Process- and Project Risk Management Copyright © BK-CPS GmbH EHAG.

Process- and Project Risk ManagementProcess- and Project Risk Management

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BK

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Process- and Project Risk ManagementProcess- and Project Risk Management

Cop

yri

gh

t©

BK

-CPS G

mbH

EH

AG

Setting the correct priorities in Setting the correct priorities in the project environment as the project environment as

well as controlling and well as controlling and mastering the Project Risksmastering the Project Risks

© Copyright BK-CPS 2002

EHAG

Terms & DefinitionsTerms & Definitions

Strategic vs. operational Management?Strategic vs. operational Management?

Content vs. organisational context?Content vs. organisational context?

„„Program-Management“Program-Management“

„„Project Portfolio-Management“Project Portfolio-Management“

„„Multiproject-Management“Multiproject-Management“


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AgendaAgenda

• The responsibility for the project portfolioThe responsibility for the project portfolio

• Branches of the portfolio-managementBranches of the portfolio-management

• FacilitiesFacilities

• Abstract & critical factors for successAbstract & critical factors for success

• Motivation and TargetsMotivation and Targets


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Incentive based on anticipated definacesIncentive based on anticipated definaces

• Consistent with the business strategyConsistent with the business strategy

• Exposure to „sacred cows “Exposure to „sacred cows “

•Assessment and prioritization of projectsAssessment and prioritization of projects

• Determination of the operational riskDetermination of the operational risk

• Utilization of key personalUtilization of key personal


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Incentive based on operative defiancesIncentive based on operative defiances

• „„We don‘t want to just react, we want to We don‘t want to just react, we want to approach problems in a proactive manner“approach problems in a proactive manner“

• „„We don‘t know the state of the projectsWe don‘t know the state of the projects““

• „„We don‘t know how delays and changesWe don‘t know how delays and changes to one project influence other projects to one project influence other projects ““

• „„We just want to take care above all aboutWe just want to take care above all about the critical and problematic projects the critical and problematic projects““


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AgendaAgenda







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ProjectProjectSupportSupport

ProjectProjectQAQA

DesignDesignAuthorityAuthority

Different roles in the company organization structureDifferent roles in the company organization structure

ChangeChangeManagerManager

ProjectProjectPortfolioPortfolioManagerManager

ProjectProjectPortfolioPortfolio

QAQA

ProjectProjectPortfolioPortfolioSupportSupport

SteeringSteeringcommitteecommittee

ProjectmanagerProjectmanager

TeamTeam

StrategyStrategy

PortfolioPortfolio

ProjectsProjects

OperationOperation

Company ManagementCompany Management


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„„Candidates“ for the Project Portfolio ManagementCandidates“ for the Project Portfolio Management

•Manager in charge (in project organizations)Manager in charge (in project organizations)

• Official Program-ExecutiveOfficial Program-Executive

• Staff position (e.g. Organization development)Staff position (e.g. Organization development)

• Member of the executive board (e.g. CFO)Member of the executive board (e.g. CFO)


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AgendaAgenda







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Branches of the Project Portfolio ManagementBranches of the Project Portfolio Management

ManagementdisciplinsManagementdisciplinsin the Project Portfolioin the Project Portfolio

ProjectmanagementProjectmanagementDimensionsDimensions

Planning

Planning

Con

trol

ling

Con

trol

ling

OpportunityOpportunityManagementManagement

PriorityPriorityManagementManagement

Risk & Risk & ProblemProblem

ManagementManagement

Quality-Quality-Management & Management &

AuditAudit

ConfigurationConfigurationManagementManagement

StakeholderStakeholderManagementManagement

TimeTime CostsCosts ResultResultQuality Quality

ResourcesResources

Corporate Strategy


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Adjustment of strategic vs. economic importance Adjustment of strategic vs. economic importance Total Portfolio considerationTotal Portfolio consideration

Economic Importance [€/$]

StrategicImportance

StrategicImportance


p1

p2

p2

p1

Tota

l util

ity

AdjustmentAdjustmentthrough through „Expansion“ and „Expansion“ and „Compression“„Compression“

StrategicImportance


Project PortfolioProject PortfolioProjectsProjects


EHAG

Priority ManagementPriority ManagementDDoing the correct thing correctly!oing the correct thing correctly!

ProjectImportance

AktualPriority

Project xy

Strategy Conformance Matrix (SCM)Strategy Conformance Matrix (SCM)

•Recognize Strategy conformance Target-Prioritization

•Recognize deviations of the Actual -Situation Controlling

•Traceability Conflict reduction

•Risk Assumption Opportunity Costs Prioritization Deficiency


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Basics for the Assessment of the SCMBasics for the Assessment of the SCM

Actual PriorityActual Priority

Pro

ject

impo

rtan

ceP

roje

ct im

port

anceStrategy PaperStrategy Paper

Business PlanBusiness Plan

Balanced ScorecardBalanced Scorecard

Project Business CasesProject Business Cases

IAOCIAOC

ManagementManagementAwarenessAwareness

ResourceResourceDedicationDedication

AppropriatedAppropriatedBudgetBudget

Project progressProject progresson scheduleon schedule

Tangible assets

Intangible assets


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Inquiry of the strategic importance of projects(1) Inquiry of the strategic importance of projects(1) Balanced Scorecard with targets and measurement Balanced Scorecard with targets and measurement categoriescategories

How does a project xy influence the customer

business?

Customer Perspective

Internal Processes

Innovation

Which part contributes project xy to the reduction of

time and costs?

Which innovation targets are addressed by project xy?


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Inquiry of the strategic importance of projects (2) Inquiry of the strategic importance of projects (2) Pragmatical chance assessment based on BSC-IndicatorsPragmatical chance assessment based on BSC-Indicators

WeightWeight

100%100%

10%10%

15%15%

15%15%

10%10%

10%10%

15%15%

10%10%

## CategoryCategory IndicatorIndicator Measurement CategoryvMeasurement Categoryv

Strategic importanceStrategic importance11 Client StrategyClient Strategy Customer count increaseCustomer count increase Number of new clientsNumber of new clients

22 Client StrategyClient Strategy Product densityProduct density Number of products per clientsNumber of products per clients

33 Client StrategyClient Strategy Intensity of customer relationshipIntensity of customer relationship Number of transactions per client / yearNumber of transactions per client / year

44 Effectiveness & EfficiencyEffectiveness & Efficiency Web-based presenceWeb-based presence Portion of web-based processesPortion of web-based processes

55 Effectiveness & EfficiencyEffectiveness & Efficiency Process improvement externalProcess improvement external Portion of swaped out process stepsPortion of swaped out process steps

66 Effectiveness & EfficiencyEffectiveness & Efficiency Process improvement internalProcess improvement internal Quality- and time-saving indexQuality- and time-saving index

77 Effectiveness & EfficiencyEffectiveness & Efficiency Leverage from/to other unitsLeverage from/to other units Leverage IndexLeverage Index

88Accomplishments & Accomplishments & CommunicationCommunication Provide leading instruments Provide leading instruments Platform Enhancement IndexPlatform Enhancement Index 15%15%

Chacteristics per Project and Indicator: No ImpactNo Impact

Minor ImpactMinor Impact

Large ImpactLarge Impact

Core TargetCore Target


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Overview Project Portfolio (1)Overview Project Portfolio (1)ProjectsProjects

Project Importance

ActualPriority

5

8 94

2 1

6

7

3

Declarations:- The size of a circle constitutes the estimated project expenses (Costs and Time)- The color constitutes the affiliation of the project to a certain context.


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Overview Project Portfolio (2) Overview Project Portfolio (2) Factual DependenciesFactual Dependencies

Declarations:Connections between projects: Interdependencies and influences(red = negative, green = positive, black = neutral/not yet clear)

5

94

2 1

7

3

8 6

ActualPriority

Project Importance


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Overview Project Portfolio (3) Overview Project Portfolio (3) Personnel DependenciesPersonnel Dependencies

Declarations:Conflict situation between projects based on planned resources

5

94

2 1

7

3

6

ActualPriority

ProjectImportance

8


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Overview Project Portfolio (4)Overview Project Portfolio (4)Time DependenciesTime Dependencies

Declarations:Time coherences (e.g. Completion of project 4 is prerequisite for project 5)

5

94

2 1

7

3

6

ActualPriority

ProjectImportance

8


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Overview Project Portfolio (5)Overview Project Portfolio (5)“Green Region” = Strategy Conformity“Green Region” = Strategy Conformity

AktualPriority

5

94

2 1

7

3

6

ProjectImportance

8


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Overview Project Portfolio (6)Overview Project Portfolio (6)ArrangementsArrangements

5

4

2

7

3

AktualPriority

6

1&2

3

1

8 109

4’

ProjectImportance

8


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Risik and Problem ManagementRisik and Problem ManagementThe ProcessThe Process

Risk ManagementProcess

Risk Monitoring

Improvement of the Risk Management

Risk Management Strategy

Recognize and assess risks

Data/Information

Portfolio TargetsPortfolio Targets


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Risk and Problem ManagementRisk and Problem ManagementThe necessity of an assessmentThe necessity of an assessment

P R O D U C T L I F E - C Y C L E R I S K

PLANNING & INITIATION REQUIREMENTS ANALYSIS

TESTING

DESIGN

IMPLEMENTATION & ROLLOUT POST IMPLEMENTATION

DEVELOPMENT

COST

P R O J E C T M A N A G E M E N T R I S K

COMMUNICATION PROCUREMENTHUMAN RESOURCE RISK

QUALITYTIMESCOPE

PROJECT INTEGRATION (PROJECT OFFICE)

P R O J E C T S U P P O R T R I S K

PROGRAMME OFFICE INTEGRATION WITH COMMONBUSINESS FUNCTIONS

P R O J E C T E N V I R O N M E N T R I S K

STAKEHOLDERS

PORTFOLIO MANAGEMENT

STRATEGIC ALIGNMENT CORPORATE CULTURE

BUSINESS ENVIRONMENT (ORG)

PROCESS ALIGNMENT


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Frequent indicators for Project risks...Frequent indicators for Project risks...

•Artificial pressure of time:

„Without pressure of time nothing will proceed anyways ...“

•Planning is based on a perfect world:

•Project Management by Hope:

„The Project members were rolled over by the day-to-day business...“

„Key person xy was absorbed by another project ...“

„There should be nothing to intervene ...“

„We do not have any time buffer ...“

„We do not have any time for a detailed planning...“


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Develop a Risk strategyDevelop a Risk strategyM

easu

re o

f d

amag

es

Probability of occurrence

ControlIgnore

Crisis Management

Reduce

Accept

Insure


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The basis of the Risk Management processes The basis of the Risk Management processes in a complex environmentin a complex environment

Aufwände bis 31.07.00 / Basis für Billing

Monat BudgetStd

ISTStd

BudgetStd

ISTStd

BudgetStd

ISTStd

Budget Total

h

Budget TotalPT

ISTTotal

h

ISTTotalPT

Budget kumuliert

h

Budget kumuliert

PT

ISTkumuliert

h

ISTkumuliert

PT

Abweichung IST/ Budget

kumulierth

Abweichung IST/ Budget

kumuliertPT

EACkalkulatorisch

h

EACkalkulatorisch

PT

Abw. gg. Budget

PT

Juni 2000 (Start 9.6.)

100 152 130 274 230 27 426 50 230 27 426 50 196 23 3695 435 200

Juli 2000 150 241 155 462 220 105 525 62 807 95 755 89 1233 145 478 56 3261 384 149

August 2000 150 75 210 435 51 0 0 1190 140 1233 145 0September 2000 120 75 210 405 48 0 0 1595 188 1233 145 0Oktober 2000 118 75 210 403 47 0 0 1998 235 1233 145 0

Total 638 393 510 736 850 105 1998 235 1233 145Noch offen 245 -226 746Total offen 765

M/V AP-Erst.Coaching/PL TPL M/V

Effort Controlling

Aktual and adopted Project plans (Aktivities, Deliverables)

Supply object list & Milestone control Status reports

of the ProjectsCombined open issue lists on the program management level

Risk Mapping

Sig

nif

ica

nc

e

Likelihood

3

4

2

1

6

57

Risk Management Report

Risk Tracking

Interviews

group

user

Observations


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Having the sight on the benefitHaving the sight on the benefit

The active dialog about the project risks improves the creation of awareness of the project members involved

The established Risk-Management-Process serves as an early waring system

Through the realization of the proposed measuresthe risks will be reduced in the appropriate manner

The risk dialog forces the dealing with unrealistic project defaults( costs, time,resources, technical feasibility) at the management level

Basis for the cockpit-function at the project portfolio level


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The Controlling-CycleThe Controlling-CycleContents of the reportingContents of the reporting

Precense oriented Precense oriented aktual state of the project aktual state of the project

Little effort for project and portfolio managersLittle effort for project and portfolio managers

Professional degree of performance (percental)Professional degree of performance (percental)

Accumulated Costs (nominal, percental)Accumulated Costs (nominal, percental)

Combined from single project reports, concentration on the essentialCombined from single project reports, concentration on the essential

Planning deviations with rationalsPlanning deviations with rationals

Options for problems, risiks and solutionsOptions for problems, risiks and solutions

Planned steps up to the next reportPlanned steps up to the next report


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AgendaAgenda







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Literature reference: PRINCE 2 (Project- / Portfoliomgmt.)Literature reference: PRINCE 2 (Project- / Portfoliomgmt.)Central Computer and Telecommunication Agency CCTACentral Computer and Telecommunication Agency CCTA

COMPONENTS

•OrganizationOrganization•PlansPlans•ControlsControls•StagesStages•Management of RiskManagement of Risk•Quality in a Project Quality in a Project Environment Environment•Configuration Configuration Management Management•Cange ControlCange Control

PROCESSES

•Strating Up A Strating Up A Project Project•Initiating A ProjectInitiating A Project•Directing A ProjectDirecting A Project•Controlling A StageControlling A Stage•Managing ProductManaging Product Delivery Delivery•Managing Stage Managing Stage Boundaries Boundaries•Closing A ProjectClosing A Project•PlanningPlanning

TECHNIQUES

•Product-BasedProduct-Based Planning Planning•Quality ReviewsQuality Reviews•Change ControlChange Control Approach Approach•Project FilingProject Filing

Plus:Plus:Exisiting techniquesExisiting techniquesalready in use.already in use.

Business Case for the Project

Existing Company Systems & Procedures? (ISO 9000) ?


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ToolsTools

Tool characteristicsTool characteristics

Project Management SuitesProject Management Suites

Process Management SoftwareProcess Management Software

Schedule Management SoftwareSchedule Management Software

Cost Management SoftwareCost Management Software

Resource Management SoftwareResource Management Software

Communications Mgmt. SoftwareCommunications Mgmt. Software

Risk Management SoftwareRisk Management Software

But remeber:But remeber:

„A fool with a tool is still a fool...“


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Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO AssessmentExample : IACO Assessment

Easy to generate and handle


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Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO Assessment cont‘dExample : IACO Assessment cont‘d

Project & process initilization and

descriptions at a glance


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Single sheets for each subsystem


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See the rating and interaction for each system at ones


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Set your individual dependencies and see

the resulting relations without reassessment


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Have an overview on all of your Systems

in relation to eachother


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Support Material:Support Material:Simple Process diagrams – on one page!Simple Process diagrams – on one page!

Flow ChartFlow Chart DescriptionDescription ResponsibilitiesResponsibilities FrequencyFrequency InputInput OutputOutput

1

2

3

4

5

6

7

8

11

22

33

44

55

66

77

88

Flow chart, supplemented with detailed descriptions, definitions of the responsibilities , Frequency, Inputs and Outputs

Process DiagramProcess Diagram Customer Logo


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AgendaAgenda







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Critical Success factor # 1:Critical Success factor # 1:The „Cultur compatibilityThe „Cultur compatibility““

Exaggerated FormalismExaggerated Formalism

Paper and Document flood, bureaucracyPaper and Document flood, bureaucracy

Little usable content in the documentationLittle usable content in the documentation

How do I bypass the process?How do I bypass the process?

Recognize Quick winsRecognize Quick wins

Align the proceedingAlign the proceeding

on the currenton the current

problem definitionproblem definition

ThereforeTherefore


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Further Success FactorsFurther Success Factors

Management Management CommitmentCommitment

Exemplify and the will for enforcementExemplify and the will for enforcement

Transparent communication as a chanceTransparent communication as a chance

The project protfolio is of interest to allThe project protfolio is of interest to all

No imaginary assessment accuracy No imaginary assessment accuracy

Most modells require information, which doesn‘t exist in realityMost modells require information, which doesn‘t exist in reality

The courage to decideThe courage to decide

The transparent portfolio management makes clear that some The transparent portfolio management makes clear that some

management decsicions have to be made (e.g. to cancle projects) management decsicions have to be made (e.g. to cancle projects)

Process- and Project Risk Management Copyright © BK-CPS GmbH EHAG.

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