Risk Management
Vignesh Sivadass
Lecture3Mv12.pptMANG 6143
Project Risk Management
Mario Brito
Ten key shortcomings of many common practice project risk management processes are provided now to indicate where this course is going, using two lists of five.
You should understand the nature all ten of these concerns, and how to resolve them, by the conclusion of the course, but explanations will have to emerge as the course proceeds.
The first five
| A capture phase equivalent which is clarity inefficient, with common omissions like the lack of a clear basis for a shared understanding of all relevant objectives, measurable or not, with an orderly process in place for considering all relevant trade-offs between objectives in opportunity efficiency terms. A select & focus phase equivalent which is not used as a flexible basis for selecting and adjusting the process to the context of each project and modifying the process as the lifecycle progresses from concept strategy to project termination. A select & focus phase equivalent which is unclear about the motives for the process in relation to the various interested parties, or the links between motives for the analysis of uncertainty, opportunity and risk and the models selected. Silo separation of the phase equivalents to the create & enhance plans plus the shape base plans phases, with results like early plans which are far too detailed in terms of activities but lacking clarity about uncertainty, including the relevance of all seven Ws, the way uncertainty will reduce as the project lifecycle progresses, and the way the business financial cash flow models used are driven by all other plans. An identify phase equivalent which is limited to event based uncertainty, which cannot cope effectively with composite uncertainties, and which fails to structure sources of uncertainty and associated risk and responses usefully, often generating excessively long and detailed ‘risk registers’ that address minor issues in excessive detail but are completely blind to sources of uncertainty which really matter. |
The second five
| Absence of a structure phase equivalent, with little evidence of robustness testing or effective structuring decisions, including the lack of a significant search for common or general responses and a failure to identify significant linkages and interdependences between important sources of uncertainty. Lack of an explicit ownership phase equivalent, with resulting inadequate attention to the implications of contractual arrangements for motivating parties to manage uncertainty, including inappropriate use of simplistic contracts. A quantify phase equivalent which is costly but not cost effective, ineffectively linked to earlier qualitative analysis, resulting in biased estimates that are usually highly conditional on scope assumptions and other assumptions which are lost sight of or never identified. An evaluate phase equivalent which combines different sources of uncertainty without capturing crucial interdependencies, which does not provide the insight to clarify how revisiting earlier analysis can clarify uncertainty and help to develop effective responses which will facilitating achieving risk efficiency and opportunity efficiency, or demonstrate the robustness of key choices when necessary. Absence of an effective iterative process structure which embeds the features of all nine SPP phases and a failure to distinguish planned iterations which involve limited costs, successive applications of an iterative process as a project lifecycle progresses, and unplanned iterations to deal with surprises which are costly. |
Part one review, questions and discussion
Part two – the basic SPP phase by phase
with a high clarity initial focus
- Most of the time we will assume a high clarity approach is required, but we will also explore directly related lower clarity approaches and the way high clarity approaches can inform lower clarity choices, using high clarity examples in a manner which is comparable to the way some people employ ‘useful theory’.
- For related reasons, most of the time we will assume that the project of interest is in the E&D (execution and delivery) strategy stage. But we will also explore the DOT (design, operation and termination) strategy stage and the concept strategy stage in a preliminary manner, with a focus on the nature of key interdependencies and their importance.
- Also for related reasons, most of the time we will assume a client’s perspective, but we will explore a contractor’s perspective as well, with a focus on the nature of key contractor-client interdependencies and their importance.
The process as a programme of projects
- Within each stage each phase is a project – you can use the linked bar chart (Gantt chart) portrayal to manage phases within stages and the activities (tasks) within phases.
- At a project stage level ‘the programme’ is a portfolio of 9 projects.
- At a complete full lifecycle level the portfolio needs holistic management.
- Everything we know about good project, programme and portfolio management can be brought to bear on managing the process.
- This includes uncertainty management in a project management context.
- Portfolio, programme and project uncertainty management distinctions are a question of degree for present purposes, a process ‘driver’.
- Most of the time our discussion will focus on high clarity management of an asset delivery project involving a physical asset for illustrative clarity, but all of the course concepts also apply to managing processes.
Process ‘drivers’ and linked assumptions
When looking at each phase in detail, what is involved is a function of process ‘drivers’, so we have to make assumptions for discussion purposes. Some key process drivers (and the related assumptions) are:
strategy / tactical level of the project (strategic),
perspective and motives (client wanting holistic insight),
learning curve position (low down, more generally those involved have limited capability-culture development so far in this area),
decisions of interest (shaping strategic plans for the assumed stage).
The process phases, explored one phase at a time
We will start with the ‘basis of analysis’ part of the process, then consider the rest of the ‘qualitative analysis’ part of the process, and finish with the ‘quantitative analysis’ part of the process.
The capture the context phase
- The capability-culture issues are always important in all phases, in terms of those doing the analysis and those interpreting it to make decisions.
- This phase involves problem structuring ‘craft skills’ (like knowing when and how to decompose activities), a key aspect of the modelling skills required by the person in charge of leading and shaping the process, the ‘process manager’.
- All ‘process staff’ require basic ‘facilitator’ interpersonal skills.
- The importance of anticipating a very simple strategic level activity (task) structure and other seven Ws structures aligned with the nature of the sources of uncertainty involved, revising these structures as the analysis proceeds if appropriate, and generalising this to all aspects of the project context.
- The need to move from an E&D task orientation to an objectives orientation addressing all seven Ws.
- The multiple key roles of the project lifecycle framework and the role of the seven Ws plus the goals-plans relationships frameworks.
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Key project definition questions – the seven Ws
what
the design of
the product
of the project
who
all project parties
ultimately involved
plans for
relationships
and contracts
plans for
operations
why
project motives:
profit and
other motives
plans for
business case
purposes
wherewithal
resource
plans for
activities
when
integration of all
plan-based
timetables
whichway
plans for
activities
resource
plans for
operations
where - the location of the
project and all the relevant
wider context issues
Capture phase specific tasks
the project parties
the project design
the project objectives
the wherewithal plans
the project timing
the project lifecycle
deliverables fit
for purpose?
no
yes
complete
the focus
phase
elaborate
and resolve
start
the
process
consolidate
the whichway plans
the project context
Case study: Development of an for fraud prevention with Hunter
- Customers making a credit application want the best service but also want to be protected against fraudsters and identity theft. You have to balance protection while giving your genuine customers the best decision in the shortest possible time. Hunter gives you accurate application fraud protection for customers and business to help deliver an uninterrupted experience to genuine customers.
- Who's it for? Organisations that need to protect customers using applications across multiple channels for robust fraud protection.
- How it works. Hunter prevents application fraud by highlighting suspicious applications, allowing you to investigate and prevent fraud without inconveniencing genuine customers. Hunter matches the application data against multiple data sources including your fraud data, the device the application is made on as well as shared fraud databases, mortality data and dedicated ‘watch lists’. It uses customised rules to cross-match data sources to highlight inconsistencies, as well as matching it to known fraud data. The results are measured to give a level of fraud risk. The suspicious applications are moved into the investigation tool for further analysis and action.
- Source: https://www.experian.co.uk/business/identity-fraud/fraud-management/hunter/?utm_medium=internalRef&utm_source=Consumer%20Services
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Four crucial common tasks for all phases
Document – record in text, tables and diagrams, with a view to ease of understanding for all parties involved.
Verify – ensure all providers of information agree as far as possible, and important differences of opinion are highlighted.
Assess – evaluate the analysis to date in context to ensure that it is ‘fit for purpose’.
Report – release verified documents and present findings as appropriate.
The value of knowledge which has been captured in a suitably structured accessible form can be enormous, during a project, and during subsequent related activities.
