2. DPA PFG “Professional Services That Count” 9-May-15 E File Reference PFG PPT TEMPLATE 1 UNCLASSIFIED Space Projects Risk Management is the Key to Success Presented to the

3. DPA 9-May-15 2 UNCLASSIFIED 2 AIMS To create an awareness of some of the techniques that can be employed to complete a successful Project Risk Analysis

4. DPA 9-May-15 3 UNCLASSIFIED 3 Today’s Agenda  Background to the Problem  A Process to address the Problem  An Example of a Project Risk Network  Summary and Questions

5. DPA 9-May-15 4 UNCLASSIFIED PROJECT SUCCESS = on time, on cost, to spec

6. DPA 9-May-15 5 UNCLASSIFIED 5 BACKGROUND  NAO audits MoD’s Major Projects  Yearly monitor of Costs and TimescalesTimescales  Benefits of SMART Acquisition  Moving towards a more informed forecastforecast

7. DPA 9-May-15 6 UNCLASSIFIED 6 Defence Journal of the DPA - 2003

8. DPA 9-May-15 7 UNCLASSIFIED 7 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

9. DPA 9-May-15 8 UNCLASSIFIED 8

10. DPA 9-May-15 9 UNCLASSIFIED 9 MoD’s Risk Management Process

11. DPA 9-May-15 10 UNCLASSIFIED 10 Identify  Use prompts, list and characterise elements  Include risk source, event consequences & context of the risk  Opportunities may also be revealed  Think out of the box  Engage all stakeholders - IMPORTANT

12. DPA 9-May-15 11 UNCLASSIFIED 11 Analyse

13. DPA 9-May-15 12 UNCLASSIFIED 12 Analyse  Two stage assessment process  Qualitative against agreed criteria  Probability of risk occurring  Impact on time, cost and performance  Display as a PIGPIG  Ownership of risk  Where and when it could occur  Quantitative

14. DPA 9-May-15 13 UNCLASSIFIED 13 Quantitative stage  Define 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

15. DPA 9-May-15 14 UNCLASSIFIED 14 Risk Register Serial No. Risk Title Activities Affected Probability Impact Perf. Cost Sched. Risk Reduction Ownership Risk Questionnaire Level 1 Sample summary Sheet

16. DPA 9-May-15 15 UNCLASSIFIED 15 Plan

17. DPA 9-May-15 16 UNCLASSIFIED 16 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

18. DPA 9-May-15 17 UNCLASSIFIED 17 Risk Handling  Mitigation Strategies  Terminate Terminate  Treat Treat  Transfer Transfer  Tolerate Tolerate  Fallback or Contingency Plans  an alternative taken up if a risk occurs  trigger point set to allow sufficient time to be effective

19. DPA 9-May-15 18 UNCLASSIFIED 18 Manage

20. DPA 9-May-15 19 UNCLASSIFIED 19 Proactive/Reactive  Implement  by the Risk Manager, Stakeholders, using the Risk Plan Risk Plan  Monitor  Maintain Risk Records/Register, easy access  Review  Use results of Qualitative/Quantitative analysis  Report  Relevant & Concise analysed data

21. DPA 9-May-15 20 UNCLASSIFIED 20 Managing a Project Why 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?

22. DPA 9-May-15 21 UNCLASSIFIED 21 Point Estimates Conventional single point estimate 095 Time

23. DPA 9-May-15 22 UNCLASSIFIED 22 Dur 95 22 5 40 20 25 18 20 10 5 35 10 5 3 MayJunJulAugSep Element 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

24. DPA 9-May-15 23 UNCLASSIFIED 23 Reality ! 095 Could be as low as this Could be as high as this 90105 Time

25. DPA 9-May-15 24 UNCLASSIFIED 24 Cycling to Work Uncertainty: Most likely - 30 mins Minimum - 20 mins Maximum - 50 mins 203050 Time Risks: Puncture? 3PE & Prob Accident? 3PE & Prob Time 203565 Risks

26. DPA 9-May-15 25 UNCLASSIFIED 25 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

27. DPA 9-May-15 26 UNCLASSIFIED 26 The Estimate Process Risk Register 3 Point Estimates Cost 10%-50%-90% Confidence levels Schedule 10%-50%-90% Confidence levels Schedule 3 Point Estimates * Modelling Cost 3 Point Estimates

28. DPA 9-May-15 27 UNCLASSIFIED 27 3 Point Estimates

29. DPA 9-May-15 28 UNCLASSIFIED 28 Roll the dice !!

30. DPA 9-May-15 29 UNCLASSIFIED 29 Monte Carlo Simulation Combined distribution =

31. DPA 9-May-15 30 UNCLASSIFIED 30 Probability of outcomes Probability % Time 0 100 20 40 60 80 959085100 Days 95 Days 42%

32. DPA 9-May-15 31 UNCLASSIFIED 31 Target Outcome % Confidence Range of Project Outcomes Target here? No Problems Expected 100% 0% Target here? Serious Problems Expected Target here? Manageable Problems Expected

33. DPA 9-May-15 32 UNCLASSIFIED 32 Understanding the results  l ‘No problem’ targets are likely to be inefficient and contain contingency  l Targets within the range of possible outcomes are likely to be achievable and efficient l ‘Serious Problem’ targets are likely to be unachievable.

34. DPA 9-May-15 33 UNCLASSIFIED 33 Criticality - Single Point 10 110 100 140 60 120 40 90 130 70 80 30 50 20 START FINISH Critical Path

35. DPA 9-May-15 34 UNCLASSIFIED 34 Criticality - 3 point 10 110 100 140 60 120 40 90 130 70 80 30 50 20 START FINISH Critical Path

36. DPA 9-May-15 35 UNCLASSIFIED 35 Criticality Index

37. DPA 9-May-15 36 UNCLASSIFIED 36 Schedule Summary l Prioritise Risks High Medium Low HighMediumLow l Quantify Risks l Understand Results l Identify Risks

38. DPA 9-May-15 37 UNCLASSIFIED 37 Summary 1  Risk Identification  Break down the task, identify the risks and their responses  Analysis  Model the individual elements and combine them to form an overall result  Planning  Plan for corrective actions, risk reduction options and fall-back plan  Management  Carry out and monitor the plans

39. DPA 9-May-15 38 UNCLASSIFIED 38 Summary 2  GIGO  Stakeholder involvement  Take it seriously  Mandated Process in MoD

40. DPA 9-May-15 39 UNCLASSIFIED n PFG Risk-1 (Dave Burgin) n PFG Risk-8 (Paul Woodward) Mail Point # 2104 LARCH level 1a MoD Abbey Wood, Bristol n Tel No 0117-91-34382 n FAX 0117-91-33970 n E-mail - PFG-Risk-Analysis-Team@dpa.mod.uk – More information ?? – DAWN Knowledge Base – PFG WEB Site ANY QUESTIONS ? PFG “Professional Services that Count”

41. DPA 9-May-15 40 UNCLASSIFIED 40 Risk Plan Typical contents  Purpose, Roles, Methodology, Tools, Techniques, Reviews, Definitions, Reporting by applying the principles of  Who, What, When, Why, Where and How to each topic

42. DPA 9-May-15 41 UNCLASSIFIED 41 LowMediumHigh 0 3 Low Medium Probability Impact 3 P I Grid Risk 3 & 5 Risk 2 Risks 1 & 4

43. DPA 9-May-15 42 UNCLASSIFIED 42 Quantitative Risk One Two Three Four Five 3 Pt Est Min ML Max 5 710 101217 1 2 5 81018 1 412 Distributions Project Range

44. DPA 9-May-15 43 UNCLASSIFIED 43 Terminate Take action to avoid the risk occurring

45. DPA 9-May-15 44 UNCLASSIFIED 44 Treat Take action to REDUCE the risk’s impact

46. DPA 9-May-15 45 UNCLASSIFIED 45 Transfer Is another stakeholder better placed to manage the risk?

47. DPA 9-May-15 46 UNCLASSIFIED 46 Tolerate Can the Project accept the consequences of a risk?

48. DPA 9-May-15 47 UNCLASSIFIED 47 Legacy Projects

49. DPA 9-May-15 48 UNCLASSIFIED 48 Smart Projects