1. About the speaker 26 years of experience with IBM
IBM Certified Executive PM
12 years Project Management
Demand Supply Optimization
(eBusiness – supplier collaboration $36M project and counting)
ASCI White ($250M systems integration project)
SP Hardware/Software Development ($210M multiple projects)
Fiber Optic Product Development/Research ($25M project)
Geographic Information Systems Development ($50M project)
PMP Certified – 04/98

3. Risk Management
Tom Delaney, EPM PMP m
10/10/2003

4. Risk Basics Two types of risk: Four steps to risk management:
Business
Has upside and downside potential
Pure
Only downside potential
Four steps to risk management:
Identification
Evaluation
Mitigation
Monitoring
Three components of risk:
Event
Probability
Impact by project phase
Risk severity = probability x impact

5. Identification Start with business or project objectives
Determine focus areas
Determine risk drivers
Then identify potential risk events
Review the WBS
Brainstorming
Lessons learned
Checklists
Every risk event should be able to be tied back to a business or project objective.

6. Evaluation Keep It Simple !! Impact Probability High Medium Low
Very High
Keep It Simple !!
Impact
Probability 3 2 1 9 6 4

7. Mitigation Avoidance Retention Reduction Transfer Contingency
Follow alternate course
Retention
Accept the consequences if the occur
Reduction
Take specific actions to reduce the potential of occurrence and/or the effect
Transfer
Place all of a portion of the risk on another party
Contingency
Set aside specific funds
Set aside time within the project schedule

8. Monitoring Watch the Very High and High risks
DAILY
Try to make small improvements over time
Major risks are rarely eliminated over night
Very High & High risks, if left unattended, will cause you to fail.
Watching Medium and Low risks closely may cause you to fail.
you will run out of time working on these and you will not spend enough time on the Very High, High, schedule, cost, issues, etc.

9. Advanced Risk Management with examples from….
The race for the:
Biggest
Badest &
Fastest !!!
The current fastest computer
NEC
Custom vector processor
100 Teraflops
The bid to replace ASCI White with a 300 Teraflop system – ASCI Purple
Cray is building a 1 Petaflop (1000 Teraflop) system
Blue Gene/L – nearly 400 Teraflops and ¼ the size

10. ASCI Purple Bid Bid with the Department Of Energy Proposal
Bid awarded to IBM in early 2003
Proposal
Build a 100 Teraflop system by 1H 2005
Option for upgrade to 300 Teraflops
10x performance above ASCI White
The most powerful system on earth – 2000/2001
2x performance above a custom built NAS system
Unique architecture – 2002
Many High Risk items identified before the bid was submitted !

11. Fills two basketball courts, almost all new technology, significant new software
Currently the #2 or #4 fastest computer in the world – depending on how you count

12. Advanced Risk Management
Evaluate risk before and after the mitigation plan.
You will find that some mitigation strategies don’t actually make the situation better – so find another strategy.
Set a date for when to cut over to the mitigation strategy.
Get management and stakeholder agreement to that at the beginning of the project.
Quantify the impact in terms of cost or schedule if possible
Instead of High, Medium, Low

13. Advanced Risk Analysis
Criteria
Criteria
Multiplier
Probability of occurrence
High .8
Very likely to happen
Medium .5
Might happen
Low .2
Not very likely
Impact Assessment
Event
Probability
Multiplier
Impact
Risk Value 1
Medium .5
$500K
$250K 2
High .8
$300K
$240K

14. Advanced Risk Analysis
Risk Description
ASCI : Product Technology Delay impacts start of system test.
Pre-Mitigation
Impact
Probability
Overall
High
Mitigation
Start testing effort with Old Product & complete initial buildup of New Product with prototype parts if production level parts are not available by January Pay scrap cost and upgrade to production level later. Rigorous management and review of all development project deliverables on a frequent basis to identify any critical path impacts. Executive prioritization of New Product for ASCI above other priorities to obtain scarce resources and funding.
Post-Mitigation
Medium
This is just the summary. A 2+ page detailed analysis was completed for each risk.
Description, Impact, Probability
Multiple strategies for reduction, retention, avoidance, transfer
Specific cut in dates identified to prevent Management inaction

15. Advanced Risk Visualization
Happened
Didn’t Happen
Happened
Didn’t

16. Summary
Embrace risk
Risk is how you deliver more, faster
Take prudent risk often
Focus only on risk that will have serious impacts on the project
Share your risk taking with the stakeholders
Don’t surprise stakeholders with your risk taking
Be willing to fail 20% of the time
You will end up failing rarely and you will deliver “extra”
Don’t be reckless

17. Sound Bites “Development is not for the faint of heart”
Tony Befi, IBM VP of Development
(ASCI White, 9 months behind schedule, it shipped on time)
Have confidence in your (& your team’s) ability
Speak the truth – even when it isn’t welcome
Have fun when the going gets tough
If it was easy they could get anyone to do it – instead they got you!