Oliver,
I agree with your thoughts.
You can widen your closing statement to include the PM Maturity of organisations everywhere.
Fortunately, as good software becomes available, PM Maturity improves, as can be seenm from the adoption of the critical path method of planning.

Colin

I have developed a methodology for cost risk analysis for a government authority using Pertmaster which I am currently extending to combined cost and schedule risk analysis using Pertmaster and our own risk management database, RiskIntegrator2, which maps risks to schedule activities in Pertmaster. This could also be done using Pertmaster Risk Expert’s Risk Register.

The basic approach is to deduct the [P50 forecast for cost (or schedule) excluding global risks] from the [P90 (say) forecast including global risks] to determine the Management Reserve, or Unallocated Provision (UAP) for cost (or schedule).

The logic for cost risk analysis is that the project estimate excluding global risks incorporates the contingency amounts for each line item and the P50 for the whole estimate (or perhaps technically more correctly the Pmean) after simulation, represents the Expected Value for completing the project incorporating the "known unknowns".

However, there are usually "global risks" identified in risk workshops that apply to the project, which are not reflected in the line item contingency allowances (three point estimates). These global risks with financial impacts and estimated probabilities of occurrence should be added below the cost estimate range analysis to represent the additional financial uncertainties to be taken into consideration in funding the project. Depending on the risk aversion or risk appetite of the organisation, the P80, P90 or even P95 project cost can represent the budget or bid value to be utilised.

A significant deficiency of the above approach is that it doesn’t take account of the financial impact of duration risk. The only way this can be realistically assessed is by integrating project costs and the project schedule by loading the project estimate into the project control or summary schedule and then performing a combined schedule and cost risk analysis. This is because a delay in a project cannot be costed unless we know in which activity or activities it occurs and also when in the activities, because of the profiled (rise and fall) nature of resource usage.

Similarly, when global risks with duration impacts that are not overlappping with duration ranges on existing activities in the range analysis are to be analysed, we cannot determine the cost impacts of those duration risks unless we apply them to a critical path schedule to determine whether there are project prolongation costs as well as individual activity delay costs.

By following the above described cost risk analysis approach for integrated cost and schedule risk analysis, we can derive realistic Management Reserves (or UAPs) for both Cost and Schedule.
Global risks are normally added to milestones of interest resulting in dual milestones: without and with global risks. Uncertainties both better and worse than the schedule and estimate assumptions can be incorporated by using probabilistic branching, with the branching percentages (which must sum to 100%) either symmetrical (50:50), or skewed to match the preferred or agreed likelihoods.

A challenge in having such an approach adopted is that the estimating and project planning processes are too often performed by different people in quite separate ways and often different stages of project development.

Colin Cropley