Schedule Risk Management - Construction Project Scheduling and Control - page 376

The definition of risk by AACE International Cost Engineering Terminology 4
is: “the degree of dispersion or variability around the expected or 'best' value,
which is estimated to exist for the economic variable in question, e.g., a quanti-
tative measure of the upper and lower limits which are considered reasonable for
the factor being estimated.”
Time contingency : An amount of time added to the base estimated duration to
allow for unknown impacts to the project schedule or to achieve a certain level of
confidence in the estimated duration.
Probability : A measure of the likelihood of occurrence of an event.
Risk register : A checklist of potential risks developed during the risk identification
phase of risk management.
Risk allocation : A determination of how to respond to risks, which can include
shifting risks, avoiding risks, preventing or eliminating risks, and incorporating
risks into the schedule.
Deterministic : A calculated approach to estimating a single activity duration using
work quantity divided by estimated production rate.
Probabilistic : The determination of risk likelihood and consequences to estab-
lish duration ranges or risk-adjusted durations that can be used in a schedule in
recognition that there are no certainties in estimating future durations.
Monte Carlo analysis : A probabilistic approach to determining confidence levels
of completion dates for a project schedule by calculating durations as probability
distributions.
Probability distribution : The spread of durations in a statistically significant
population that is used for the range of durations in probabilistic scheduling
approaches.
Confidence level : A measure of the statistical reliability of the prediction of a
project's completion.
What-if scenario : A modeling of a risk for use in a CPM schedule in order to
predict the ramifications of an identified risk.
Qualitative analysis : The determination of the likelihood of a risk occurring on a
project, as well as assessing the severity of that risk should it occur and prioritizing
the resultant list of risks.
Quantitative analysis : The assigning of a probability to the qualitative description
of a risk, ranking risks, and calculating the potential impact from both individual
risks and the cumulative effect of all risks identified.
Exculpatory clauses : Disclaimer verbiage that is designed to shift risk.
4 Association for the Advancement of Cost Engineering (AACE) International, “Cost Engineering
Terminology.”