Vose SoftwareModelRisk example · Projects and construction
Risk Register: Threats and Opportunities
How much risk contingency does the hospital extension need? The risk register, quantified in cost and time.
From the model’s saved run
Risk contingency
The total risk cost — direct cost plus the cost of delay — at the confidence level on the Inputs sheet.
| Measure | Unit | Value |
|---|---|---|
| Register's expected value, with the average delay beyond the float | US$m | 4.03 |
| Mean total risk cost (simulated) | US$m | 4.12 |
| Risk contingency at the chosen confidence level | US$m | 6.05 |
| Confidence level (Inputs sheet) | 80% | |
| Contingency above the expected value | US$m | 2.02 |
| Budget: base estimate + contingency | US$m | 91.1 |
S-curve (cumulative probability) of Total risk cost from the saved simulation.
The business question
The hospital extension has a base estimate of US$85 million and a 104-week programme with eight weeks of float. Like every project, it keeps a risk register: contaminated ground, a gas main to divert, design changes, asbestos, a tight labour market, and a few opportunities such as value engineering the façade.
Each entry has a probability and a range of cost and time if it happens. Adding up probability × impact gives the register's expected value, but a contingency equal to that average is not enough most of the time, because in any given project some risks happen in full and others not at all.
The model turns each entry into a risk event, links its cost and its delay so that they happen together, adds the cost of delay, and simulates the register to give the contingency at the sponsor's confidence level and the chance of finishing on time.
- Who it is for
- Project managers, risk managers, cost managers and project sponsors.
- Main outputs
- Risk contingency at the chosen confidence level against the register's expected value · total risk cost including the cost of the delay beyond the float · delay and the chance of finishing within the programme float · the risks that drive the exposure.
How the model works
Three sheets after this one, read from left to right. Each one feeds the next.
Inputs sheet
The base cost and programme the risks are added to, the float in the programme, what a week of delay costs (site overheads, preliminaries, inflation), and the confidence level at which the contingency is set.
Register sheet
Each risk has a probability and three-point ranges for its cost and its delay; opportunities have negative impacts. In every iteration VoseBernoulli decides whether each risk happens and VoseUniform how bad it is: the same draw places both its cost and its delay in their ranges (the U argument of VosePERT), so a large cost goes with a long delay.
Delays are added as if each hit the critical path.
Results sheet
The total risk cost — direct cost plus the cost of the delay beyond the float — at the chosen confidence level, compared with the register's expected value; the delay against the float; and the tornado of the risks that drive the total.
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The results in detail
Cost and schedule ranges
P50 / P80 / P90: a 50%, 80% and 90% chance of not being exceeded.
| Measure | Unit | P50 | P80 | P90 | Mean |
|---|---|---|---|---|---|
| Total risk cost | US$m | 3.94 | 6.05 | 7.34 | 4.12 |
| Direct risk cost | US$m | 3.25 | 4.82 | 5.76 | 3.34 |
| Delay | weeks | 13.4 | 19.4 | 22.7 | 13.8 |
| Weeks late (beyond the float) | weeks | 5.4 | 11.4 | 14.7 | 6.5 |
| Number of threats that happen | risks | 4.0 | 5.0 | 6.0 | 4.2 |
| Measure | Unit | Value |
|---|---|---|
| Chance of finishing within the float | probability | 20.2% |
Which risks matter
Lowest and highest mean total over ten equal groups of each risk's cost (VoseSimSensitivityMean): where a response pays off most.
Tornado chart: the inputs ranked by how far the mean output moves across each input’s range.
The ranking as a table 15 inputs
| Input (ranked by influence) | Lowest mean | Highest mean | Rank |
|---|---|---|---|
| T9 Key subcontractor becomes insolvent | 3.81 | 7.71 | 1 |
| T3 Client design changes after stage 4 | 2.91 | 6.13 | 2 |
| T7 Shortage of mechanical and electrical labour | 3.42 | 5.73 | 3 |
| T1 Contaminated ground found during excavation | 3.72 | 5.60 | 4 |
| T5 Medical equipment prices rise | 3.59 | 5.22 | 5 |
| T4 Asbestos in the existing building | 3.70 | 5.33 | 6 |
| T2 Gas main diversion takes longer than planned | 3.68 | 5.19 | 7 |
| T11 Hospital operations restrict working hours | 3.58 | 5.09 | 8 |
| T10 Defects found in commissioning the medical gases | 3.93 | 5.05 | 9 |
| T12 Fire strategy needs re-approval | 3.96 | 5.02 | 10 |
| T6 Planning condition adds archaeological works | 3.95 | 5.01 | 11 |
| T8 Wet winter stops groundworks | 3.88 | 4.86 | 12 |
| O1 Value engineering of the façade | 3.61 | 4.41 | 13 |
| O3 Framework bulk-purchase agreement | 3.83 | 4.23 | 14 |
| O2 Early access to the site compound | 3.80 | 4.19 | 15 |
How to read these results
- The register's expected value is an average: in a real project some risks happen in full and the others not at all. A contingency set at the expected value would be exceeded about half the time. The confidence level makes that choice explicit.
- Cost and delay of a risk come from the same draws, so they happen together and a large cost comes with a long delay. Delay beyond the float also costs money, which is why the total risk cost exceeds the direct cost of the risks. The float absorbs the first weeks, and their time-related cost with them.
- The schedule results add up every delay as if it hit the critical path, so they are pessimistic: PC-03 calculates the delay through the programme's network, where some delays are absorbed by float.
- The tornado ranks the risks by their effect on the total. It does not always match a probability × impact score: a likely risk with a narrow range matters less than a rarer one with a wide range.
See it move. Open the workbook, change an input on the Inputs sheet and run the simulation: every table and chart on this page updates in Excel.
Inputs and assumptions
Every assumption in the model, with its uncertainty and where it comes from. The figures are illustrative.
Project 3 inputs
The base the risks are added to.
| Assumption | Unit | Value |
|---|---|---|
| Base estimate (without risk contingency)Approved cost plan, stage 4. | US$m | 85.0 |
| Float in the programmeTime contingency already in the 104-week programme. | weeks | 8 |
| Cost of a week of delay beyond the floatPreliminaries, site overheads and inflation on the remaining work. | US$m per week | 0.12 |
Contingency policy 1 input
The confidence level the sponsor wants for the risk contingency.
| Assumption | Unit | Value |
|---|---|---|
| Confidence level for the contingencyP80 is common for public-sector projects at business-case stage. | probability | 80% |
Units and conventions
- Money
- US$ million (US$m).
- Time
- Weeks of delay to completion; the programme's float absorbs the first weeks.
- Threats and opportunities
- Threats have positive impacts (more cost, more time); opportunities negative ones.
- Expected value
- Probability × mean impact, summed over the register: the average, not a contingency.
Key assumptions and limitations
- Critical path
- Every delay is added to completion, as if all risks hit the critical path: the schedule results are an upper bound. PC-03 uses network logic instead.
- Independence
- Risks are independent of each other; within a risk, cost and delay are fully linked.
- Cost of delay
- Only weeks beyond the float cost money: the float absorbs the first weeks and their time-related cost. Each week beyond it costs the same, whatever causes it.
- Data
- The project, the register and all figures are invented for this example.
How to use it
- Replace the register on the Register sheet with your own risks: probability, cost range and delay range.
- Set the base cost and programme, the float, the cost of a week of delay and the confidence level on the Inputs sheet.
- Run a simulation from the ModelRisk ribbon (10,000 samples with a fixed seed are set).
- Use the tornado to decide where risk responses pay off, then update the register and simulate again.
Simulate this model with ModelRisk’s classic engine: it does not run in Turbo mode yet.
ModelRisk functions used
- VoseBernoulli
- Whether each risk happens.
- VoseUniform, VosePERT
- How bad it is: one draw, passed as the U argument of the cost and the delay PERTs so that they move together.
- VoseInput, VoseOutput
- Name each risk's cost and the totals for the Results Viewer and the sensitivity analysis.
- VoseSimMean, VoseSimPercentile
- Statistics of the simulation for the tables and charts on the Results sheet.
- VoseSimSensitivityMean
- The tornado chart: every risk ranked by how far the mean total risk cost moves across the range of its cost.
Further reading
- How to calculate cost contingency (Vose guide)
- Sensitivity analysis in Excel: a tornado chart step by step (Vose guide)
- Hillson, D. and Simon, P. (2020). Practical Project Risk Management: The ATOM Methodology, 3rd edition. Berrett-Koehler.
- AACE International (2011). Recommended Practice 65R-11: Integrated Cost and Schedule Risk Analysis and Contingency Determination Using Expected Value.
Download the workbook and run it yourself. It opens in Excel with ModelRisk. The free trial runs every example model.
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An illustrative example: the figures are invented for teaching and do not describe a real company, project or asset. Last updated 9 October 2026.