WBS 1 1 Risk Management Eric Anderssen LBNL

WBS 1. 1 Risk Management Eric Anderssen (LBNL) Risk Manager E Anderssen 09/10/2014 CD 1 Review 1

Risk Management • • • Plan Risk Management Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 2

Risk Management Plan • First step in Risk Management is to plan the process — Define the process, roles and responsibilities — Engage Project Management in the process • Need Image Risk Management Plan Status: — Risk Management Plan (RMP) written — Risk Register is a controlled document — Project principals are engaged in the process • Consistent with best practices — “PMBOK Guide” ANSI Standard (ANSI/PMI 08 -001 -2012) — DOE “Risk Management Guide” (DOE G 413. 3 -7 A, 2011) • Management of risk is a continuous process throughout the life cycle of the project E Anderssen 09/10/2014 CD 1 Review 3

Roles and Responsibilities • Project Manager and Director (PM/PD) — PM Responsible for the risk management process, monitors risks, and executes risk response plans; manages risk contingency — PD Owns risks which are above L 2 M, e. g. external to project • Level 2 Managers (L 2 M) and their teams — Identify risks, assign probabilities and impacts, develop risk response plans as appropriate, participate in RMB — L 2 M Own all internal risks • Risk Management Board (RMB) — Reviews and updates Risk Register; retiring or modifying existing risks, identifying new risks as project progresses — Meets monthly • Risk Manager (RM) — Interface between L 2 M and PM; maintains Risk Register — Facilitates Risk Management Process E Anderssen 09/10/2014 CD 1 Review 4

Risk Management • • • Plan Risk Management Process Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 5

Summary of Leading Risks Risk description Prob. DOE funding profile shifted or CR (R 1 -01, -02) ML (0. 20) H H Plan assumes 3 mo CR/ Reduce scope Foreign funding less than expected (R 1 -05, -06, -07, -08, -09) Corrector lens blank fab or polishing takes longer than planned (R 2 -03, -04) Barrel alignment procedure requires large CMM (R 3 -03) ML (0. 20) H H MH (0. 25) H H /Cost reduction, other funding, Contingency, Drop to threshold KPP Early start, schedule float/ Contingency MH (0. 25) H H External Vendor, Procedures, Contingency, schedule Float Production rate of Positioner Fiber Assembly (R 5 -06) MH (0. 25) H H /Additional staff, tooling, Contingency, Schedule Float Grating Efficiency/Wavefront does not meet specification (R 6 -03) ML (0. 20) H H Accidental damage to lens (R 2 -10, -11, -12, -13) L (0. 05) M M /Accept degraded performance, Contingency, additional gratings Procedures, schedule float/ Contingency Problems in scaling positioner production (R 4 -10) ML (0. 10) M M E Anderssen 09/10/2014 Impact Risk Level CD 1 Review Mitigation/Response Early prototyping and preproduction/ Contingency 6

Risk Identification • • Risk Register is under configuration control in Doc. DB Contains sufficient information to conduct MC analysis Truncated example shown below (columns/rows hidden) Summary response plans included E Anderssen 09/10/2014 CD 1 Review 7

Risk Identification • ‘Management’ Risks (ascribed to WBS 1. 1 ‘Management’) — Includes risks ‘external’ to project e. g. foreign contributions, CR, etc. • ‘Technical’ risks (subsystems 1. 2 -1. 9) — Identified by L 2 M and their SME’s — L 2 M have risks related to loss of foreign contributions these are explicitly moved to WBS 1. 1, but tracked by L 2 M indicated in ‘WBS’ column of Risk Register • Risk thresholds used to identify risk rank — Rank defined later, summarized here WBS Management Corrector Barrel Focal Plane Fibers Spectrometer ICS DATA Integration SUM High 6 2 1 0 1 1 0 0 0 11 Medium 1 8 1 4 0 2 1 3 1 21 E Anderssen 09/10/2014 CD 1 Review 8

Risk Management • • • Plan Risk Management Process Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 9

Qualitative Risk Analysis (Ranking) Risk probability High Moderately high Moderately low Low > 50% 25 – 50% 10 – 25% < 10% Cost Schedule Scope / Performance LOW LOW < $10 k < 1 wk MEDIUM LOW LOW < $50 k < 3 wks HIGH MEDIUM LOW $200 k <6 wks HIGH MEDIUM Unlimited > 6 wks Negligible Low Medium High Risk Impact • Risks are ranked based on this matrix • Project plan was adjusted early to mitigate some high rank risks for example — Added manpower to fiber production to move off CP — Purchased additional equipment on project • High and Medium risks remain — Identified potential response plans, reduced impact where reasonable, this is a continuous process E Anderssen 09/10/2014 CD 1 Review 10

Risk Thresholds • Thresholds set by PM/PD in conjunction with IPT — Establish levels of potential risk impacts that should be tracked — Schedule impact ranked vs CP, but tracked independent of CP • Scope and Performance are subjective assessments — Scope identified and tracked vs objective KPP, not threshold KPP E Anderssen 09/10/2014 CD 1 Review 11

Risk Management • • • Plan Risk Management Process Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 12

Quantitative Analysis Outputs • Cost Contingency has two components: — Bo. E assigns contingency to the cost estimate based on defined uncertainty levels of the project plan (estimate errors) — Quantitative risk analysis estimates additional contingency (Risk Contingency) to address un-planned events • Schedule Contingency has two components: — Prescribed float is included in project plan already to address known uncertainty (estimate errors) to meet the early finish — Quantitative risk analysis estimates additional float beyond early finish and project completion • The project plan (Resource Loaded Schedule) is the first order approach at risk management — Tasks are planned at current levels of understanding and cost/schedule to complete are assigned — Risks represent changes to the plan that cannot or should not be included in the base plan E Anderssen 09/10/2014 CD 1 Review 13

Quantitative Risk analysis • • Risks are assigned probability and a triangular distribution impacts for a Monte Carlo analysis Probabilities are professional judgment from L 2 M, SME, or adopted from other projects with similar risks E Anderssen 09/10/2014 CD 1 Review 14

Monte Carlo Results • Risk cost contingency is 2. 7 M$ at 90% confidence • Float from ‘Early Finish’ to CD 4 is 14 mo supported by the Monte Carlo results E Anderssen 09/10/2014 CD 1 Review 15

Risk Management • • • Plan Risk Management Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 16

Risk Response • Quantitative Risk analysis feeds into our response plan • Every risk identified in the registry has a summary response plan included • The goal behind identifying a risk is to either include its cost/schedule impact directly into the project plan or carry them in the Risk Registry • Carried risks are necessarily uncertain but can be mitigated — Inclusion of portions of their impacts directly in the project plan is considered regularly to reduce impact or probability in the MC • Risk Response is proactive, but contingent on meeting cost and schedule constraints • Trades between cost/schedule vs scope/performance are already considered for various risks E Anderssen 09/10/2014 CD 1 Review 17

Scope and Performance Impacts • Scope and Performance impacts specifically have no cost or schedule impact — Some risk responses were moved to scope/performance to reduce impact on cost/schedule — Damage to Petal, etc. — Do not effect Threshold KPP; assessed against Objective KPP and early finish, but not desired — Low probability • Quantitative Risk Analysis feeds back into to risk response plan based on defined resources — This represents effective cost/schedule management E Anderssen 09/10/2014 CD 1 Review 18

Risk Management • • • Plan Risk Management Identify Risks Qualitative Risk analysis (Risk Ranking) Quantitative Risk analysis (Monte Carlo) Plan Risk responses Monitor and Control Risk E Anderssen 09/10/2014 CD 1 Review 19

Monitor and Control Risks • L 2 M are actively engaged in the risk management process — They have identified risks and engaged in mitigation strategies during the project planning process — Risks that remain in the Risk Registry have plans to retire them • Identified risks have actively been retired (13 retired risks) — Some risks were realized and their impacts absorbed in the project, e. g. R 6 -01 ‘Blue Triplet bonding will fail’ — Others have been retired due to recent scheduled down select (branched decision) • RMB (Risk Management Board) meets regularly — Technical Board (TB) meets weekly; RMB is convened as required with the same members E Anderssen 09/10/2014 CD 1 Review 20

Conclusions • Key risks have been identified, and are being tracked in a risk Register • Monte-Carlo analysis has been conducted on the inputs from management and L 2 M’s to assess management reserve • A risk management plan has been developed with defined responsibilities and processes E Anderssen 09/10/2014 CD 1 Review

Backup Slides E Anderssen 09/10/2014 CD 1 Review 22

Key Documents • Risk Management Plan — https: //desi. lbl. gov/Doc. DB/cgi-bin/private/Show. Document? docid=324 • Risk Register — https: //desi. lbl. gov/Doc. DB/cgi-bin/private/Show. Document? docid=376 E Anderssen 09/10/2014 CD 1 Review

Risk Example (R 6 -08) • Yield model uncertainty requires another batch run — Including the extra batch on-project inflates base cost — If this occurs, having some reserve to cover is desired • Risk probability is low, cost moderate — Assign some portion of Management Reserve to cover — The other option would be to accept risk if it occurs and take scope/performance hit (no attribution to reserve) E Anderssen 09/10/2014 CD 1 Review 24