Book reviews
Practical Risk Assessment for Project
Management
S Grey
Wiley 1995 140 pp £22.50
ISBN 0 471 93979 X
This book describes how to make a
quantitative evaluation of the uncertainty
affecting cost, schedule and revenue esti-
mates in a project based business. The text
is written in an informal style, often in the
second person, and assumes little or no
previous knowledge of risk analysis.
Chapter 1 and the preceding Introduction
briefly outline the risk management pro-
cess, various approaches to risk assess-
ment, the role of the risk analyst and the
payoffs from risk analysis. Chapter 2
provides a basic, non-technical introduc-
tion to probability density functions, the
concept of dependence and the mechanics
of Monte Carlo simulation. Certain sim-
plifications are adopted for the remainder
of the book, such as exclusive use of
triangular probability density functions,
and either zero or 100% correlation
between variables. Chapter 2 also intro-
duces the software tool @RISK and the
rest of the book assumes that the reader
will be using @RISK, either in Lotus 123
release 2 or Excel 4. The core of the text is
Chapter 3 on cost risk and Chapter 4 on
schedule risk. Each of these chapters is 35
pages long and so together they make up
half the book. Chapter 3 provides a step-
by-step discussion of cost risk quantifica-
tion starting from a work breakdown
structure and an extended worked example
and commentary on spreadsheet calcula-
tions and layout. This is followed by a
discussion of practical issues connected
with obtaining realistic data, contingency
levels, and qualitative identification of
sources of risk.
Chapter 4 on schedule risk shows how
to build an @RISK model of a project's
activity network in order to evaluate
uncertainty about project duration. As in
Chapter 3 the discussion uses plenty of
diagrams and spreadsheet layouts to illus-
trate different modelling concepts, such as
probabilistic branching. Chapter 4 closes
with further comments on data estimation,
and a brief discussion of external depen-
dencies and selling confidence.
Chapter 5 shows how to approach the
practical problem of trying to estimate the
likely level of profit to be generated in the
next year from a set of possible business
opportunities. The book finishes with a
short chapter commenting on further
techniques and a few other software
130
packages.
Overall this is a very accessible text
aimed at practitioners which provides
useful practical guidance on how to go
about modelling uncertainty as part of a
risk analysis. Only four references are
cited, which is a pity, even in a book for
practitioners. Discussion of practical issues
is sensible and pertinent but is unduly brief
in a number of places, perhaps reflecting
the fairly specific objectives of the text. At
only 140 pages of text, it is priced rather
high by the publishers, particularly given
the basic nature of much of the contents.
However practitioners new to quantitative
risk analysis will still find it good value for
money.
Stephen Ward
School of Management
University o f Southampton
UK
Effective Project Management Through
Applied Cost and Schedule Control
James A Bent and Kenneth K Humphreys
Marcel Dekker 1996 456 pp
ISBN 0 8247 9715 9
The authors/editors have approached this
book from a basis of extensive experience
in the oil and chemical industries, and
whilst many of their comments have wider
application it is to readers in those in-
dustries that the material will be particu-
larly valuable. More specifically it will be
of value to senior managers in both client
and construction companies who wish to
assess the extent to which their own com-
pany's performance measures up to best
practice in the industry. An American
book, based on American experience and
practice, it does make some reference to
work elsewhere, e.g. the forms of contract
used by the Institutions of Civil and
Mechanical Engineers, and the Federation
Internationale des Ingenieurs----Conseils
(FIDIC). Generally data is quoted in
American terms, e.g. dollars per square
foot, and controlling legislation is based on
USA practice.
This is not an elementary text dealing
with the basic approaches to project
management, but rather it assumes such
an understanding and then concentrates on
a critical review of how effective the
methods are, and how they can be im-
proved in practice. An essential aspect of
their approach is benchmarking, by which
a company's performance in project
management is compared with what is
being achieved by others and in this and
other industries. In particular the extent to
which a company is successful in the
adoption and implementation of total
quality management (TQM) is examined,
and it is shown that there is generally
considerable scope for improvement. The
authors point out that many of the reasons
for failure in this respect relate not to the
detailed skills of staff, but to lack of
commitment on the part of managers.
The authors base their work on a three-
pronged approach:
Program--Technical procedures and
methods;
People skills--Experience, application
and ability (but there is no mention
here of training in pro);
Culture of project groups--Commit-
ment and co-operation.
The establishment of cost and time
baselines is discussed in considerable
detail, with great emphasis being placed
on realistic estimates. There are many very
good examples quoted to help explain the
text whether this is in terrns of planning
and control of time, cost or quality. There
are over 200 illustrations, many of them
simple and clear; there are however some
which are over-complicated and others
which are not visually very clear (especially
where they have been copied directly from
computer printouts). The text is well
structured, clearly indexed and is written
in a style which is easy to understand. Most
of the terms used are consistent with
general project management practice but
there is little specific reference to other
publications, and no bibliography.
Overall this will prove to be a useful
book in the planning and control work of
large construction projects, particularly
those in the oil, chemical and other process
industries, and as a reference text for
students of advanced project management.
It should well achieve what the authors
have claimed for it.
In the absence of a stated price I cannot
easily comment on value for money, but I
think that on the assumption that the
market consists essentially of large con-
struction companies who have a great deal
to learn from it, then a price in excess of
$100 would seem to be a bargain. For
students and other aspiring project man-
agers it might be difficult to justify such a
figure.
John F Woodward FAPM
Consultant
Scotland