integrating risk and benefits management
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Integrating Risk and Benefits Management. Bruce Phillips and William Foulds. content. Life Cycle Engineering. Life Cycle Engineering. Who are we?. …and what do we do?. Why ‘risk and benefits’?. Context, integration and themes. - PowerPoint PPT PresentationTRANSCRIPT
Integrating Risk and Benefits ManagementBruce Phillips and William Foulds
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
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
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
making it up as you go along…
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?
Strategic Objectives
Identify
Assess
Plan
Manage
• 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
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?
why benefits management?
Strategic
Objectives
Identify
Plan
Deliver
Review
• 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.
key risk/benefits themes
Strategic
Objectives
Plan
Execute
Harvest
Learn
• 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
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-Project Project Transition Early OperationsSustained 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
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-Project Project Transition Early OperationsSustained 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 ObjectivesOpportunity and
Trade-off Decisions
‘before’
‘after’
‘before’
‘after’
Minimise
Maximise
New Capability Seen as BAU and Used
Effectively
Outputs Transitioned
to Users
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.
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
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
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
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
critical success factors
Simplicity: Empowerment, Process, Transparency
Culture: Leadership, Attitude, Collaboration
Habit: Methodology, Motivation, Sustainability
Any Questions?