Learning to Thrive in a Riskaverse Culture Understanding

Learning to Thrive in a Risk-averse Culture Understanding the nature of risk, and the relationship it has with your organizational culture Chris Vandersluis chrisv@hmssoftware. ca President, HMS Software © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

HMS History 1984 1985 1994 1995 1997 1999 2001 2004 2005 2006 2007 HMS Software founded. First project: automating the project office at Philips Information Systems and creating a project timesheet HMS becomes a Welcom Software alliance partner HMS releases Time. Control 1. 0 HMS releases Time. Control 2. 0 for Windows with links to Microsoft Project HMS joins Microsoft Project Solution Partner program HMS becomes a Primavera Technology Alliance Partner HMS releases Time. Control 3 as a client/server product HMS releases first web timesheet interface for Time. Control HMS releases Time. Control 4. 0, a full web-based version HMS named as a Premier Microsoft Project Solution Provider HMS becomes a Microsoft Gold Certified Partner HMS named as a “First to Market partner” by Microsoft HMS releases Time. Control Industrial 4. 7 HMS releases Time. Control 5 © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Defining Project Risk o Classic Definition Risk management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events, while minimizing the probability and consequences of events adverse to project objectives o Real-world Interpretation Risk management is the prevention of being blind-sided early and often by events not under the full control of project managers. It includes the timely response by project sponsors and senior mangers to serious risk that can adversely impact project success and business objectives © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Urban Legends About Risk o We can’t really manage the unknown, so why try? Reality: Only an estimated 10% of all risks are actually unforeseeable o We tried managing risk, but projects still failed. Reality: You were either tracking the wrong risks, or failed to get management action on the most serious risks o Management never responds to risk, so why bother? Reality: If projects aren’t linked to business objectives, management often will not see the value in taking action (compared to other priorities) © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Balance Risk Management 0% Effort Unaware of or Ignore Risks Project Manager “Death Wish” Can Management quickly grasp which risks are a real threat to project & business objectives? Achieving Balance: Be aware of all known risks, but be proactive in managing the most serious threats © 2007 Heuristic Management Systems Inc. 100% Effort Micro. Managing All Known Risks www. hmssoftware. ca

Major Dimensions of Risk Project Risks External Risks * Ø Cost, schedule, planning, Ø Economic downturn, Internal Risks * Technology Risks * Ø Sponsorship, resource Ø Disruptive technologies, resources, scope changes, dependencies, quality… conflicts, legal, financial, contract issues… competition, outsourcing, partner roles, regulatory… integration, vendor reliability, IT competency… (*) Often not within the Project Manager’s control © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Practical Risk Tools Three templates that can help improve consistency and early warning response to serious project risks: Ø Standard PM Life Cycle with Phase Gate Reviews Ø Standard Risk Management Process Ø Accelerated Project Recovery Template Ø PERT Analysis © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Controlling Standardized PM Methodology Phase 1: Phase 2: Phase 3: Phase 4: Initiating Planning Execution Closeout Identify Needs Develop Project Plan Product Life Cycle Business Case Time/Cost Estimates Reporting & Analysis Product Development Life Cycle Begin Closeout Validate Deliverable No No Proceed ? Yes Time/Cost Baselines Issue/Risk Response Assess Risks Status OK? Project Charter No No Charter OK? Cancel Phase 1 Approval Yes Pla Phase 2 n Approval OK ? Yes Cancel Phase 2 Approval © 2007 Heuristic Management Systems Inc. No No Verify Scope Change Control Yes User Accept ? Yes Manage “Product” Lessons & Archive Improve & Measure Project Closeout Upgrade ? Yes User Satisfied ? Yes Phase 3 Approval Yes Phase 4 Approval Go to ”Initiating” www. hmssoftware. ca

Risk Insurance: A Project Recovery Plan © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Visualizing Scope, Time and Cost • Scope: Work variance is greater than 20% of baseline work • Time: Finish variance is greater than 20% of current duration • Cost: Cost variance is greater than 20% of baseline cost © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Visualizing Scope, Time and Cost Multiple baselines can also be tracked (see above), and the timescaled data can be imported directly into Excel for analysis. © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Greater Visibility to Your Project Risks Risk Probability and Severity: Quickly identify potential threats… even without using an automated Risk system © 2007 Heuristic Management Systems Inc. Project Issues: Simple indicators can also be used to highlight serious, unresolved issues www. hmssoftware. ca

Standard Risk Management Process This process can be triggered when a High Probability and High Severity risk is identified that could lead to potential project failure. © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

A Consistent PM Methodology This is just one example of how organizations can implement a standard PM Methodology that can be applied across all projects. The ultimate goal is repeatable project success, and improving overall PM Maturity. © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

PERT Analysis sheet © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Multi-Bar PERT Gantt © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Summary o The primary goal of managing risk is to keep from being blind-sided by unexpected events… and to enable better decision-making with timely, accurate data o Virtually all project risks can be identified, but the list, priorities and actions should be updated regularly o For key decision-makers, less is usually more… as long as it’s kept action-oriented o If risks are overlooked, then shame on the project manager… if management refuses to act on welldefined, prioritized risks, then shame on management! © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Some of our clients © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Take action! Take a free online tour of Project 2007 on us: http: //www. epmconnect. com/PB_Registration. asp? Partner. ID=1318&LDT=Tour To find out more about HMS Software: www. hmssoftware. ca For more information from HMS: info@hmssoftware. ca © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca

Thank You! © 2007 Heuristic Management Systems Inc. www. hmssoftware. ca