A project schedule is a prediction of future outcomes or states, for example: "by May 18th we will be 24% complete”. It’s a forecast of delivery date, project completion date, engineering completed, start of fabrication, start of construction, delivery of equipment and materials, planned and future performance, resource utilisation, resource availability and more.
It also includes numerous assumptions that are often made relatively early on in the project lifecycle. In fact, perhaps the single most important assumption is assuming the project will go ahead as planned. But does it?
Using what-if scenario analysis (WISA) on some or all of the project schedule enables project managers to change their assumptions and make more informed decisions.
What-If Scenario Analysis
What-if analysis is used to explore and compare various plan and schedule alternatives based on changing conditions.
It can be applied in the primary project phases to try out scenarios and optimize your plan. During execution, it is an important tool used to predict the consequence of any event (late delivery etc.)
What-if scenario analysis can range from a simple evaluation of the effects of changing the duration of one or more activities to a more complex analysis. This could include introducing duration uncertainty, running project forecasts based on performance-to-date, all the way to a schedule and cost risk analysis, taking identified project and enterprise risks into account.
The majority of questions asked are exploratory in nature and are intended to examine the results of predictions in the future.
Some examples might be:
- What if lead time for major equipment or components is extended?
- What if we sub-contract parts of the prefab or fabrication work?
- What if we need to extend the duration of certain engineering activities?
- What is the effect on completion date and resources if the current performance trend continues?
- What if prefabrication work seven days a week instead of five?
- What if we accelerate the schedule?
Answering these questions quickly, reviewing the results and asking new questions is the process by which engineers and project managers find the best solutions.
The questions often involve making changes to data, running the analysis, examining the predictions, comparing it to the schedule, and then challenging the effect.
Benefits of What-If Scenario Analysis
1. Evaluation of Possible Outcomes
A project manager can use WISA to see how a given outcome might be affected by changes in particular variables. This provides them with greater insight into the possible uncertainties they're likely to encounter and the impact of these risks on the successful completion of the project.
2. Better Informed Decisions/Actions
Thanks to what-if analysis, project managers can make more informed decisions about the future of the project, reducing uncertainty. They can respond to alternative situations more quickly and effectively because they've developed strategies to minimize the impact of change.
3. Improved Project Predictability
A what-if scenario is informal speculation about how a given situation might be handled. The more questions that are asked, answered, and reviewed throughout each stage of the project lifecycle, the more informed the project manager, and the more predictable the project outcome.
4. Analysis of Simple and Complex Factors
WISA is an umbrella term for a type of evaluation that measures the effect on a project outcome should one of the primary elements be changed. At its most complex, Monte Carlo analysis can be utilised to provide analysis throughout unlimited scenarios. To answer basic questions, a simpler method of what-if analysis can also be used to extract the necessary information more rapidly.
Improved Project Management
What-if analysis allows project managers to recognize options and impact from events and changing assumptions. With proper utilization, project managers can make more informed decisions and predict the outcome of those decisions more accurately.
Project management will always be characterized by a degree of uncertainty, changes, impact from events, and deviation from the plan. The challenge is managing each factor and understanding its impact on the project.