Strategic Target Analysis

Why do programmes go wrong?

Most large-scale projects and programmes fail to meet their key milestones and completion dates. At a fundamental level, this is because the estimating assumptions made when the programme plans were first constructed were essentially “risky”.

Traditional estimating approaches take good quality estimates (ie things that have been done many times before) and poor-quality estimates (ie estimates for activities never attempted before) and simply add them together to produce a single date which conceals the uncertainties. Further if these uncertainties are now lost in this single date, there is no way of re-analysing or managing the risks by directly addressing the uncertainties.

How can Strategic Target Analysis fix this?

Strategic Target Analysis (STA) is highly effective way of calculating the % confidence of hitting a programme milestone and showing the key assumptions that need to be managed to keep it on-track or get it back on track.

STA is part of the Strategic Delivery Assurance approach and is a development from the established Quality Based Costing (QBC) technique.

STA is fundamentally different from the “industry standard” Quantitative Schedule Risk Analysis (QSRA) and works where QSRA fails. One key reason for this is because QSRA inevitably uses a “squeezed” plan as its starting point where STA constructs a new, strategic, plan that models the potential critical paths through the programme. We call this a Potential Critical Path Network.

How does STA work?

The Potential Critical Path Network (PCPN) is made up of Bricks – strategic chunks of activity that model the current state of the programme understanding, as defined by the programme team.

Each Brick is assigned to an “Owner” who is the person who has the best insight into the timescales that the Brick will take to complete. Brick Owners are interviewed to break down the estimates to model the uncertainty in the Brick at the current time.

This is done by asking structured questions that essentially break the Brick down into:

A =                          Absolute minimum

A + B =                   Best guess/realistic estimate

A + B + C =            Contingency added

A + B + C + D =     Disaster scenario

The assumptions that underpin the estimates are also captured using the ABCD Assumption Analysis process. The key factor here is that the ratings of the assumptions must be consistent with the estimate breakdown and the interview often results in challenges to the estimates and/or assumptions to make them consistent.

 

risky assumption

 

Each Brick then has two probability distributions built around the estimates – one for the “Contingency Scenario” and one for the “Disaster Scenario”.

 

Brick diagram 2

 

 Monte Carlo simulations are then run to statistically add the Brick estimates together.

The resulting probability distributions can be interpreted to make crucial decisions i.e.

  • There is currently no-chance of the programme completing before the 0% date
  • The 50% confidence cost means that there is an 50-50 chance of the programme completing by this date
  • The 90% confidence date is normally considered to be the date to consider “most likely” ie if you don’t manage the assumptions identified, this is where you will end up
  • The current completion date on the plan could, in theory, be anywhere on the curve, but in reality, it will always be at the low probability end of the curve or often off the curve ie 0%
  • The identified assumptions are rigorously tied into the Brick components such that management of these assumptions provides a “roadmap” of how to get from where you are predicted to end up (ie low % probability) to where you want to be (ie 90% probability)

 

Assure Web-based Toolset

Assure is a powerful web-based tool that allows the ABCD data captured to be easily managed and reports (eg Assumption/Risk Registers and risk profile “Bubble Diagrams”) to be produced. The information is viewable via any browser so that communication is made more effective across your intranet or secure internet. The Monte Carlo functionality required for the STA process is integral to Assure and links directly from the Bricks to the assumptions providing a fully functional ABCD based Enterprise Risk Management system.

Would you like to know more about risk management?

We are confident that just an initial call will provide enough information to create a new outlook regarding the impact of risk management on your business.