project value risk management achieving the wow factor on your projects

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© Copyright Risk Masters, Inc. 2013. All rights reserved. 1 RMI Risk Masters, Inc. PVRM - Project Value Risk Management Focusing on making your most critical projects successful June 2, 2013

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Page 1: Project value risk management   achieving the wow factor on your projects

© Copyright Risk Masters, Inc. 2013. All rights reserved. 1

RMI Risk Masters, Inc.

PVRM - Project Value Risk Management

Focusing on making your most critical projects successful

June 2, 2013

Page 2: Project value risk management   achieving the wow factor on your projects

© Copyright Risk Masters, Inc. 2013. All rights reserved. 2

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• It is very visible…– Within the firm– To customers

• It is important to your company…– To achieve its strategy– To meet its financial goals– To enhance its reputation– To gain market share– To maintain its lead over our competitors

• And it is important to you!

You have a very critical project

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• Technology…– You are using new

technologies for the first time• Resources…

– Funding is limited– Time is short– Turnover is high

• Process…– There are governance issues– Requirements are difficult to

pin down

• Internal Environment…– Leadership is in transition– Datacenters are being

consolidated– Your network has been

hacked• External Environment…

– A supplier’s network has been hacked

– A supplier is struggling with new technology

– A supplier has been acquired

Risks you face…

And key opportunities may be overlooked

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• Your company’s reputation will suffer• Your customers will consider alternate suppliers• Your company’s strategic and financial goals will not

be met

• An “OK solution” is just not good enough• A “failed solution” just cannot happen• Exceeding expectations is better than just meeting

them

• You are responsible for success, and anything less than the best won’t do…

Consequences you face…

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• Success is more than simply achieving objectives – the baseline against which managers are measured

• True success comes from a better product, ahead of schedule, below budget.– This can only be achieved by anticipating the obstacles to success and

taking advantage of expected and unexpected opportunities– Risk can never be eliminated but it can be managed to the benefit of the

project owners, the project team, and all who are involved

Adding Value by Managing Risk

Expe

ctati

ons

Time

Predicted project endCost overrun

Resource shortage

Delivery delay

• Sooner• Less costly• BetterManaged Risk

“Pay as you go” Risk Management

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• Project Value Risk Management (“PVRM”) will…– Enhance the quality of the product that is delivered– Mitigate the risks that threaten the success of the project– Reduce the overall actual duration and costs of the

project– Empower you to be better informed about the real status

of the project, and therefore more able to influence its outcome

For these critical projects…

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• An experienced IT Leader is assigned by the project’s Sponsors as the “Project Value Risk Consultant” (PVRC)

• The PVRC works with the project team to jointly identify risks and opportunities, develop plans to mitigate the risks, and assess the value and impact of the opportunities.

• Risks are tracked on a Risk View Spreadsheet that enumerates and categorizes the risks, assesses their impact, tracks mitigation and status, and calculates the chance of impact (Appendix A).– With this, Risks can automatically be grouped, analyzed and studied

• The PVRC works with the project team throughout the lifecycle of the project to develop and present to the Executive Sponsors a periodic report of Risks, Opportunities and Actions Taken (Appendix B).– The guidance of the Sponsors is then incorporated into the Project Plan

How PVRM Works…

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• QRM is the systematic application of quality management policies, procedures and practices to the tasks of assessing, controlling, communicating and reviewing risk

• QRM improves the project throughout its lifecycle

• QRM involves four steps– Risk Assessment– Risk Control– Risk Review– Risk Communication

More than Quality & Risk Management (QRM)

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• Project Managers are tasked with managing risk, among other activities. – PVRM supports this role through skill, experience, and having the

time/ability to focus on risk as a dedicated task• A Project Manager is responsible for everything but is rarely expert in all

aspects of a project…including Risk Management – PVRM empowers the Project Manager, as do Subject Matter Experts

• PVRM looks beyond organizational constraints to provide Senior Management with a perspective independent of accountability for delivery

• PVRM gives the project customer and Senior Management a surrogate to ensure their satisfaction, and more

More than project or risk management

Page 10: Project value risk management   achieving the wow factor on your projects

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• The skills and techniques of managing risk and opportunity…– Become core competencies of the project team– Enhance communications, escalation and awareness of risks and

opportunities– Leverage the benefits of project management to perform the project

effectively– Leverage the benefits of QRM to make the project better

PVRM integrates QRM with Project Management

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RMIPVRM is a continuous and integral part of a project

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• Adds risk identification, management and mitigation to the project work-stream

• Changes how project risks and opportunities are managed– The entire project team is engaged in actively identifying, managing

risks and opportunities– Risks and opportunities are identified and assessed early, tracked

effectively and resources are focused efficiently and effectively mitigating the risks and realizing the opportunities

– Senior Management and the project team become aware of key risks before the risks become self-evident or otherwise impact the project

PVRM helps anticipate problems

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• The project can be more focused on opportunities…– Addressing activities to make the project more successful– Mitigating or even avoiding risks that might lead to significant time and

cost overruns• While spending less time on obstacles

– Reacting to the unexpected– Invoking contingency plans, time and budget

• Senior Management is better informed of these opportunities and roadblocks– Enabling you to bring experience and appropriate resources to improve

the outcomes

PVRM transforms how the project is delivered

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Opportunity Area Typical Cost, as “% of Project”

Opportunity

Planned Contingency 20% Cost/Time avoidance

Hidden contingency embedded in schedules, resource plans and budget

20% Cost/Time recovery

Unplanned Rework, Overruns and Delays 20% Cost/Time avoidance

Total 60%

PVRM can help eliminate cost overruns

• Every project has a planned contingency

• But there are also hidden and unplanned contingencies that PVRM can manage in order to reduce your costs, eliminate duplicative efforts, and mitigate the chance overruns

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• Projects that fall behind schedule usually do so because of– Inexperience and lack of qualified staff– Staff turnover– Insufficient lead time for critical resources– Overly optimistic estimates of costs, workloads and task durations– Poor internal and external communications and escalation– A lack of understanding of the customer’s actual requirements

• These are all risks that can be anticipated and dealt with– If senior, experienced leadership is engaged on an on-going basis

throughout the project life cycle– PVRM leverages retained experience and seniority to extend the reach

of Senior Managers who cannot or will not give their time and energy to the project

PVRM can help reduce project duration

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• PVRM applies the engineering disciplines of Quality Management to major projects– Understanding buyer needs, beyond written specifications– Bridging the communications gap between customers and developers– Reducing – or eliminating – seemingly endless rounds of

disappointment and revisions– Fostering collaboration internally within the project team and externally

with Subject Matter Experts– Ensuring the polish, professionalism and “surprise and delight” of each

interim and final project deliverable

PVRM can lead to higher quality project deliverables

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• At the program level

• At the project level

• At the work-stream or activity level

PVRM can be used in many levels of a project

Relocate Datacenter

Build New Datacenter

Design, Permits & Contracts

Build & Certify

Staff the Datacenter

Relocate Staff

Hire Staff

Migrate to Datacenter

Consolidation

Migration

PVRM activities can be focused on areas of greatest risk or opportunity, as needed

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PVRM Effort

PVRM ScopeReporting Reporting and

MonitoringReporting, Monitoring

and Improvement

Low Periodic Reporting of Risks and Opportunities to Senior Management

Medium Risk Monitoring and Tracking for the Project

High Workshops to Identify Opportunities,

Eliminate Roadblocks, and Enhance Value

PVRM can be tailored to meet Management’s needs

The scope of a PVRM engagement can be…• Limited to Senior Management Reporting• Expanded to include Risk and Opportunity Monitoring• Further expanded to include workshops to pro-actively improve the project

and its outcome

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PVRM Scope PVRM ActivitiesReporting • Conduct preliminary meetings with leadership and project team

• Develop preliminary assessment• Review preliminary assessment with project team• Develop consensus• Document findings, consensus, issues and recommendations• Present to leadership and project team

Monitoring • Participate in project team meetings• Document tasks, timelines, contingencies, commitments, issues• Assess all items and provide feedback to project team• Update “living documents” and report periodically

Improvement • Work with project team to identify issues, opportunities and obstacles• Conduct meetings and facilitate dialogues to address identified items• Consult with leadership on findings and strategies• Document findings, conclusion and agreed upon actions• Incorporate into monitoring and reporting materials, above

Typical PVRM involvement

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Table 1: Risk Summary ReportThis report quantifies the Fatal and High Risks and the probability of at least

one of each occurring

(The data below is calculated automatically from the Risk View shown in Table 2 on the next page)

Appendix A: Risk Review Worksheet

Risk SeverityNumber of Risks

Probability at Least 1 Open Risk Item

OccursClosed Open

Risks that would have a FATAL impact 0 2 91.0%Risks that would have a HIGH impact 0 1 25.0%Total for Risks with a FATAL or HIGH impact 0 3 93.3%Sample

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Table 2: Risk View of ProjectSection 1 Enumerates and Categorizes Project Risks

Section 2 Assesses Impact and Tracks Mitigation and Status

Appendix A: Risk Review Worksheet

Magnitude Impact on Project Outcome Mitigation

# Description of Risk (text)Likelihood

(Table)Liklihood Chance

Impact (Table) Cost Time Qual Fit Other (text) Strategy (text) Status (text)

Open Close

q q   q q q q q q q q q

1 Requirements may be late Medium 50% Medium Y Y Open

2 Requirements may not reflect business needs Very High 90% Fatal Y Open

3 Hosting servers may be late Low 25% High Y Open

4 Development may complete late Low 25% Low Y Y

5 Design may complete late Nil 0% Low Y Y

6 Tablet version may not deliver all functionality Certain 100% Medium Y Y Open

7 Screens may not render exactly as in requirements Low 25% Nil Y Y Open

8 Business may cease to be viable Very Low 10% Fatal Y Open

Description of Risk (text)

Businnes

Process or Channel (Table)

Owner (name)

Date Last Update mm/dd/yy# Cause of Risk (text)

Risk Category (Table)

Date Added mm/dd/yy

q q q q q q q1 Requirements may be late Teams unable to meet on a timely basis due to conflicts Process Requirements 2 Requirements may not reflect business needs User team is junior and lacks leadership presence Process Requirements 3 Hosting servers may be late Vendor is back-ordered Environmental Deployment 4 Development may complete late One developer just resigned Resource Development 5 Design may complete late Team is new to designing for Tablets rather than PCs Technology Design/Usability 6 Tablet version may not deliver all functionality First time team is using Tablet toolset Technology Architecture 7 Screens may not render exactly as in requirements Tools for requirements are Generic Technology Design/Usability 8 Business may cease to be viable Pending legislation may obviate business need Other Governance Sample

Sample

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Risk Area Current Status and Assessment Risk AssessmentDevelopment Progress

Development team has made good progress and developed and launched into production System 1.0. Team is preparing for production release of System 1.1 with client-critical enhancements

Team turnover has been increasing. Risk Team is working on mitigation strategies.

QA Tools for acceptance of System 1.1 require a vendor upgrade. Some risk regarding stability and effectiveness of the upgraded tools. Mitigation plan being developed

Program Delivery

Status of program of this size and magnitude is on track as if it were being delivered to a client, with appropriate mitigation of risks, knowledge of issues, and team maturity.

While a program of this size and magnitude will have a significant number of challenges, issues, and risks, the program is being professionally managed with good mitigation and management of issues and risks. All of these issues and risks are normal for a project at this stage of development. The team should continue to manage as it has in the past and professionally execute as if the products were being delivered to an external client.

System Operations & Support

The solution will present deployment, adoption and operational challenges to all Departments. Procedures, instructions and Help Desk support need to be further developed and discussed with each Department.  This is time critical for the first Departments to deploy.

The team has developed good documentation to support the implementation from a technical infrastructure perspective, along with high-level plans for an appropriate support structure. Given the complexities of implementing a new system, the team should further refine these plans, working with each Department to understand the complications and intricacies of deployment. The team should anticipate an increase in support needs following rollout

Nomenclature & Branding Confusion

Nomenclature and branding confusion exists between new System and legacy one in use. Need for greater clarity around how methodology, behavior changes, and technology deliver transformation.

Continue reinforcing messages around the scope including methodology, technology, and technology. Departments need to recognize the broad scope to understand how each of the core components work together to reinforce ongoing transformation of business. Renaming of the transformation initiative will help avoid the branding confusion.

Appendix B: Periodic Risk Report (Example)