Programmatic Risk Analysis for Critical Engineering Systems Under Tight Resource Constraints

Robin L. Dillon (), M. Elisabeth Paté-Cornell and Seth D. Guikema
Additional contact information
Robin L. Dillon: McDonough School of Business, Georgetown University, Washington, DC 20057
M. Elisabeth Paté-Cornell: Department of Management Science and Engineering, Stanford University, Stanford, California 94305
Seth D. Guikema: Department of Management Science and Engineering, Stanford University, Stanford, California 94305

Operations Research, 2003, vol. 51, issue 3, 354-370

Abstract: Managers of complex engineering development projects face a challenge when deciding how to allocate scarce resources to minimize the risks of project failure. As resource constraints become tighter, balancing these failure risks is more critical, less intuitive, and can benefit from the power of quantitative analysis. This paper describes the Advanced Programmatic Risk Analysis and Management model (APRAM), a decision-support framework for the management of the risk of failures of dependent engineering projects within programs. Our goal is to guide the management of the design, the development, and the budget of dependent projects. Considering first a single project, our approach is to optimize the use of the budget reserves and of the funds dedicated to the system itself for each possible budget allocation. This phase involves separate optimizations of the system design and a strategy for resolving development problems based on a chosen objective function. The model also allows checking that specified thresholds of maximum acceptable risks are met, and if not, indicates how much is required to satisfy them. It is then extended to include project dependencies within a program. Finally, it allows checking that the level of resources available is appropriate by computing the shadow “risk cost” of the budget constraint. The NASA Jet Propulsion Laboratory has supported the development of this model, so each step of APRAM is illustrated by the schematic case of an unmanned space program involving two dependent projects. Also, where applicable, we discuss our experiences working with the APRAM concepts for the management of unmanned space missions.

Keywords: Project management/resource constraints; Decision analysis: risk management; Space program (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.51.3.354.14961 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:51:y:2003:i:3:p:354-370

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().