Project Risk & Opportunity Management
- Usually Ignored In Project Environment - A Significant Cause for Project Failures -
Definitions
Project - Scheme for for Something to Be Done - Outcome, Work, Time & Cost Risks - Chance, Degree of Probability of Loss, Damage, Hazard or Injury Opportunities - Combination of Circumstances Favorable for Purpose Management - Manner for Handling, Controlling, Directing, ...
Risks & Opportunities Management (ROAM)
Important Part of Planning Process Uniqueness of Associated Techniques & Tools Identification and Evaluation of Both R & O Determine & Manage Planned Actions to Mitigate Risks Enhance Opportunities
Can Be Encountered at Any Point in Cycle
Integration Management
Work of Project Must be Integrated With Other Work of Organization(s) Scope of Project & Scope of Deliverables Deliverables from Various Functions (Technical, Business, Operations, ...) Plans, Designs, Resources, Contracts, Handling Risks & Uncertainties
Risks & Opportunities Management
Identification - Likely, Character & Effects
Technical - State of Art, Innovative, Leading Edge, ... Schedule - Most Likely, Pessimistic, Optimistic Cost - Unknowns, Stretch-Out, Work-Around
Quantification - Evaluation & Interactions that
Could Effect Outcomes Response Development Control
Risks & Opportunities Management
Map of Project Cycle - Define or Wander Sequence Models - Reviewing Progress Activities & Events - Disciplined, Orderly & Methodical Customer Needs & User Requirements Contracts for Product or Services Champion & Core Team
Risks & Opportunities Management
Determine - Scope, Timing & Funding Specification - Appropriate, Over or Under Define - Methods, Participants, Commitments Design - Operations, Allocations & Details Development - Functions, Model, Configuration Verification - Operations, Environments, Interfaces, Compatability, Interchangeability, Limitations, etc. Production & Delivery - Products & Services
Risks & Opportunities Management
Control Gates Requirements Review Design Reviews & Corrective Actions Readiness Reviews
Test & Verification - Correct & Redo Production - Accept, Reject & Rework Operations - Feedback, Correct & Improve Support - Materials, Manuals & Training
Risks & Opportunities Management
Society Values Risk Taking Not Gambling Risks - Chances of Not Achieving Results Opportunities - Chances for Progress and Advancement, and Improving Value Deciding To do Nothing To Take Preventive or Causative Action To Take Contingency Action Later if Triggered
Risks Management
0 Probability of Failure - Pf 1.0
Mitigate Probability & Consequence Toward Zero
Low
Adverse Consequence - Cf
High
Opportunities Management
0 Probability of Success - Ps 1.0
Manage to Enhance High Benefit & High Probability
Low
Benefit - Bf
High
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Medium
Low
Low
Medium
High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Medium Marginal Opportunity Low Risk Low Low Medium High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Excellent Opportunity Low Risk
Medium Marginal Opportunity Low Risk Low Low Medium High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Excellent Opportunity Low Risk
Medium Marginal Opportunity Low Risk Low Low Medium
Excellent Opportunity High Risk
High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Excellent Opportunity Low Risk
Medium Marginal Opportunity Low Risk Low Low Medium
Excellent Opportunity High Risk
Marginal Opportunity High Risk High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Excellent Opportunity Low Risk
Medium Marginal Opportunity Low Risk Low Low Medium
Excellent Opportunity High Risk
Marginal Opportunity High Risk High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Medium
Low
Low
Medium
High
Risk Assessment
Risk & Opportunity Assessment Model (ROAM)
High
Project Opportunity
Medium
Low
Low
Medium
High
Risk Assessment
Project Risks
Implementation Risks
External Risks
Funding, Political Support Shared Technology & Associate Performance
Internal Risks
Planning, Resources, Tools Skills, Subcontractors Performance
Project Risks
Product Risks
Risks of Failure Single Point Failure Modes & Untestables Limited Life Items & Expendables Process Sensitivities
Risks of Hazards Explosives, Flamables, Radiation High Voltage, Toxins, Potential Energy
Project Opportunities
Strategic Opportunities
New Markets & Products New Approach & Repositioning
Tactical Opportunities
Shorten Schedule or Reduce Cost Improve Processes or Value of Output Eliminate Unnecessary Activities Leverage R&D
ROAM Techniques Based on Analysis
Checklists Rules of Thumb/Standards of Performance System Decomposition Failure Mode & Effects Analysis Hazard Analysis, Fault Tree Interviews & Audits with Experts
Planning Techniques
Project Interaction Networks Critical Path & Configuration Items Schedule Slack Similar Efforts & Lessons Learned Technical Surveys Development Test Results Correction and Retest Completions
Planning Scenario
What if .? followed by then what? What Could Go Wrong? What Opportunities Might Become Available? Build a Decision Tree Market Situation Economic Trends
Failure Mode & Effect Analysis
Select Ranking Technique Identify All Single Point Failure Modes Analyze Failures & Mission Effect Determine Those Require Correction Implement Corrective Action Emphasize Doing Early in Project Cycle
Fault Tree Analysis
Select Most Significant Hazards to System/People Identify All Single & Series Failure Modes Analyze Failures & Mission Effect Correction Design and/or Invoke Procedures Limitations Define Boundaries for Safe Use Restrictions Define Not to Exceeds
Assess Probability & Impact
Weighted Value (ML & EL)
Probability of Occurrence Benefit of Opportunity Calculate Value
Examples of Prevention
Redundancy to Eliminate Single Point Failure Use Std. or Higher Quality/ Margin Parts
Quality Tools & Techniques Applied to Risk/Optun Mgmt.
Benefit/Cost & Cost Effectiveness Benchmarking Flowcharting - System or Process Cause & Effect, Fishbone, Decision Diagrams Failure Mode & Effect, Fault Tree Inspection, Sampling, Pareto Control Charts & Trends
Examples of Contingencies
Yellow Line or Area Limits Red Lines or Area Restrictions Establish Thresholds
Variance Analysis Triggers for Corrective Action Competitions Actions Use of Overtime & Expertise Supplements
Over-design for Reliability & Growth
At & a e fi lcn a e t R la M m s o i o n n g ok v ocp iC t e an T t r y a
y r r a R t Sln nt i t h p g tc so u i C o k e p o
H i g h
F F P
L o w
C P F F
F FF P F i i dc Pr x r - m i e e C-o l F F P C ux e F s s e e F t P id
At & a e fi lcn a e t R la M m s o i o n n g ok v ocp iC t e an T t r y a
r R t Cou i t hi t B so ln y k ee r e
L o w
F F P
H i g h
C P F F
F FF P F i i dc Pr x r - m i e e C-o l F F P C ux e F s s e e F t P id
Ca y - a A t o c p W lc nt e y l a t Ts r t o o e & aR Me k a n i gs
1 0 0 0 F P % %F F P E F P R F P I S F P I F C P I F C P A F C P F F C S C O S T 1 0 0 0 L O NES % I E R S RK N O M I % C T CU R P UR RC I OE S D RK
SELER
BUYER
Ca y ocp nt e t Ts r
C l % t lgn G m o u ooI a U v e s s f s l l S e n t P C ei ( on t r ) F-xP ( Pu S) i F r F( m r i d c FL u m e i e ) pm F i E mc d m F t co P Ate Pho i r j w nci e u n s t F - i Ievi Tt P i d cnter a ( I xP c i F r F) er e n me F g C Ch g o o a s t &- r s t i Sn C l Ieve P o uc i F I s s n e F t P nte ( ) C Cl A F P o u a e A s sw e F t P r ( d C) Cl F F P o ux e F s s e e F t P id ( C) I ei DrR T I ei # n n e yes p d t ) d t le( q y n n f e i i v ' t e f e , i T& rs i e Ml m ai ta e BAmB eua r d g a g e (a t r s On s r n l k ce ri ) i c e t nP e s ho e r
Contract Administration Risks Constructive Changes
Defective Specifications Impossibility to Perform Erroneous Interpretation Act of Over-inspection Failure to Disclose Superior Knowledge Acceleration of Performance
Contract Administration Risks Disputes & Default
Default
Failure to Deliver Failure to Make Progress Failure to Perform Contract Provisions "Cure" or Receive "Show Cause" for "Termination" Compensation? Repayment?
Disputes
Relief & Remedies Negotiation & Resolve Judicial/Legislative Terminate for Convenience Interpret/Resolve Ambiguity Eliminates or Changes Requirements Technology Advances Budgetary Considerations
