1. Trigo White Ltd Practical project risk assessment VIII Conferencia Internacional Hotel Tivoli Oriente, Lisbon 28 th November 2014 Simon White Consultant, Trigo White Ltd +351 965 758 479 simon@trigowhite.com

2. Trigo White Ltd Risk management services Risk Management Plan development Risk workshop facilitation Qualitative risk assessment and analysis Risk register review Risk process design / review / implementation / audit Quantitative risk assessment and analysis Industry best practice Over 20 years’ consulting to a wide variety of industries Add value with risk management

3. Trigo White Ltd The risk workshop Valuable discussion: assumptions, inter-discipline issues, allows honesty Structured approach, best practice Engage project team, management and stakeholders Skilled facilitation, ensuring contribution from all team members, keeping focus Identify, discuss and qualify risks –Cause, risk, effect –Probability (H / M / L …) –Impact on schedule, cost and safety, production, operations (H / M / L …) Capture mitigation options and fallback options Effect of mitigation Agree action owners and deadlines Make decisions – is it worth mitigating?

4. Trigo White Ltd The risk workshop Risks can be ranked and summarised Give focus on mitigation Establish agreement Demonstrate robustness What are our top risks?

5. Trigo White Ltd The risk register A useful live project document Prioritise, categorise risks Ranking, reporting of key risks Focus risk mitigation Track mitigation actions – progress and effectiveness Keep risk visible throughout planning and execution Risk analysis adds more value …

6. Trigo White Ltd Inputs for a risk analysis Base schedule (WBS) –Around 50-300 activities –“Forward-driven” logic –Can use existing schedule, or create in a workshop Base cost estimate (CBS) –Around 20-50 high-level cost elements –Allowances / contingency identified Any risks already identified

7. Trigo White Ltd Quantitative risk assessment Quantify significant risks –Probability (%) –Schedule impact in days: P10, P50 and P90 (if it occurs) –Cost impact in £: P10, P50 and P90 (if it occurs) Associate the risks with the schedule activities (WBS) –E.g. “Delay to lift vessel arrival” will impact installation activities Associate the risks with the cost elements (CBS) –E.g. “Delay to lift vessel arrival” will impact topsides cost (optional)

8. Trigo White Ltd Quantitative risk assessment Further quantitative assessments –Schedule variance (-10% / +30% for engineering activities) –Cost variance (-5% / +10% for jacket fabrication cost) –Variance accounts for: Estimating uncertainty Risks not specifically modelled –Correlation (topsides fabrication costs are uncertain because of common causes) –Series / parallel impacts (poor weather and lift vessel delay are in parallel)

9. Trigo White Ltd Quantitative risk analysis The risk model shows the effect of the assumptions on the overall project Contingency at P90 = 6.6

10. Trigo White Ltd Quantitative risk analysis The total contingency can be shown (on average) against the individual costs

11. Trigo White Ltd Quantitative risk analysis The total contingency can also be shown against different types of risk

12. Trigo White Ltd Quantitative risk analysis The model shows the effect of the risk on schedule as well as cost

13. Trigo White Ltd Quantitative risk analysis The contribution of risks to the overall project cost or schedule can be calculated

14. Trigo White Ltd Quantitative risk analysis The total contingency can be shown (on average) phased over time

15. Trigo White Ltd All this can be … Practical Defendable Valuable

16. Trigo White Ltd An example Offshore natural gas development Schedule: many assumptions, critical path, burn rates, weather Cost: management and partners require confidence, justification of contingency, basis for decisions Production: delays hurt NPV Operability: shutdowns hurt NPV Busy multi-discipline team Busy project manager Need a meaningful risk report

17. Trigo White Ltd Full risk report

18. Trigo White Ltd Full risk report Documents risk identification and assessment process Shows who contributed to the process Includes risk register and all other assumptions Shows the model logic Gives full results –Overall contingency on cost and schedule, with justification –Breakdown of contingency by WBS, CBS and by risk –Effect of mitigation Forms a permanent record of the team’s view of the risk to the project, at a given point in time Refresh / update at each stage gate

19. Trigo White Ltd Benefits of risk analysis A valuable process –Challenge project teams and base estimates –Express uncertainty in the team’s base assumptions –Capture risks, assumptions, issues, and their consequences –Encourage open discussion amongst integrated team Demonstrate awareness of risk –Agree and communicate the team’s view of the risk –Justify contingency and mitigation efforts –Allow challenges, discussion and negotiation –Set realistic stakeholder expectations The risk model represents the perceived risk, and its logical consequences

20. Trigo White Ltd About Simon White Over 20 years’ experience in risk management and risk analysis –Wide variety of industries and major projects –Three years as UK Risk Analyst for ConocoPhillips –Previously Senior Risk Management Consultant and trainer for Pertmaster, Primavera and Oracle –Risk analyst for current major oil / gas projects such as Cygnus, Clair Ridge and Jasmine, and a major government infrastructure programme Recognised as one of the leading practitioners of integrated project schedule and cost risk management and analysis –Methods allow project risk models to be interrogated and understood by project teams and senior management –Designed and built commercial risk software: Predict!, Arrisca, and a contributing architect to Primavera Risk Analysis (Pertmaster) –Develops tools for more practical and valuable project and business risk management.

21. Trigo White Ltd Questions? Simon White Consultant Trigo White Ltd – Risk Management +351 965 758 479 +44 (0)7831 791032 simon@trigowhite.com