government office for the north west objective 2 24/25 th february 2003 apps risk training workshops
TRANSCRIPT
The need for better risk and programme management
Imminent & continuing threat of decommitment
Urgent requirement to mitigate risks and reallocate funding to minimise funds lost
Need for a more proactive approach to programme management
Opportunity to improve programme management capability within GONW & APPs
Context: Reebok event, mid-term review
Risk management information system
Focus on spend; ultimate importance of outputs
Shared resource: only as good as information inputted
Co-owned system: need feedback from partners to improve
Realistic forecasts: measure of project management capability
Normal part of project management: more systematic structured approach
Objectives of workshop
To establish the basis for inputting to the new management information
To develop a common understanding of risk assessment and its role in project management
To provide some good practice benchmarks and guidance on its use in an APP context
Agenda
Richard Caseley The risk form
Heather Heaton Risk assessment and its role in project management
Glyn Roberts Risk in the context of APPs
Working session
Risk Form
Overview Inputs – clarification of requirements Practical usage issues Outputs / benefits for active management
Overview
Claim profile &decommitment risk
Clear & timely
management info
RISK FORMClaim Form Risk Register
Improved project management
capability
Inputting
Web-based tool using GONW server and linked to interactive claim form (ICF) to avoid double-entry
Claims not outputs are main focus Inputs to come from projects via APs:
Each AP will have 1 password with which it can access all of its projects
Each project will have its own password Data input by project AP reviews data and issues to EPS
Inputs required
Data imported from Interactive Claim Form – inputs to Risk Form minimised
Basic input for all projects, more details for approved projects
informs on delivery and pipeline Input level
P1, P2 - project level P3 - claim element
Monthly input
MilestonesMilestone Phase
0 – project synopsis (project identified, described and quantified in terms of cost and outputs)
Unallocated money
1 – completed ERDF form submitted to AP
Projects in pipeline
2 – AP issue signed offer letter to project, with contracted claim profile
Projects delivering but not yet claiming
3 – 1st financial claim
Projects delivering and claiming
4 – last claim
Spend profile variability
010,00020,00030,00040,00050,00060,00070,00080,00090,000
100,000
Mar
-03
Jun-
03
Sep-0
3
Dec-03
Mar
-04
Jun-
04
Sep-0
4
Dec-04
Mar
-05
Sp
end Min
Most likely
Max
Benefits - general
Reports at AP, county/sub-region, priority and programme level
Regular management reporting Most probable claim Minimum and maximum possible spend Forecast vs actual Focuses on biggest variances Claim profile Timeline for projects (and claim elements for P3) Visibility of pipeline
The Risk Register
Decisions about spend variability in the Risk Form are based on the degree of risk inherent in a project
A Risk Register is a tool for Understanding the nature and level of risk Managing risk effectively
Risk management – the basics
The concept of risk Its role and relevance in project management Assessment of risk Management of risk
What is risk?
… any potential threat or occurrence which may prevent objectives being achieved in terms of:
- Timescale
- Cost
- Quality/benefits
Risk Management Process for each project
Brainstorm Risk Identification RiskRegister
Risk Analysis
Risk Management
•Eliminate•Mitigate•Transfer•Accept
Risk tools
Risk register Advisory Helps to prepare for the risk form Useful management & review tool Can be used at different levels of sophistication
Risk form Required Will be used to assess likely spend profile Will assist in reallocation decisions
Brainstorming the risk register
Think of all the possible risks which the project faces
Note them down, being careful to define them clearly
Note the phase of the project they are most likely to impact
Risk Time (T) Cost © Quality (Q) Impact (I) Probability (P) Severity Rankingnext 1/4 Dec-03 whole life 1-5 1-5 1-5 T+C+Q 1-5 I x P
Stage
Assessment of Risk
IMPACT Risk’s effect on cost/time/quality, if it occurs An impact is an effect on £ or days or deliverables
PROBABILITY Likelihood of the risk occurring Expressed as a % chance
Assessments are input to the risk register
Classify impacts as VL / L / M / H / VH on scale 1-5 Risks around outcomes & outputs should be
considered but are not relevant to the risk form at this stage
Risk Time (T) Cost © Quality (Q) Impact (I) Probability (P) Severity Rankingnext 1/4 Dec-03 whole life 1-5 1-5 1-5 T+C+Q 1-5 I x P
Stage
Combined impact
A simple sum of the time cost & quality effects
Risk Time (T) Cost © Quality (Q) Impact (I) Probability (P) Severity Rankingnext 1/4 Dec-03 whole life 1-5 1-5 1-5 T+C+Q 1-5 I x P
Stage
Consider the likelihood of the risk occurring
Very low Low Moderate High Very High
Risk Time (T) Cost © Quality (Q) Impact (I) Probability (P) Severity Rankingnext 1/4 Dec-03 whole life 1-5 1-5 1-5 T+C+Q 1-5 I x P
Stage
Impact and likelihood combined are used to rank risk
Impact
of
Risk
High Medium High High
Medium Low Medium High
Low Low Low Medium
Low Medium High
Likelihood of risk occurring
Risk ranking & prioritisation
Impact x probability = score Higher score = higher risk Rank and prioritise actions accordingly
Risk Time (T) Cost © Quality (Q) Impact (I) Probability (P) Severity Rankingnext 1/4 Dec-03 whole life 1-5 1-5 1-5 T+C+Q 1-5 I x P
Stage
Linking project risk assessment to risk form inputs
Take an overview of the project’s risk register Consider the overall degree of risk around the
project’s delivery In terms of the value of claims In terms of timetable
Greater risk will mean greater variability In claim forecasts In delays and durations
eg greater difference between max & min claim forecasts for higher risk projects
Spend profile variability
010,00020,00030,00040,00050,00060,00070,00080,00090,000
100,000
Mar
-03
Jun-
03
Sep-0
3
Dec-03
Mar
-04
Jun-
04
Sep-0
4
Dec-04
Mar
-05
Sp
end Min
Most likely
Max
Management of risk
Identifying mitigation Allocating responsibility The importance of regular review
Risk management
Identify reasonable mitigation action Allocate a risk owner Set a date for review
Risk Ranking Mitigation Owner Review
1234
Questions to ask at review Each month consider:
Are all risks still relevant? Are there any new risks? Have they been mitigated as far as possible? Has mitigation reduced their likelihood or impact?
Update risk register Update risk form
Risk review is an essential component of good project management
Risk Review Allows:- Tracking of risk mitigation actions
- Up-to-date accurate forecasting
Risk Review May:- Lead to project modification / re-structuring
- Lead to project cancellation
APPLYING RISK ASSESSMENT/MANAGEMENT
The Task Key risk principles Other funds risk requirements Typical Risks Key Stages for Assessment/Management Dealing with Common Risks Timing & extent of process
Delivery of Action Plan contract
Partnerships responsible for PROACTIVE management
… and report back to EPS if problems
Does Action Plan need adjustment?
Objectives
Key Principles
Understand risk assessment
Understand the projects
Risk Awareness
Common Sense (not rocket science!)
Consider risks to: Claim levels/profile (underspend/overspend/delays)
Outputs (undershoot) Outcomes - quality
Other Funders’ Requirements
• Match funds require risk assessment in appraisal • Not much detailed guidance• Tend not to emphasise risk management • SRB Appraisal Guidance:
• identify & consider each component of risk• take steps to minimise 'downside risks' (that make
project under-perform)
• Similar - RDA, Lottery Funds, EP Gap Funding
Generic Risk categories Funding e.g. no & types of sources Political risks/approvals Management capacity/capability Accommodation & equipment Cost escalation & overruns Market risk e.g. insufficient demand
Typical Risk Categories
Typical Risk Categories
Additional Priority 3 Risk Categories- Land acquisition - Unanticipated Site Issues - Legal Risk - Contractual Risk Other risks - examples:- 3rd Party actions- Underspend- Overspend- No claim- Weather- Costs associated with transfer to private sector
Project risk process
- Risk register (guidance approach/other)
- Identify risks for each element of project
- Plan of action – risk plan
- Take action
- Performance review to track results
Ongoing risk assessment in project management
Start early for greatest benefit Part of project appraisal
Identify mitigation and allocate clear ownership within project team
Project Manager to manage risk and review regularly (monthly)
APs may need to take more of a lead for Priority 2 projects
Dealing with Common Risks
APPs & EPS should consider:- Any pattern of common risks in groups of projects?
- Ask questions
- Collaborative or across the board actions to mitigate common risks? (as started from Reebok)
Even with good assessment unforeseen risks often arise therefore…
Risk assessment & mitigation a continuous process - To project completion/exit/succession- Not just at development & appraisal
Link to monitoring and evaluation- Feedback experience
Build capability to deal with risk
Pulling it all together
Risk analysis software combines all the project level information to provide An overview at AP level An overview at GO level
At Action Plan level
Report will show profile and variability of total AP spend
AP will be able to target mitigation actions appropriately
Overprogramming decisions can be made on the basis of robust analysis
AP may choose to reallocate funds between projects
AP may voluntarily decommit funds for redistribution
At EPS level
Level of management intervention will be proportional to capability displayed In forecasting In delivery
Programme wide analysis will inform decisions about Reallocation of funds between APs Decommitment Overprogramming
Risk Analysis ProgrammeDate Activity
Now APs undertake risk assessment at project level
mid March Risk Form website goes live
Early April Completed risk forms required back from APs for all projects
Late April EPS issue management reports (output from risk analysis) to APs
Ongoing Process repeated each month ie APs complete Risk Form, EPS run risk analysis and issue reports to APs, APs use them to actively manage their projects
Outcomes of workshop
A basis for inputting to the new management information
A common understanding of risk assessment and its role in project management
Some good practice benchmarks and guidance on its use in an APP context