Constructing Excellence Berkshire Club Meeting Uncertainty Management: Dealing with Risk and Value Emma Major Major Value Consultancy Ltd

Introduction

Uncertainty Management: Dealing with Risk and Value Project Managers are well versed in the process of schedule risk management; but how many project managers also identify, analyse and manage the positive opportunities on schedules? Perhaps it is time for project managers to see Value and Risk Management of project schedules as the two sides of the same uncertainty coin.

Risk Management The process through which uncertainty is controlled is over the life of a project

Risk Management Process –Identify the Risks –Analyse the risks - probability and impact –Quantify the risks - effect to the project –Develop Risk Response Plans –Construct a Risk Register –Manage the process throughout the project

Value Management Process Background & Preparation for the Workshop Background & Preparation for the Workshop Information Stage Function Analysis Idea Generation Idea Development Decision Building Action Plan Idea Evaluation How?Why? Function Analysis Records Storage Library Car Park Training Room Qua lity Fac ility Self Catering Safe Secure Easy to Clean Showers Appearan ce Provide Capacit y Use of Redundant Facility Durabilit y Co- locate Facilities User friendly Rest Leisure Smoking Improv e Morale Counselli ng Facility Quick and Easy Access Open view (Booking On) Comms Satisfy Locals/ Authority Maintenan ce Buildabili ty Abuse Resistan t Meet Statutory Requirement s Minimise Disruption during construction Speed of Constru ction Flexibilit y 33 Trains per hour Toilets Male/Fe male Mobility Impaired

Uncertainty Management How does Risk Management deal with the negative risks? How does Value Management manage the risks?

Why Uncertainty Management? Why identify uncertainties? –Optimise project delivery –Reduce abortive work –Increase value –Develop the relationship between positive uncertainties (value) and negative uncertainties (risks)

When to Commit? 80% COSTCOST TIME Concept Feasibility Design Construction Use

When is the best Opportunity? COSTCOST TIME Concept Feasibility Design Construction Use Potential for change Resistance to change Cost of change

Implementing Uncertainty Management

Linking Risk and Value Analysis –Agree the project function –Identify uncertainties that impact outcome –Evaluate the uncertainties into a prioritized listing –Develop the uncertainties to understand probability and impacts on the project and its function –Decide which of the uncertainties to manage in the short, medium and long term and assess the impact –Develop an action plan with managers –Review uncertainties and repeat

Benefits for Management –Optimised projects and businesses –Achievement of Best Value –Clarity and transparency of decision making –Greater understanding of the risks involved –Reduced resource requirements due to the resultant economies of scale –Raised awareness of the relationship of value opportunities and their associated risks

Heads or Tails Uncertainty Management Questions?

Interactive Worked Example

Building a House Extension Brief: Extend a house to double the size of the kitchen and provide a conservatory style dining room

Process 1 - Agree the Function of the Project 2 - Identify uncertainties 3 - Rank uncertainties 4 - Develop management responses and actions for the key uncertainties 5 - Uncertainty Analysis 6 - Review the outcome from the process

Function Analysis What is the project function? –Increase Space Extend Kitchen –Provide storage –Additional sink –Informal dining Provide Dining Room –Entertaining Space –Conservatory –Garden doors

Identification Identify Uncertainties Negative –Disruption to the household –Delivery is later than expected Positive –larger extension possible than envisaged –remodelled garden provided if work undertaken in summer

Ranking

Management How do you minimise the risks and ensure the opportunities occur? –Review the project in line with the uncertainties –Action Planning –Uncertainty Manager to ensure benefits are achieved

Uncertainty Analysis Evaluate the actual time and cost changes that could be achieved Model these using Monte Carlo Risk Analysis Software Include an uncertainty range within the project to ensure accurate reporting

Heads or Tails Uncertainty Management Questions?

For further information Emma Major Major Value Consultancy 14 Allonby Close, Lower Earley Reading RG6 3BY. UK +44(0)