Risk Management Using Project Risk Management to Promote - - PowerPoint PPT Presentation

Risk Management

Using Project Risk Management to Promote Communica5on, Understanding and Agreement

Kevin Raum Tim Boatwright

Welcome

Tim Boatwright

• Principal Consultant with Ten Six
• PMP, EVP & ITIL Cer5fied
• Project Controls expert with 20 years in DoD,

Energy, Biotech and IT experience

• Former EVP Cer5fica5on Board Lead for AACEi
• Principal Consultant with Ten Six
• Project and risk management systems, process,

tools implementa5on expert with 30+ years in Biotech, IT, DoD, state-local-federal government and interna5onal experience

• Cer5fied mediator

Kevin Raum

About Ten Six

• Specialists in enterprise Project PorRolio

Management and Earned Value Management

– Global customer list – Offices in USA & UK – Experienced staff – average 25+ years – Experts in Oracle Primavera P6 & Deltek tool suites – Unique consul5ng & training services

Learning Objec=ve

• To provide you with some prac5cal and

proven Risk Management tools, techniques and strategies that can improve project communica5ons

• To share our experiences and lessons from the

successful implementa5on and applica5on of risk management framework to improve project communica5ons across an array of projects

Poor Communica=ons Impacts Project Performance

Source: Project Management Ins5tute; The Essen(al Role of Communica(ons

One in five projects fails due to failed project communica5ons

Communica=on Challenges

Source: Project Management Ins5tute; The Essen(al Role of Communica(ons

“…project success is dependent upon communicating the correct information to the appropriate stakeholders, using clear and relevant language that resonates with the audience.”

Causes of Poor Communica=ons

• Communica5ons processes not in place or

followed

• Language and concepts inappropriate or poorly

understood

• Stove pipes of work and informa5on
• Differences in expecta5ons
• Leadership not engaged
• Discomfort with delivering “bad” news or

disagreeing

What Can You Do?

Risk Management Addresses These Challenges

Communica=ons Challenges How Risk Management Addresses Language and concepts inappropriate

• r poorly understood
• Reviewing work scope, contract, for understanding and to iden5fy risks
• Reviewing assump5ons and using these as basis for risk iden5fica5on
• Mul5-disciplinary teams working together to iden5fy and clarify risks
• Modeling using analy5c tools, techniques, methods

Stove pipes of work and informa=on

• Using cross-func5onal teams to review requirements, assump5ons, and iden5fy risks
• Planning processes integra5ng upstream and downstream work and risk impacts
• Iden5fying linked risks

Communica=ons processes not in place or followed

• Risk plans provide a standard and guidance on execu5ng risk management
• Risk kick-offs
• Risk review mee5ngs
• Risk submissions by anyone related to the project
• Escala5on mechanism

Leadership not engaged

• Engaging leaders in risk planning, risk reviews, escala5ons
• Involving stakeholders risk processes prior to project ini5a5on
• Engaging stakeholders, including customers, in risk reviews

Differences in expecta=ons

• Risk workshops
• Risk iden5fica5on, analysis and response planning

Discomfort with delivering “bad” news

• Risk Iden5fica5on process
• Escala5on mechanism
• Risk reviews

Risk Concepts

• Risk: The likelihood that a project will fail to

meet its objec5ves because of an event or condi5on

• Risk Management: is aimed at reducing the

uncertainty of outcomes (business decisions, project decisions, work done by the team and suppliers, etc.) and/or the impact of a risk event

Risk Concepts

• Project risk management is a process

– Increases the likelihood of project success – Iden5fies and assesses threats to the project – Iden5fies ac5ons to either reduce the probability of those threats occurring

• r reduce the impact of the threats to the project.
• Benefits:

– Inclusive of ALL project team members and project stakeholders, e.g. scien5sts, contracts people, technicians, managers and stakeholders such as the client (begins in the investment decision making process and ends at project closure) – Used as a means to promote dialog and understanding of the program within the project team, project team and contractors, and between the project team / program manager and the customer and other stakeholders – It has the poten5al to create cohesion and strengthen the no=on of “team”

View of Risks Vary With Role

• Sponsors/Management: Growth, ROI,

CAPEX, OPEX, reputa5on, dates, safety….

• Customer: financial outlay, delivery

dates, reputa5on, poli5cal….

• Program/Project Manager: schedule,

costs, quality, resources, safety….

• Team Members: my work, other’s work

that affects me, safety….

• Suppliers/Subcontractors: schedule,

demand, reputa5on, safety….

Risk Management is important from strategy/vision to project delivery

Risk Management Process

Risk Management Planning Risk Iden=fica=on Risk Analysis Risk Response Planning Risk Monitoring & Control

The risk management process is carried out itera=vely in all phases (Pre-ini=a=on to Project Closeout)

Risk Management Planning

Risk Planning

Business Drivers and Priori5es

Leadership Team (PM, RM, BM, et al)

Project Approach, Schedule and Cost Es5mates Project Objec5ves, Goals and Constraints

Risk Processes and Procedures

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Communica=ons Benefits

• Lays out and defines the process, roles, responsibili5es, &

tools to be used

• Lays out standards for types and quality of informa5on
• Sets expecta5on that risk management is important
• Commits stakeholders to the risk process

Risk Iden=fica=on

A project life cycle ac=vity

– Prior to project ini5a5on – Outset of the project (planning) – Project or milestone reviews – Rebaseline exercises – When environmental condi5ons change Risk Planning Complete Tools: Risk Iden5fica5on Itera5ve Process

Risk Log

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Documents Needed

• Contract and Statement of Work: Formal requirements
• Assump=ons and “Other” Guidance: “Informal” requirements
• Technical Approach: The agreed upon approach to mee5ng the

goals and objec5ves of the project

• Work Breakdown Structure (WBS/D): Tool used to define and

group a project's work elements (or tasks) in a way that helps

• rganize and define the total work scope of the project
• Detailed Cost Es=mate: Project costs defined to the lowest level
• f the WBS
• Project Schedule: Tool defining the dura5on, resources, and

dependencies associated with each WBS.

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Risk Iden=fica=on

Obtain All Proposal Ar5facts and Contract (terms, SOW, costs, etc.) Review and Prepare for Proposal Debrief Conduct Proposal Debrief Review Scope, Contract, SOW, Assumptions, etc. Craft and Lay in High Level WBS, Target Dates, on WBS Element(s) Review WBS and Draft Project Schedule with Team Update WBS/D Conduct 1:1 Planning Sessions Prepare Schedule for each WBS Element Prep Draft Risk Log Integrate Fragnets into Draft Schedule Review Schedule WBS/D, Risk Log with Team OK? NO Final Draft Schedule, WBS/ D, Risk Log

Communica=ons Benefits

• Builds on agreed

informa5on (plans, schedules, assump5ons, etc.)

• Challenges assump5ons
• Supports clarifying

requirements, plans and designs

• Promotes cross-

func5onal discussions

• Permits discussion of

poten5ally bad news

• Engages stakeholders

Proposal Review Project Planning Brainstorming, Mind Map Ishikawa/Fishbone Diagram

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Capture Iden=fied Risks

PROJECT: New Project

Revision Date: 9/15/2016 Version: 1

ID Risk Name Description WBS Affected Cost Schedule Performance Mitigation Options Likelhd Mitigation Actions Owner Status Internal? 1 Individual operators may not have received full training for the operations. 1.1 20,000 20 days None 4 2 3 4 5 6 7 8 9 10 Consequences Analysis

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Risk Analysis (Qualita=ve & Quan=ta=ve)

Inputs:

• Agreed Approach
• Rules and

Guidelines

• Risk Log
• Project Team
• Experts
• Risk Item Form
• Categories

Risk Analysis Process Outputs

• Individual Risk

Details

• Risk Severity

Index

• Es5mated Costs
• Mi5ga5on

Strategies

Communica=ons Benefits

• Involves en5re team: could include experts, contractors/suppliers, as well as management and customer
• Helps to clarify requirements, assump5ons, designs and plans
• Promotes cross-func5onal discussions and collabora5on as risks’ causes and linkages are iden5fied
• Sets an “objec5ve” founda5on for calcula5ng adjusted schedule, budget and performance targets
• Begins to iden5fy op5ons for mi5ga5ng risks
• Brings alen5on to parts of the project that require closer scru5ny and monitoring
• Assigns responsibility for risks

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Qualita=ve Risk Analysis

Communica=ons Benefits

• Helps to challenge thinking – what is really going on and

what will be the impact if this risk is realized

• Creates a visual of the risks that is easily communicated

and understood (RYG)

• Sets out an objec5ve means of choosing parts of the

project that require closer scru5ny and monitoring

• Helps project team and stakeholders to understand how

changes and shins in the program impact risks

Likelihood

5 5 10 15 20 25 4 4 8 12 16 20 3 3 6 9 12 15 2 2 4 6 8 10 1 1 2 3 4 5 1 2 3 4 5

Impact

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Monte Carlo Analysis

21

Iden5fies driving risks and predicts likelihood of achieving schedule and budget targets

Communica=on Benefits

• Summarizes risk in the program and provides programma5c level of informa5on on

impact of all risks on cost and schedule

• Points to areas of project requiring more scru5ny and monitoring
• Gets customer, management, and team engaged in important conversa5ons
• Allows “bad news” to be discussed in a sesng of solving problems
• Ties en5re program together

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Risk Response Planning

Iden5fy and evaluate risk mi5ga5on

• p5ons

Assess mi5ga5on

• p5ons’

impact(s) Es5mate costs and schedule impacts Select “best” mi5ga5on Implemen t selected mi5ga5on

• p5on

Adjust risk quali5es post mi5ga5on Update risk log

Monitor risk mi5ga5on triggers

Communica=on Benefits

• Assigns ac5ons and accountability for risk mi5ga5on
• Creates basis for sustaining a focus and a conversa5on on parts of the project that are vulnerable
• Gets customer, management and team engaged in cri5cal conversa5ons
• Diminishes likelihood that there will be surprises
• Provides means of understanding the ROI of mi5ga5on ac5vi5es

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Ongoing Risk Management

• Risk reviews (regular, major milestones/changes)
• Monitor risk triggers
• Adjust risk impact scores
• Iden5fy, analyze, prepare responses for new risks
• Allocate risk con5ngency budget
• Re5re risks

Risk Managem ent Planning Risk Iden=fica =on Risk Analysis Risk Response Planning Risk Monitorin g & Control

Communica=on Benefits

• Maintains accountability and ownership for risks and mi5ga5ons
• Sustains conversa5on on parts of the project that are vulnerable
• Keeps customer, management and team engaged in cri5cal conversa5ons
• Diminishes likelihood that there will be surprises

CASE STUDIES

Case Study 1: Biotech in Crisis

• $250 million vaccine development program
• Extremely op5mis5c and unrealis5c

assump5ons

• No real or believable schedule or budget
• Customer very meddlesome and extremely

unhappy

• Contractor in danger of being dropped

Case Study 1: Biotech in Crisis

• Solu=on – Part 1: Build the Plan

– Build the complete WBS, WBSD, schedule and budget for each of the seven vaccine projects based on the assump5ons given – Get customer and management buy-in and sign-off on basic planning elements (WBS/D, Budget, Resource Plan, Schedule)

• Solu=on – Part 2: Capture and Model Risks

– Challenge the assump5ons and iden5fy and quan5fy the risks in each vaccine project (complete risk log, mi5ga5on op5ons and trade-off op5ons, mul5-disciplinary team for risk iden5fica5on and characteriza5on) – Build the con5ngency budget and present to customer

Case Study 1: Biotech in Crisis

• Communica=on Lessons Learned:

– Shock at the “real” number once the complete risk analysis was complete – Customer, management, and project teams had complete buy-in to the schedules and budgets – Teams that were more firmly commiled to project success because there was agreement on a realis5c defini5on of success – Customer and biotech came to the table and worked together to define and commit to a beler working rela5onship

Case Study 2: Team Buy-In

• Large A&E firm with numerous federal contracts
• Much of the bidding and high level planning done by

the PM’s; much FFP work

• Over the fence demand from individual resources to

“make it so”

• Low level of commitment by team members
• Morale was low

Case Study 2: Team Buy-In

• Worked with planner/engineer to develop high

level WBS per SOW scope

• Brought team in to review WBS and flesh out

WBSD

• One-on-one sessions with each team member

to develop detailed work plans for each part of the WBS

Case Study 2: Team Buy-In

• Key ques=ons:

– What is this total scope, es5mate of effort, dura5on)? – What do you need to know? – What do you receive as inputs (“upstream”)? – What do you provide as inputs to others (“downstream”) – Logical rela5onships between your work ac5vi5es and linkages to others? – Where is the customer involved in this (reviews, sign-off, go/no-go gates)? – What could go wrong? What affects your likelihood of success?

Case Study 2: Team Buy-In

• Summarized and presented

to government client:

– SOW review – Approach and assump5ons – Reviewed schedule – Iden5fied where the customer had substan5al affect on schedule outcome

Case Study 2: Team Buy-In

• Communica=ons Lessons Learned:

– Beler buy-in by the team to the project “I’ve never had my ideas or opinions heard before.” – Customer had a clearer idea of the schedule and could clearly see where the risks were and how their involvement was “on the cri5cal path” and contributed to schedule risk

SUMMARY

Risk Cri=cal Success Factors

Source: Project Management Ins5tute

Risk Management Improves Project Communica=ons

• Formalizes and reinforces communica5ng between the various par5es
• Objec5ve means of discussing issues
• Promotes collabora5on and communica5on across func5ons
• Makes it easier to iden5fy and understand how to address ques5ons

and concerns

• Quan5fies impact and poten5al solu5ons to problems
• Reduces “finger poin5ng” and “poli5cs” about issues
• Improves overall understanding and comprehension of the project, its

individual components and rela5onships

• Enables subcontractors/suppliers/customers and other stakeholders to

raise issues sooner

• Engenders deeper trust

Risk Management Maturity

Immature Mature Stakeholders

• Limited/no senior management involvement
• Risk informa5on not shared with customer
• No risk sharing or data from suppliers
• Extensive senior management involvement
• Risk informa5on shared with customer
• Risk sharing and data from suppliers

Risk iden=fica=on

• Limited/no risk iden5fica5on processes
• New risks are slow to be iden5fied and considered
• Risk iden5fica5on limited to a few people
• Risk iden5fica5on is driven top-down
• Broad array of risks is iden5fied
• Project monitors con5nuously for risks
• Risk iden5fica5on is everyone’s responsibility

Risk Analysis

• Risks are poorly described and quan5fied or not at

all

• Risks are not priori5zed
• No secondary effects are iden5fied
• Risks are well described and adhere to a standard descrip5on
• Risks are quan5fied and probabili5es assigned; and, priori5zed
• Secondary effects of risks are iden5fied

Risk Responses

• Limited or no risk responses
• Limited or no cost/benefit analysis
• Limited or no risk response plans or monitoring
• Risk responses are captured and well documented
• Cost benefit analysis is performed
• Risk responses are implemented as intended and are also

monitored

Project Management

• Risk management begins with project start
• Risk and project management processes are not

linked

• Limited or no risk reviews are
• Few or no risk reports
• No risk informa5on used for project es5ma5ng
• Risk management begins well before the project is ini5ated
• Risk and project management processes are well integrated
• Regular & structured risk reviews a
• Standard and tailored risk reports
• Risk informa5on used to refine/adjust project es5ma5ng

Risk Management Culture

• Limited or no trust between team and

stakeholders

• No risk management plan
• Risk submilers are viewed nega5vely
• Strong trust between team and stakeholders
• Risk management plan is present and in line with the project

scope

• Risk submilers know that they will not be penalized for

submisng risks

Wrap Up

• Risk Maturity Ques5onnaire
• PDU’s for the webinar:
• tensix.com/webinar/

Ques=ons?

Tim Boatwright 5m.boatwright@tensix.com Or Kevin Raum kevin.raum@tensix.com (703) 910-2600