New Edition of Book “Risk and Decision Analysis in Projects”

riskanddecisionanalysisinproject3edcoverJohn R. Schuyler delivers a wholly rewritten and expanded successor to the best-selling prior editions of his book.

Decision analysis provides assistance in making logical, consistent decisions under uncertainty. This book instructs readers in applying decision analysis to a wide range of project decisions. An essential concepts and how-to guide intended for serious Project Management students and practitioners, the scope of the book is quantitative analysis, from project inception to post-project review. The entire asset life cycle is covered, from an initial feasibility analysis, to the project plan, to the post-project review, and on to a look-back analysis of the capital investment decision.

» Learn more

» Download @RISK – try it for yourself!

On-Demand Webinar: “Introduction to Risk and Decision Analysis using the DecisionTools Suite”

Project and Pipeline Valuation

»Watch now: “Introduction to Risk and Decision Analysis using the DecisionTools Suite”

This webinar is designed to provide an entry-level introduction into probabilistic analysis and will show how Monte Carlo simulation and other techniques can be applied to your everyday business analyses. If you build models in Excel then Palisade solutions can almost certainly help you to make more informed decisions, right from your desktop.

The webinar will explore some of the ways in which organisations are applying Palisade tools. From oil and gas, insurance and finance through to healthcare, defence and construction, @RISK and the other tools in the DecisionTools Suite enhance the decision making capabilities of some of the world’s most successful companies.

For more than 30 years, Palisade software and solutions have been used to make better decisions. Cost estimation, NPV analysis, operational risk registers, portfolio analysis, insurance loss modeling, reserves estimation, schedule risk analysis, budgeting, sales forecasting, and demand forecasting are just some of the ways in which the tools are applied. The webinar will demonstrate how easy – and necessary – it is to implement quantitative risk analysis in any business.

» Watch “Introduction to Risk and Decision Analysis using the DecisionTools Suite” now

» Download The DecisionTools Suite – try it for yourself!

From Boardroom to Courtroom: Using @RISK to Value Early-Stage Companies

pellegrino_associatesIntellectual property (IP) is one of the most valuable assets early stage companies own, and one of the many challenges faced by these companies with no assets other than untested technology is how to determine a fair market value for their IP should they face a civil lawsuit.  IP makes a huge contribution to local, national and global economies. Businesses rely on the enforcement of their IP, e.g. patents, trademarks and copyrights, while consumers use IP to ensure they are purchasing safe, guaranteed products. This is why it is important for organizations to protect and understand the value of intellectual property.

Pellegrino & Associates, a boutique valuation company with a specialty in software and IP, uses Palisade’s @RISK software to run Monte Carlo simulations for their risk analysis and to calculate fair IP values, based on discounted future incomes. The method is detailed in the book BVR’s Guide to Intellectual Property Valuation, by Michael Pellegrino, a leading expert in IP valuation.

“We’ve used it on more than 300 client engagements in every major sector of the economy, from software and semiconductors to chemical coatings and consumer electronics,” said Pellegrino. “We apply it to a range of damages models including the assessed value of a product, reasonable royalty payments, total cost of product reproduction, as well as the potential for lost profits – and in all the cases that went to court where we used Monte Carlo simulation, our results were accepted every time.”

» Read the full case study
» Learn more about @RISK
» Pellegrino & Associates
» BVR’s Guide to Intellectual Property Valuation

Integral Consulting Uses @RISK to Help Protect the Environment

integralconsultingcasemainSustainable ‘green’ practices have been a growing focus as individuals, corporations, and governments consider issues such as global warming, highly volatile markets, and urban sprawl.  For a Fortune 100 mining company, these concepts have become a key part of managing cleanups and hazardous waste sites to increase the environmental, social, and economic benefits of the cleanups.  The company needed to address acid mining drainage from large rock piles as well as the potential for rock slide risks at the site. The cleanup solution originally supported by the Environmental Protection Agency (EPA) and State was complete removal of the rock piles and transport to an offsite disposal location. However, this could take more than 20 years to complete, at a cost of approximately USD $180M. The solution would also increase hazards to the public through exposure to years of heavy truck traffic through small towns, and produce millions of tons of greenhouse gases.

Integral Consulting, Inc., a science and engineering firm that provides multidisciplinary services in the fields of health, environment, technology and sustainability, was hired by the mining company to assist with evaluating remediation (aka cleanup) strategies for a 100-year-old mine. The Integral team used Palisade’s @RISK to evaluate multiple strategies and select a solution that minimized environmental impact and achieved full regulatory approval, while enabling the client to save more than USD $100M. The company’s mission is to help clients across a wide range of public and private enterprises to identify technically sound, cost-effective and environmentally friendly solutions to complex problems.

“@RISK enabled us to do sensitivity analysis on each criteria, which helped us determine how specific uncertainties could drive different decisions,” explained Timothy Havranek, Principal Consultant for Integral Consulting. “It let us easily identify which choice was optimum for our client, for the community and for the environment.”

» Read the full case study
» Learn more about @RISK
» Integral Consulting, Inc.
» Environmental Protection Agency (EPA)

@RISK Models Cancer Risks of Carcinogen Intake from Food and Beverages for Canadians

universityofvictoriaWhile news headlines regularly report on acute health issues relating to food and beverages, such as E. coli outbreaks and salmonella poisoning, very little is known about the adverse health issues caused by the longer-term intake of contaminants in those foods and beverages – including carcinogens. The University of Victoria (UVic), a national and international leader in many areas of critical research, participated in the CAREX Canada Project, funded by the Canadian Partnership Against Cancer, to better understand the environmental and occupational exposures to substances associated with cancer, and subsequently provide support for exposure reduction strategies and cancer prevention programs.

The UVic team used @RISK, Palisade’s risk analysis software, to model differences in Lifetime Excess Cancer Risk for Canadians based on contaminants found in food and beverages. The results revealed notable differences in cancer risks for several different demographics, and are detailed in the thesis, Geographic Exposure and Risk Assessment for Food Contaminants in Canada, by Roslyn Cheasley, a Master’s student with the Department of Geography at UVic.

Palisade’s @RISK enabled the team to easily and effectively determine the concentration of carcinogenic elements in the identified food and beverage products, as well as learn if certain demographics were more at risk from dietary patterns than others.

“We decided to take things up a notch when we updated the data, and upgrade to a probabilistic analysis model based on Monte Carlo simulation,” said Cheasley. “We wanted to estimate the range and frequency of possible daily contaminant intakes for Canadians, as well as associate these intake levels with lifetime excess cancer risk. This is where @RISK came into the equation.”

» Read the complete case study here
» Learn more about @RISK
» University of Victoria (UVic)

@RISK Manages Operational Risks in the Green Supply Chain

graphicerauniversityAs the public becomes more aware of environmental issues and global warming, consumers are asking more questions about the products they purchase. This has resulted in a growing number of companies considering the move to green supply chain management (GSCM) and integrating environmental thinking into their supply chain management.

“Many companies are concerned that changing their established processes and implementing a green supply chain could result in lower quality products, delayed shipments, or even a loss of business,” explained Dr. Sachin K. Mangla of the Indian Institute of Technology Roorkee and Graphic Era University – Dehradun.

“Going green” can be a complex transition from an operational perspective, and not all companies are convinced that improved environmental performance will lead to financial gains. As green supply chain (GSC) considerations typically introduce different operational activities and processes to the supply chain, they also create new uncertainties and risks which can have a significant impact on a manufacturing-based business.

Dr. Sachin K. Mangla with Graphic Era University-Dehradun used Palisade risk analysis software @RISK to identify and evaluate the operational risks of implementing a GSC for a well-established plastic manufacturing company in India. The results generated a wide variety of possible risk scenarios, as well as associated probabilities. “@RISK enabled us to not only predict the type of risks that could happen, but also anticipate what risks were most likely to happen,” said Mangla. “This enabled us to create a model that provides companies with visibility into the potential ecological-economic gains of a green supply chain, as well as recommendations to best manage the operational risks.”

» Read the complete case study here
» Learn more about @RISK
» Graphic Era University – Dehradun

Patrick Engineering Uses @RISK for Cost and Schedule Risk on MBTA Project

PatrickEngineeringPatrick Engineering, a nationwide U.S. engineering, design, and project management firm, provides independent cost estimating, scheduling, and risk analysis services for the Massachusetts Bay Transportation Authority (MBTA). Given the uncertainty of cost and schedule duration estimates, the best way to display them is with probability distributions. Patrick Engineering uses @RISK to assess cost and schedule contingency needs based on project or program risks.

Patrick worked on the Downtown Crossing Vertical Upgrade project recently, part of the MBTA’s program to upgrade elevators and meet accessibility requirements of the Americans with Disabilities Act. The first step for the project was risk identification. “To do this, you need to work collaboratively with the client, with the designers, with the project management team, with anyone who will have insight into the project – you want them all involved,” explains Kim Kozak, Sr. Project Manager for Patrick Engineering. The full team for the Downtown Crossing station project included six organizations and approximately 20 team members.

From here, Patrick Engineering holds a Quantitative Risk Workshop with all the players. “We try to get people thinking, to encourage discussion, as even a small detail could lead to a giant risk,” said Kozak. “Similar to the situation with the Titanic – what seems like a minor detail could be enough to sink the entire ship.”

“The final results of Palisade’s @RISK models help us, and our clients, understand where projects could go – not where they will go,” explained Kozak. “And we know that if a risk does occur, we’re well prepared as we’ve already identified it.”

» Read the Full Case Study

@RISK and DecisionTools Suite 7.5 Now Available

The latest version of our popular risk analysis tools, @RISK 7.5 and DecisionTools Suite 7.5 are now available!  Version 7.5 offers a range of improvements for any decision maker, from general use enhancements to new, specialized analytical features.  New and enhanced graphing options, faster performance, and sophisticated analytics make DecisionTools Suite 7.5 the only decision analysis toolset you’ll ever need.

Read What’s New

Register for a free webinar on What’s New in @RISK 7.5

Key Features Include:

  • New and Improved Tornado Graphs In @RISK
  • Faster Optimization with RISKOptimizer
  • Over 20 New @RISK Functions
  • Graphing and Reporting Improvements in @RISK
  • Optimized for Windows 10 and Excel 2016

Other Important Features:

  • Run Optimizations During Simulation Without Coding
  • New StatTools Analyses

Join Us for a Free to Learn More About What’s New In @RISK 7.5 and DecisionTools Suite 7.5!

» Wednesday, July 20th, 1pm EDT (NYC) | 10am PDT (Los Angeles) – Register

» Thursday, July 21st, 10am EDT (NYC) | 3pm BST (London) | 7:30pm IST (Delhi) – Register

» Wednesday, July 27th, 10am AEST (Sydney) – Register

Oct/Nov Web and Live Training Sessions from Palisade Experts

For those of you looking to hone your risk analysis and modeling skills, don’t miss out on our training services, both in-person and web-based!

Palisade Regional Seminars

Apply @RISK and the DecisionTools Suite to real-life problems, maximizing your software investment. All courses include free materials with dozens of example models. Participants bring their own laptops.

Events take place around the globe—look for events near you:

Singapore: 18-20 November

Europe, Middle East, and Africa 
Amsterdam: 6-7 October
Johannesburg: 15-17 October
London: 28-30 October
London: 25-27 November

Brazil (in Portuguese)
São Paulo: 16-17 de outubro
Belo Horizonte: 22-24 de outubro
São Paulo: 29-31 de outubro
Brasilia: 19-21 de novembro
Rio de Janeiro:  26-28 de novembro

North America 
Montreal : 21-23 October
Denver: 29-31 October

Latin America (in Spanish)
Santiago, Chile: 3 al 5 de noviembre

Live Web Trainings

Delivered by an expert instructor via an interactive web session. Course notes and examples files are emailed to you. With online training you can avoid travel time and costs while still interacting with the instructor and group.

Check out these valuable training sessions, from the comfort of your own computer:

Decision-Making & Quantitative Risk Analysis using @RISK, Part II
8-9 October 2014, 1pm-5pm ET (6pm-10pm GMT)

Decision-Making and Quantitative Risk Analysis using the DecisionTools Suite, Part I
20-21 October 2014, 9am-1pm ET (2pm-6pm GMT)

Decision-Making & Quantitative Risk Analysis using the DecisionTools Suite, Part II
3-4 November, 9am-1pm ET (2pm-6pm GMT)

@RISK Improves Upon Black-Scholes Options Pricing Method


The financial world holds a great deal of risk. To help balance some of the unknowns, Dr. José Raúl Castro Esparza, professor at Benemérita Universidad Autónoma de  Puebla, in Puebla, Mexico has used @RISK to create a more exact and accurate pricing strategy for a key financial tool, the derivative. He has used this model as a teaching tool for both graduate and undergraduate students in the Actuarial Sciences and Masters of Finance programs at his university.

Derivatives are, in essence, a security whose price depends on the performance of one or more underlying assets. Companies often buy derivatives to help manage risk, as these tools can be viewed as a form of insurance policy. But how does the seller of the derivative determine its price?

The typical technique used is known as the Black-Scholes method, which takes into account the current price of the asset, the average price of the asset during the past, and how many days, months, or years into the future the asset will be bought (i.e. time until expiration of the option). Additionally, the formula incorporates a “white noise” element—which stands in as the inherent uncertainty that cannot be measured.

However, the Black-Scholes method doesn’t fully capture reality. “Real life doesn’t statistically behave in those normal distributions,” says Dr. Castro.  As an alternative, he applied a Monte Carlo method, based on the “Random Walk Model” (a mathematical formalization of random movement) that uses the appropriate statistical distribution to model random errors, and designed an interactive model in Excel VBA so that users could easily access this tool for pricing options.

@RISK’s customizability and ease-of-use made his option pricing program possible, says Dr. Castro. “I was able to develop this capability with Palisade’s software, creating a much more accurate and simple method of determining the price of these derivatives.”

» Read “@RISK Improves Upon Black-Scholes Options Pricing Method”