New AACE Recommended Practice Fills Gap in Quantitative Risk Analysis Maturity Model
This recommended practice (RP) of AACE International (AACE) defines a quantitative risk analysis (QRA) maturity model (QRAMM) for assessing the level of capability for quantifying the uncertainty and risks associated with projects, programs, and portfolios within the risk management (RM) function of a capital investment or project management organization. Maturity models for general risk management are widely published, but less common for the QRA step of RM processes such as presented in Chapter 7.6 of the AACE Total Cost Management (TCM) Framework. This RP is intended to fill that gap.
The QRAMM is not prescriptive to specific QRA methods; to the contrary, it highlights that many options exist and provides examples of how various methods may be considered at various maturity levels as appropriate. There are many AACE quantitative risk analysis RPs to consider; these are outlined in AACE Professional Guidance Document No. 02 (PGD-02).
The QRAMM is also not a maturity model for assessing the depth of capability for any particular QRA method selected by an organization. Instead, the QRAMM offers a road map to facilitate continuous improvement. Each QRAMM capability level can be applied with various degrees of rigor or maturity depending on the organizational needs. The QRAMM assumes that to achieve a high level of QRA maturity, an organization must clearly understand its RM needs and apply a QRA method to the degree that is fit-for-purpose for those needs.
Contributors:
James E. Arrow, DRMP (Primary Contributor)
Francisco Cruz, PE
John K. Hollmann, PE CCP CEP DRMP FAACE Hon. Life
Luis Henrique Martinez
Martin Snyman, DRMP
About James:
James Arrow has established strategies that secure a risk-based competitive advantage for several Fortune 500 companies. James is both a skilled practitioner and a well-known thought leader. He imbues infectious enthusiasm and passion for the technical field of project risk management.
James has played a key role in successfully delivering critical capital assets, in a variety of locations, around the world. He has more than 20 years’ professional experience and had the opportunity to work with diverse teams across the globe. He is well-versed on project best practices and applies exceptional communication skills to lead multi-disciplinary teams.
An effective hands-on team-player, James is also an acclaimed writer and speaker on topics concerning project risk management, data analytics, data science, including digital disruption in the engineering and construction sector. In recent years, on several occasions, James has been formally recognized by his peers for his contributions to the profession.
James is currently Program Risk Manager at Los Alamos National Laboratory, Principal and Consultant for Project Quantum Solutions LLC, and the current Vice-Chair of AACE’s Data Science & Advanced Analytics Subcommittee. He has received the Technical Excellence and the Outstanding Technical Subcommittee Chair awards from AACE International.
AACE Members may download the RP free of charge here:
https://web.aacei.org/docs/default-source/rps/122R-22.pdf
Non-members may purchase the RP for USD 100 here:
https://www.pathlms.com/aace/courses/2928/documents/70120