. @RISK imports all the analysis into Excel, which means that we can use all the formulae in the software alongside all the @RISK features - a powerful combination for statistical analysis."
Using a three-point estimation (optimistic, most likely and pessimistic) for each of the 15 activities, the team was able to construct probability distributions in @RISK to represent the uncertainty around each activity. They then conducted simulations consisting of 15000 iterations each as part of the experiment.
Based on this experiment, the Institute is looking to use @RISK to develop an approach that helps outsourcing project teams to develop risk mitigation strategies.
