Month: August 2016

RD&I Consulting uses @RISK to Model Financial Uncertainty of Fehmarn Belt Fixed Link

The Fehmarn Belt Fixed Link is a planned immersed tunnel that will cross the Fehmarn Strait to connect Denmark and Germany. This large infrastructure project is mainly user funded, with an official projected payback period of less than 40 years.  However, based on the latest research from RD&I Consulting based in Denmark, it is highly unlikely that this projected payback deadline will be met.

Fehmarn Belt Fixed Link

Hans Schjær-Jacobsen, Director of RD&I Consulting and former Professor and Director at the Technical University of Denmark, used Palisade’s @RISK software to create financial models for the Fixed Link to determine the likelihood of project success – or failure – in terms of the payback period.

Uncertainty in the model was calculated by probabilistic uncertainty representation and Monte Carlo simulation, as well as interval analysis. Schjær-Jacobsen leveraged @RISK software’s ability to calculate a genuine uncertainty profile by Monte Carlo simulation in contrast to just partial sensitivity analyses, using uniform and also triangular distributions as they were easily derived from double estimates (i.e. best- and worst-case), and triple estimates (i.e. best-, base- and worst-case), respectively. The simulation generated the probability distribution of the payback period for the Fehmarn Belt Fixed Link over 60 years, providing a project uncertainty profile presented in terms of a traffic light metaphor: a green light corresponds to a payback period of less than 40 years, a yellow light corresponds to a payback period of 40-50 years, and a red light corresponds to a payback period of more than 50 years.

Project uncertainty profile for the Fehmarn Belt Fixed Link payback period.

For the Danish government, the only acceptable outcome of the model for the projected payback period is in the green light zone: less than 40 years. However, based on the model created by Schjær-Jacobsen, the Fehmarn Belt Fixed Link is a high-risk business case and the likelihood of financial project failure in terms of the payback period taking longer than 40 years is equal to 92.5% and substantially larger than acknowledged by the project proponents and presented to the public. This is due to several realistic uncertainties based on readily available facts, including traffic volume and income, construction costs, services and EU subsidies.

“As nobody had done this kind of analysis on the project before, the results were a surprise,” explained Schjær-Jacobsen. “However, now that these results have been presented to Fehmarn A/S and the Commission of Transport, we will see how they impact future development of the Fehmarn Belt Fixed Link.”

» Read the Full Case Study

Take Control Over Your CPU in @RISK and RISKOptimizer

@RISK has the ability to use multiple CPUs, but have you ever wanted more control to choose how many CPUs are used in @RISK to run simulations?  Now you can decide exactly how many CPUs to utilize, giving you more control of @RISK simulations and your computer!

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RISKOptimizer also now has the capability of using multiple CPUs, dramatically increasing the speed of calculating optimizations. Speed tests showed optimizations run 4x faster than before – or even faster – saving you tremendous amounts of time.  So now there’s no excuse to take coffee breaks while waiting for your optimizations!

Netconomy Plans for Business Growth with Palisade’s @RISK

As the world continues to become ever more digital, companies from all industries need to have a strong digital commerce strategy. However, launching a digital commerce platform can be a complex undertaking, especially for established companies which have built their businesses on more traditional, paper-based processes that are better suited for ‘brick and mortar’ transactions. Netconomy Software and Consulting specializes in omni-channel and e-commerce software integrations, creating digital marketplaces for a diverse range of companies in the retail, wholesale, consumer, telco and transportation industries. This is where Netconomy has found its ‘sweet spot’: working with enterprise organizations to adapt and connect their business processes with state-of-the-art technologies to deliver scalable e-Commerce solutions. However, this is a fast-paced industry and the company is having to grow – and plan for that growth – rapidly.

For the first few years, the company utilized a classical budget process: taking a couple of months of the year to create a financial plan for the next year. However, this type of planning process has become less effective for Netconomy since the company is developing so quickly.  The company needed a planning process that would combine risk management with its budgeting and forecasting.

Now, the Austrian-based company uses Palisade’s @RISK to integrate risk management within its budgeting and financial planning processes, providing the management team with full visibility of the risks associated with each element of its budget. This in turn enables the company to make better, more informed decisions regarding capital expenditure, investment planning and future growth strategies.

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» Read the full case study

OnDemand Webinar: See What’s New in @RISK and DecisionTools Suite 7.5

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Get a tour of the useful new features in @RISK and DecisionTools Suite version 7.5! Watch the “What’s New in @RISK and DecisionTools Suite 7.5” webinar at your convenience.

» Watch the Free Webinar Now

This webinar covers key features that are new to 7.5:

  • 22 new functions – 16 distribution functions and 6 new statistical functions.  All of which are important for insightful estimation of uncertainty and provide useful statistics on simulation results data.  Ranging from insurance risk to reliability engineering to modeling of household income, @RISK 7.5 has your risk analysis needs covered!
  • Improved tornado graphs – Tornado Overlays, Contribution to Variance and Input Shading to improve analysis and make sharing results much easier.
  • Faster optimization with RISKOptimizer – With speeds up to 4x faster, your time can be better spent on interpreting your results instead of waiting for your optimization to complete.
  • And more!

» Watch the Free Webinar Now

» Read What’s New in 7.5

New Functions in @RISK 7.5!

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Functions are at the heart of risk analysis involving Monte Carlo simulation. In version 7.5 we have added a total of 22 new functions – 16 distribution functions and 6 new statistical functions. @RISK’s new distribution functions will appeal to a variety of industries and applications:

  • RiskDagum – This distribution is mostly associated with modeling income distribution and is useful in many actuarial statistics.
  • RiskFréchet – Used to quantify extreme events, Fréchet distributions is helpful in modeling rare, unexpected events such as radioactive emissions, seismic analysis, and peak single-day rainfall and flooding.
  • RiskCauchy – This distribution is useful in scientific and engineering applications to model resonance behavior, measurement repeatability and light dispersion.
  • RiskBurr12 – Burr distributions are used to model household income, insurance risk and reliability data.
  • RiskFatigueLife – If you are looking to model material reliability, FatigueLife distribitions are effective in modeling reliability and are used to estimate failure of materials over time.

These new functions are important for accurate, insightful estimation of uncertainty and provide useful statistics on simulation results data.  Ranging from insurance risk to reliability engineering to modeling of household income, @RISK 7.5 has your risk analysis needs covered!

»Learn about all the new functions in @RISK 7.5

»Learn more about @RISK

Project Manager Today’s In-Depth Review of @RISK Professional

PMToday_flProject Manager Today took an in-depth look at @RISK Professional in a 4-page article in July.

“All projects involve risks, but it’s vital to understand what those risks are and how they might affect your budget and schedule,” explains author Steve Cotterell. “@RISK is a well-established software tool that’s been designed to help you do that.”

What follows is a thorough review of features, with helpful screen captures as illustrations. The piece serves as a nice introduction to @RISK, demonstrating how project managers create models to mitigate uncertainty, all within Excel!

» Read the full @RISK Professional Review