Of course, projects like these are expensive—anywhere from $200-$800 million—and come with considerable uncertainty. To deal with this, the City brought on a team to help them hone in on the costs and risks associated with the project, with a goal of greater cost and schedule certainty. As part of that team, SMA Consulting’s Risk and Project Controls Manager Jesse Kostelyk was tasked with estimating the potential costs and analyzing the uncertainties involved in the project. To do so, he turned to @RISK.
@RISK allows for the project management modeling that Kostelyk and SMA Consulting need, enabling them to estimate the impact of various risks on the cost and schedule of the project. Thanks to @RISK’s integration of Microsoft Project schedules with Microsoft Excel models, the consulting team could manipulate schedule inputs and then observe how those changes would affect the budgetary outcome of this important, multi-million dollar project. The result was a much more objective, precise view of the scope of the LRT expansion for decision-makers.
By leveraging the spreadsheet environment as an interface to a project schedule, @RISK enables modeling flexibility that was never possible in Microsoft Project alone.
“@RISK’s ability to integrate models in Excel and Project opens up a world of possibilities for capturing and quantifying construction project uncertainty,” reports Kostelyk. “At SMA Consulting, it’s our go-to program for risk analysis.”
After running the risk analysis using Monte Carlo simulation, the project managers were able to bring their results to the Edmonton City Council and present them with a defined cost range. “They are asked how much risk are you willing to take to move this project forward,” says Kostelyk, “and then we can quantify how certain we are about how much it will cost.”
Accordingly, the project team decided to choose a budget at the 85th percentile of certainty, which, when the construction contract was awarded, was within 2% of the winning bid. Thanks to @RISK’s integration of both schedule and cost concerns, the Edmonton LRT project began on solid financial footing.
Read the full case study here.