1. Integrating Risk and Benefits Management Bruce Phillips and William Foulds

2. Life Cycle Engineering content Life Cycle Engineering Case Studies Who are we? Why ‘risk and benefits’? Understanding the risk/benefit relationship Context, integration and themes …and what do we do? Success Factors The important enablers

3. Consultancy Services Solutions Collaborative Solutions – ensuring the information and processes our customers need are securely shared, better organised and available at the point of need Management Services – supporting and delivering critical projects and programmes, managing risk and providing assurance and governance our business Lifecycle Engineering – managing and supporting assets, ensuring they are available and affordable through life Information & Knowledge Management – delivering confidence in the quality and assurance of our customers’ information Visualisation Solutions – advanced solutions that work with the growing big data challenge, and more information systems to support more informed decision making Data Analytic Solutions - helping our customers to work smarter and make better decisions

4. Will Foulds Bruce Phillips The business – Management Services, Project Management Group Leader The business – Management Services, Risk Management Group Leader our people The profession - Institute of Risk Management (IRM) Member and MSc Risk Management, PRINCE2 and APMP The ‘sharp-end’ - Delivering enterprise, portfolio, programme and project risk management architectures and solutions worldwide The ‘sharp-end’ - Delivery and leadership of many projects, programmes and transformation changes in Defence, Security and ICT The profession – APMP, MSP, APM Benefits SIG and APM SWWE Committee

5. making it up as you go along…

6. why ‘risk’? “Effect of uncertainty on objectives” (ISO 31000). Golden Rule: “Risk is in the eye of the beholder”. Determined by: Perception: What is the risk, and how big is it? Appetite: What risk am I willing to accept? Value: What’s it worth to me? Coin-toss game Flying in an aeroplane We use risk management as a mechanistic process to achieve objectives. But, our actions are a balance of Risk and Benefit Individuals, project teams, stakeholders The intended project benefits It’s all about Risk…isn’t it?

7. Strategic Objectives IdentifyAssessPlanManage Identify elements of uncertainty Balance appetite, perception and value Focus management attention Communicate - Monitor, report and update Fundamentally linked to Strategic Objectives why risk management? Recent Trends: Objectives biased, not benefits Compliance: Birth of the ‘compliance’ approach restricts benefits identification Integration: Little alignment of Benefits and Risk Management functions Recent Trends: Objectives biased, not benefits Compliance: Birth of the ‘compliance’ approach restricts benefits identification Integration: Little alignment of Benefits and Risk Management functions

8. why ‘benefits’? Outcome considered to be an advantage by one or more stakeholders. Delivery of benefits is the rationale behind the investment in business change. In project management, success can only be achieved through delivery of benefits. Like risk management, it contributes towards the achievement of strategic objectives. Therefore, integrated risk and benefits management enables success. Experience tells us that there is a poor record of transformational change initiatives realising the benefits they were intended to deliver. Lack of benefits identification or management? Not managing the uncertainty? It’s all about Benefits…isn’t it?

9. why benefits management? Strategic Objectives IdentifyPlanDeliverReview Supports: The decision to invest Delivering the vision Defining project outputs Ownership and contribution Helps harness (the inevitable) changes and opportunities as they come along. It’s also about non-benefits i.e. risk! Fundamentally linked to Strategic Objectives Business Case: Investment decisions not based upon the balance of risk v benefits! Understanding: Benefits and risk management seen as a ‘black arts’. Measuring Success: We don’t - we just move on to the next project. Business Case: Investment decisions not based upon the balance of risk v benefits! Understanding: Benefits and risk management seen as a ‘black arts’. Measuring Success: We don’t - we just move on to the next project.

10. key risk/benefits themes Strategic Objectives PlanExecuteHarvestLearn Integration: Positive cumulative effect through managing risk and benefits together Engagement: Improved collaboration, communication, ownership and visibility Learning: Helps to ensure experiential learning is encouraged and exploited Integration: Positive cumulative effect through managing risk and benefits together Engagement: Improved collaboration, communication, ownership and visibility Learning: Helps to ensure experiential learning is encouraged and exploited Plan: Simple strategies to integrate… integrated risk and benefits management strategy Execute: Bring risk and benefits into alignment through monitor and control… benefits/non-benefits focused risk register Harvest: Review of what benefits were delivered and when… updated risk/benefits realisation plan Learn: Understanding the risk/benefit relationship and what we learnt (good and bad)… continuous improvement plan

11. typical lifecycle Potential Risk Impacts not Integrated in to Benefits Realisation Plan Risk Management Strategy Outputs Transitioned to Users Embedding the New Capability New Capability Seen as BAU and Used Effectively Benefits Realisation Value Curve Risk Impact Curve Pre-ProjectProjectTransitionEarly Operations Sustained Operations Risk Register No Real Validation of Risks Against Benefits and their Profiles Delivery Understand the context Monitoring Risk with No Direct Consideration of Impact on Benefits Little or No Risk v Benefits Performance Review Focus on Benefits. Insufficient Focus on Non-Benefits No Benefits Realisation Measurement or ROI Assessment No Appetite for Opportunity Benefits or Trade-offs Benefits Management Strategy

12. target lifecycle Integrated Risk and Benefits Realisation Planning Integrated Risk and Benefits Management Strategy Embedding the New Capability Benefits Realisation Value Curves Risk Impact Curves Pre-ProjectProjectTransitionEarly Operations Sustained Operations Benefits Focused Risk Register Validating Candidate Risks Against Agreed Benefits and their Profiles Delivery Schedule and Cost Risk/Benefit Analysis Understand the context Monitoring Risk and Controlling Benefits Review of Risk v Benefits Performance against Baseline Risk Impact of Non- Benefits ROI and Assess Contribution towards Strategic Objectives Opportunity and Trade-off Decisions ‘before’ ‘after’ ‘before’ ‘after’ Minimise Maximise New Capability Seen as BAU and Used Effectively Outputs Transitioned to Users

13. arms factory build Scenario Design/build; Risk Management to ensure programme planning and decision support. Objectives: a) factory build, b) markets and exports serviced and c) deliver long-term economic return. Traditional methods of risk management to be deployed under contract: T, C and P. Solution Working with local stakeholders and project team to identify benefits: a) local recruitment, b) sustainability for dual-purposes and c) 25% increase in production ahead of rivals Benefits-based risk register. Graphic of risk ‘burn-down’ and realisation of benefits to the local people and economy. Benefits Novel risks/opportunities that traditional methods would have missed. Increased support from local stakeholders (linked to motivation). Benefits approach enhanced risk register. Delivering value, not just a product.

14. security services Scenario Significantly under-performing service provision Original objectives around demand/capacity management, product quality, value Concept of risk and benefits completely alien Threat of losing the contract Solution Understand risk impact on current baseline Define new service levels based on delivery of achievable benefits Risk aligned benefits realisation planning Joint team continuously reviewing risk and affects on benefits, via skilled PMO Benefits measured using same baseline approach and metrics Benefits Culture shift in attitude to risk and benefits Increased project and programme success Customer satisfaction Value driven by increased productivity x6

15. army communications programme Scenario Objectives around managing equipment obsolescence and reducing training burden No defined benefits Benefits not really understood - at all levels Decisions being taken without understanding risk and impact on benefits Solution Benefits workshops, seniors/decision-makers Identify, prioritise benefits and understand risk Goal based benefits realisation plan focused on the management of risk Integrated risk mitigation of non-benefits and end benefits Decision-making based on impact on benefits Benefits Realisation that ‘it’s all about delivering benefits’ Risk to benefit relationship understood Benefits selected on value, prioritisation and risk Benefit options, based on risk impact

16. defence systems engineering Scenario Environmental protection system for armoured vehicle procurement programme Two options: ‘active’ (self-regenerating filters) and ‘passive’ (disposable filters) Risks and benefits of each option not considered or understood Decision required for business case Solution Through-life assessment of both options based on risk and benefits relationship Considering risk/benefit curves for both options determined ‘passive’ as optimum Recommendation based on balance of risk and delivery of benefits, approved by ChEng Benefits Clear risk/benefit assessment based on capability, financial, organisational and regulation categories Decision-makers know the impact of their decision Approach adopted for other areas of the vehicle enabling fleet based benefits/risk trade-offs

17. navy communications programme Scenario Complex ICT transformation programme Process, organisation, technology and information but no coherence Poor governance - and new SRO! Integrated risk and benefits management immature Solution Creation of a blueprint with under-pinning benefits and risks Creation of a programme plan that defines how outputs and outcomes will be delivered Creation of a scheduling approach that integrates risk and benefits Exploring the relative schedule and cost risk/benefits of different delivery options Benefits Risks and benefits traceable from vision to implementation Coherence in future state of the programme Accountability: known cost of risk and cost of benefits Culture change

18. critical success factors Simplicity: Empowerment, Process, Transparency Culture: Leadership, Attitude, Collaboration Habit: Methodology, Motivation, Sustainability

19. Any Questions?