risk management is the key to success presented to the

DPA

21 Apr 2023E File ReferencePFG PPT TEMPLATE

1UNCLASSIFIED

PFG “Professional Services That Count”PFG “Professional Services That Count”

Space Projects

Risk Management

is the Key to Success

Presented to the

DPA

21 Apr 20232

UNCLASSIFIED2

AIMS

To create an awareness of some of the techniques that can be employed to complete

a successful

Project Risk Analysis

DPA

21 Apr 20233

UNCLASSIFIED3

Today’s Agenda

Background to the ProblemA Process to address the ProblemAn Example of a Project Risk NetworkSummary and Questions

DPA

21 Apr 20234

UNCLASSIFIED

PROJECT SUCCESS = on time, on cost, to spec

DPA

21 Apr 20235

UNCLASSIFIED5

BACKGROUND

NAO audits MoD’s Major ProjectsYearly monitor of Costs and TimescalesBenefits of SMART AcquisitionMoving towards a more informed forecast

DPA

21 Apr 20236

UNCLASSIFIED6

Defence Journal of the DPA - 2003

DPA

21 Apr 20237

UNCLASSIFIED7

Risk Maturity Assessment

WHAT IS A RISK MATURITY ASSESSMENT?

•to independently assess maturity of the risk management process

•to produce prioritised action plans for improvement

Initial Process

DPA

21 Apr 20238

UNCLASSIFIED8

© HVR Consulting Services Ltd

Example: Project 1 J une 2000Example: Project 1 J une 2000

1.0

(Max) Level 4

Natural

Level 3

Normalised

Level 2

Novice

Level 1

Naive

DPA

21 Apr 20239

UNCLASSIFIED9

MoD’s Risk Management Process

DPA

21 Apr 202310

UNCLASSIFIED10

IdentifyUse prompts, list and characterise

elementsInclude risk source, event consequences

& context of the riskOpportunities may also be revealedThink out of the boxEngage all stakeholders - IMPORTANT

DPA

21 Apr 202311

UNCLASSIFIED11

Analyse

DPA

21 Apr 202312

UNCLASSIFIED12

AnalyseTwo stage assessment processQualitative against agreed criteria

Probability of risk occurring Impact on time, cost and performance Display as a PIG Ownership of risk Where and when it could occur

Quantitative

DPA

21 Apr 202313

UNCLASSIFIED13

Quantitative stageDefine the measure of PROBABILITY e.g.

High >50%, Medium 20%- 50%, Low <20%

Define IMPACT on COST e.g. High >30%, Medium 10 - 30%, Low <10% or High >£250k, Medium £50k- £250k, Low <£50K

Define IMPACT on TIME e.g. High >30%, Medium 10 - 30%, Low <10% or High >6 months, Med 3m - 6 m, Low <3m

DPA

21 Apr 202314

UNCLASSIFIED14

Risk Register Serial No.

Risk Title

ActivitiesAffected

Probability

ImpactPerf. Cost Sched.

RiskReduction

OwnershipRisk Questionnaire Level 1

Sample summary Sheet

DPA

21 Apr 202315

UNCLASSIFIED15

Plan

DPA

21 Apr 202316

UNCLASSIFIED16

Plan

Classify Tolerate - No action but reassess Reject - i.e. not valid at this stage Handle - require action

Risk Handling Mitigation Strategies - risk reduction Fallback Plans - an alternative

DPA

21 Apr 202317

UNCLASSIFIED17

Risk HandlingMitigation Strategies

Terminate Treat Transfer Tolerate

Fallback or Contingency Plans an alternative taken up if a risk occurs trigger point set to allow sufficient time to be

effective

DPA

21 Apr 202318

UNCLASSIFIED18

Manage

DPA

21 Apr 202319

UNCLASSIFIED19

Proactive/ReactiveImplement

by the Risk Manager, Stakeholders, using the Risk Plan

Monitor Maintain Risk Records/Register, easy access

Review Use results of Qualitative/Quantitative analysis

Report Relevant & Concise analysed data

DPA

21 Apr 202320

UNCLASSIFIED20

Managing a ProjectWhy Plan? What do we need to know about the schedule?

Duration of the project Milestones Chances of achieving target? By how much?

What part of project needs special attention?

DPA

21 Apr 202321

UNCLASSIFIED21

Point Estimates

Conventional singlepoint estimate

0 95

Time

DPA

21 Apr 202322

UNCLASSIFIED22

Dur95225

402025182020105

351053

May Jun Jul Aug SepElement Description Project Total Design Design Approval Purchase L/ L Items Produce Drags Purchase Raw Matls Make Piece parts Purchase B/O Items Purchase Sub-Con Inspect Sub-Con Prepare Tech Docs Typeset, print & bind Assemble Test Pack & Despatch

Sample Network

DPA

21 Apr 202323

UNCLASSIFIED23

Reality !

0 95

Could be aslow as this

Could be ashigh as this

90 105

Time

DPA

21 Apr 202324

UNCLASSIFIED24

Cycling to WorkUncertainty:

Most likely - 30 mins

Minimum - 20 mins

Maximum - 50 mins 20 30 50Time

Risks:

Puncture? 3PE & Prob

Accident? 3PE & ProbTime

20 35 65

Risks

DPA

21 Apr 202325

UNCLASSIFIED25

Combining Risk with Uncertainty

• Achieved via Monte Carlo Simulation

• Works by simulating the project many times using the estimated distributions and plotting the outcomes

• Can be used for time or cost

• Achieved using a Computer Based Tool such as Predict, @Risk, Crystal Ball, ARM

DPA

21 Apr 202326

UNCLASSIFIED26

The Estimate Process

Risk Register3 Point Estimates

Cost10%-50%-90%

Confidence levels

Schedule10%-50%-90%

Confidence levels

Schedule3 Point Estimates

*

Modelling

Cost3 Point Estimates

DPA

21 Apr 202327

UNCLASSIFIED27

3 Point EstimatesElement Description Minimum Most Likely MaximumDesign 18 22 28Design Approval 4 5 6Purchase Long Lead Items 36 40 50Produce dwgs & Planning 17 20 25Prepare Tech Documents 20 25 40Purchase Raw Materials 18 18 18Purchase B/O items 17 20 25Purchase Sub-Con items 18 20 24Make Piece Parts 8 10 13Inspect Sub-Con items 4 5 6Typeset, Print & Bind 30 35 55Assemble 9 10 12Test 3 5 6Pack and Despatch 3 3 3

DPA

21 Apr 202328

UNCLASSIFIED28

Roll the dice !!

DPA

21 Apr 202329

UNCLASSIFIED29

Monte Carlo Simulation

Combined distribution =

DPA

21 Apr 202330

UNCLASSIFIED30

Probability of outcomes

Pro

babi

lity

%

Time

0

100

20

40

60

80

959085 100

Days

95 Days

42%

DPA

21 Apr 202331

UNCLASSIFIED31

Target Outcome

%Confidence

Range of Project Outcomes Target here?

NoProblemsExpected

100%

0%

Target here?

SeriousProblemsExpected

Target here?Manageable

ProblemsExpected

DPA

21 Apr 202332

UNCLASSIFIED32

Understanding the results

‘No problem’ targets are likely to be

inefficient and contain contingency Targets within the range of possible

outcomes are likely to be achievable and efficient

‘Serious Problem’ targets are likely to be unachievable.

DPA

21 Apr 202333

UNCLASSIFIED33

Criticality - Single Point

10

110

100

140

60

12040

90

13070

80

30

50

20START FINISH

Critical Path

DPA

21 Apr 202334

UNCLASSIFIED34

Criticality - 3 point

10

110

100

140

60

12040

90

13070

80

30

50

20START FINISH

Critical Path

DPA

21 Apr 202335

UNCLASSIFIED35

Criticality IndexActivity No. Node Criticality %

1 1002 1003 14 315 306 307 08 39 3

10 7311 7312 3213 3214 100

DPA

21 Apr 202336

UNCLASSIFIED36

Schedule SummaryRisk Record

Risk No. WBS Ref. Risk Title

Project

Risk Manager Tel. No. Risk Owner Tel. No.

Cat No. Plan No.

ProductionFFV2000

3 FFVP1Failure to Meet Reliability rtequirementsFFV1

J.Smith 1234 Contractor 4321

Risk Description

Earliest Occur Initiation Date Deletion Date Review Date

30-Jul-96 03-Jan-96 30-Jan-96

Required equipment reliability, as demonstrated on reliability growth trial equipment, is not achieved on production equipments as a result of productionisation and design changes.

Long delays to programme will be incurred as a result of design and quality changes necessary to improvethe reliability, coupled with a further trials programme to demonstrate achievement.Increase in costs will be incurred and equipment performance will not meet reilability requirements.

Impact Description

Pre Risk Score

Post Risk Score

Probability Cost Performance Time Score Band

60.00%

20.00%

1

1

3

3

3

3

1.400

0.467

Med

Low

XREF

PLANS

HISTORY

Phase

Prioritise RisksHighHigh

MediumMedium

LowLow

HighHighMediumMediumLowLow

Quantify Risks

Understand Results

Identify Risks

DPA

21 Apr 202337

UNCLASSIFIED37

Summary 1 Risk IdentificationRisk Identification

Break down the task, identify the risks and their responses

AnalysisAnalysis Model the individual elements and combine them to

form an overall result PlanningPlanning

Plan for corrective actions, risk reduction options and fall-back plan

ManagementManagement Carry out and monitor the plans

DPA

21 Apr 202338

UNCLASSIFIED38

Summary 2

GIGOGIGO

Stakeholder involvementStakeholder involvement

Take it seriouslyTake it seriously

Mandated Process in MoDMandated Process in MoD

DPA

21 Apr 202339

UNCLASSIFIED

PFG Risk-1 (Dave Burgin) PFG Risk-8 (Paul Woodward)

Mail Point # 2104

LARCH level 1a

MoD Abbey Wood , Bristol Tel No 0117-91-34382 FAX 0117-91-33970 E-mail - [email protected]

–More information ?? –DAWN Knowledge Base –PFG WEB Site

ANY QUESTIONS ?

PFG “Professional Services that PFG “Professional Services that Count”Count”