Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor

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Applying Risk Factors in the Strategic Selection of Portfolio Projects - Case Study

Date: July 2013

JT MacGregor BSc(Hons), MSc, CEng, MAPM, MIMMM

Programme Executive – Customer Business & Services


Applying Risk Factors in the Strategic Selection of Portfolio Projects

Session will be in two parts

1. Brief overview of Portfolio Project

Risk Factors and in particular the

use of CIFTER analysis tool

2. Worked example using a CIFTER risk

analysis on the decanting and

demolition of a building


Doing the “Right” Projects

Doing

the

“Right”

Project

Doing

the

Project

well



Net Project Priority

Gross

Project

Priority

Project

Cost*

Key element of Project cost is the Complexity or Risk Factors associated with doing the Project


Project Complexity ≡ Risk One of the most well-known means of measuring

Project complexity is to use a CIFTER (Crawford – Ishikura) analysis

Identifies seven risk factors that affect the management complexity of projects

Each factor is rated from very low to very high based on a qualitative assessment of that factor

Tool was developed as part of an international team

- The Global Alliance for Project Performance Standards (GAPPS) as part of a framework for Competency based standards in Project managers

- Can be used in conjunction with APM Body of Knowledge (BoK) skills and experience assessments


Project Risk Factors

Cifter Risk factors 1. Stability of the overall project context.

2. Number of distinct disciplines, methods, or approaches

involved in performing the project

3. Magnitude of legal, social, or environmental implications from

performing the project

4. Overall expected financial impact (positive or negative) on the

project's stakeholders.

5. Strategic importance of the project to the organisation or

organisations involved

6. Stakeholder cohesion regarding the characteristics of the

project.

7. Number and variety of interfaces between project and other

organisational entities


Project Risk Factors - Example

Standard Output from Cifter Analysis


Project Complexity

Standard Output from Cifter Analysis


Project Risk Factors

Basic CIFTER Limitations

Information generated from traditional CIFTER Risk /

Complexity model is limited to PM Competency

One dimension

Dominated from a supply chain perspective rather than

customer

If however Risk / Complexity information is linked to

(a) the Project benefits

(b) Cost Elements of doing the Project in the Portfolio

Then a much more comprehensive decision can be

made with respect to which project to launch in which

order (Multiple dimensions)

- Can be applied to Programmes / Portfolios


Risk Based Project Prioritisation

8 9 10 11 12 13 14 15 16 17

Cifter Assessment

$ S

avin

g p

er

An

nu

m

Project A Project E

Project B Project F

Project C Project G

Project D Project H

Low Complexity High Complexity

Hig

h B

en

efi

t L

ow

Ben

efi

t

2

1

3

4/5

4/5

6



Summary

Conducting a CIFTER risk analysis at the beginning of Portfolio

Project selection process provides a quick, easy to use method

of assessing different projects dimensions before the project

starts.

Tool can be used by non-experts

but should be checked by experienced Project Manager to

ensure consistency

Provides key decision making information when agreeing

scope and launch criteria with Sponsor and major stakeholders

Provides clear communication to Project Team and all

of the stakeholders of the risks that must be

addressed if project is launched


References GAPPS (2006) A Framework for Performance Based Competency

Standards for Global Level 1 and 2 Project Managers Sydney: Global Alliance for Project Performance Standards

Crawford, a.l., “Crawford-Ishikura Factor table for Evaluating roles” 2005

Crawford, L.,”Global Body of Project Management Knowledge and Standards” in The Wiley Guide to Managing Projects, P.W.G. Morris, Pinto, Jeffrey K.,,Editor. 2004, John Wiley and Sons. P1150 –1196.

Crawford, L., “Senior Management Perceptions of Project Management Competence”., in IRNOP V.(2004a): Rotterdam, Netherlands.

Aitken, A.C., Dr Lynn,”A study of Project Categorisation based on Project Management Complexity” in IRNOP VIII, 2007: Brighton, United Kingdom, 2007

MacGregor, JT, Identification of key factors in the development of TotalCare® Aftermarket Services” MSc Dissertation: University of Manchester, School of Mechanical, Aerospace & Civil Engineering, 2008

Applying Risk Factors in the Strategic Selection

of Portfolio Projects


Part 2 Worked example using a CIFTER analysis on the decanting and demolition of a building



Workshop Project scenario

The decanting and demolition of a multi-storey building built in the 1960’s

Building occupied by approximately 330 people

-

Timescale for project - 6 months

Project cost £0.5m, Cost Saving £0.75m


Risk Assessment Sheet CIFTER Risk Project Complexity Assessment Tool

Project APM Joint Risk and Portfolio Management event

Overall CIFTER Risk Complexity Score:

Recommended PM Role to Lead Project :

CIFTER Factor 1 2 3 4 Comments

1 Stability of the overall project context.

Very

high High Moderate Low

2

Number of distinct methods and

approaches involved in performing the

project Low Moderate High

Very

high

3

Magnitude of legal, social, or

environmental implications from

performing the project. Low Moderate High

Very

high

4

Overall expected financial impact

(positive or negative) on the project's

stakeholders. Low Moderate High

Very

high

5

Strategic importance of the project to the

organisation or organisations involved.

Very

low Low Moderate High

6

Stakeholder cohesion regarding the

characteristics of the product of the

project. High Moderate Low Very low

7

Number and variety of interfaces between

project and other organisational entities.

Very

low Low Moderate High


Project Manager

Date 4th July 2013

Rating

7

14

21

28

LevelD

LevelC

LevelB

LevelA

CIF

TE

R R

atin

g

PM Role recommended to lead Project





Workshop Project scenario

The decanting and demolition of a multi-storey building built in the 1960’s

- Building is nearing end of useful life, is known to have asbestos and is located next to main road

Building occupied by approximately 330 people

- To create enough decanting space will require nearly 600 other people moving

Timescale for project - 6 months

Project cost £0.5m, Cost Saving £0.75m