Risk Factor Overview

A project can experience impacts to its schedule and costs in the form of a threat, opportunity, or weather event. However, there are risks to a project that could have either a positive or a negative impact. For example, let's say that you are working with a contractor whose team has unpredictable schedule adherence. Sometimes they finish ahead of schedule, and sometimes behind. You can use a risk factor in your project to model this uncertainty. In this case, you might call this risk factor "Productivity". Similarly, you could have fluctuating costs related to a material that has an unstable price. Or, you could simply have a risk factor for duration uncertainty.

Unlike threats or opportunities, risk factors are configured as percentages rather than days or cost amounts. A risk factor with 100% set as its impact means that the risk factor has no effect on that activity, and the duration or cost will not change. When adding a risk factor, you can enter a single percentage or a minimum, most likely, and maximum percentage range. For example, when entering impact details for the risk factor, you can set 90% as a minimum (early or below cost), 100% as most likely (on time or at cost), and 110% maximum (late or above cost) uncertainty.

You can also create a tier system using risk factors. For example, you could have low (+/- 5%), medium (+/- 15%), and high (+/- 30%) material cost uncertainty. Then, you can assign these risk factors based on an activity's attributes, such as more uncertainty for activities occurring further into the future.

Risk factors can be assigned to multiple activities, and a single activity can have more than one risk factor assigned to it. After a risk factor risk is created, you should assign it to the activities that may be impacted by it. Risk factors that have no assigned activities will not impact the risk analysis.

Use in Risk Analysis

Risk factors are included in the quantitative risk analysis calculations, but are not supported by the qualitative risk analysis. If an activity has uncertainty assigned to it, risk factors are calculated for that activity after that uncertainty has been applied. Risk factor cost impacts have the option to determine which cost type they will impact: Labor, Nonlabor, Materials, or All Costs. Risk factors are applied before threat and opportunities in the risk analysis for both schedule and cost impacts, which means that threat and opportunity sizes are always added based on their size in the risk register and not inflated by a risk factor impact percentage.

Risk factors can provide a way to have activity uncertainty that includes correlation. When applying activity uncertainty, you often want to have that uncertainty correlated to reflect underlying causes in the uncertainty in duration. Risk Factors offer an alternate approach, where the underlying cause is entered as a risk factor and by driving multiple activities a correlation can result between those activities. With risk factor percentages, correlation coefficients are calculated during the risk analysis run so that P-80 data is more accurate.

If you are using risk factors in your risk analysis, the risk analysis Mean Impact results will be inaccurate. This is current behavior, and will be corrected in a subsequent release. Remove the risk factors from your risk analysis, or, if you do include risk factors, do not utilize Mean Impact results.