Technical Report: Quantitative Risk – [Report 4]

Report Number: Technical Report SERC-2015-TR-040-4

Report Name: Quantitative Risk

Publication Date: February 24 2015


Executive Summary
The goals of this project are to develop, verify, validate, assess, and transition practical, relevant, and significant methods, procedures, and tools that provide objective and quantified indicators of acquisition program cost, schedule, and performance risk. The methods, procedures and tools are
intended to complement, not replace, current risk management practices by providing early warning of
risk exposure, i.e., of conditions that tend to increase the likelihood and/or severity of adverse
acquisition outcomes. The primary products are
(1) a set risk leading indicators, i.e., objective metrics calculated from standard program documents and contract data reporting items that provide early warning of areas of risk exposure, and
(2) methods to calibrate and baseline the relationships between the risk leading indicators and program outcomes. Secondary products are
(3) recommendations for Request for Proposal (RFP) language to improve visibility and transparency of risk exposure during Engineering and Manufacturing Development (EMD), and
(4) recommendations for collecting and sharing data to calibrate/baseline risk estimating relationships across programs.
The risk leading indicators point to root causes, and indicate the technical areas of risk in the program. The risk leading indicators address
(1) evidence of risk exposure prior to EMD award, and
(2) evidence of risk exposure during EMD execution.
The risk leading indicators are intended for use by Government analysts and risk managers, and by EMD contractors in their risk management program. The risk leading indicators are being co-developed working with end-users, and are being validated and assessed by application to a major defense acquisition program, in concert with the program’s Risk Manager. This report describes progress and results during 2014, focused on developing and verifying risk leading indicators, and plans for 2015, focusing on pilot application and evaluation in cooperation with a major defense acquisition program.