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Process- and Project Risk ManagementProcess- and Project Risk Management
Cop
yri
gh
t©
BK
-CPS G
mbH
EH
AG
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“
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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““
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
„„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)
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
Adjustment of strategic vs. economic importance Adjustment of strategic vs. economic importance Total Portfolio considerationTotal Portfolio consideration
Economic Importance [€/$]
StrategicImportance
StrategicImportance
Economic Importance [€/$]
p1
p2
p2
p1
Tota
l util
ity
AdjustmentAdjustmentthrough through „Expansion“ and „Expansion“ and „Compression“„Compression“
StrategicImportance
Economic Importance [€/$]
Project PortfolioProject PortfolioProjectsProjects
© Copyright BK-CPS 2002
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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?
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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.
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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...“
© Copyright BK-CPS 2002
EHAG
Develop a Risk strategyDevelop a Risk strategyM
easu
re o
f d
amag
es
Probability of occurrence
ControlIgnore
Crisis Management
Reduce
Accept
Insure
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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) ?
© Copyright BK-CPS 2002
EHAG
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...“
© Copyright BK-CPS 2002
EHAG
Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO AssessmentExample : IACO Assessment
Easy to generate and handle
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO Assessment cont‘dExample : IACO Assessment cont‘d
Single sheets for each subsystem
© Copyright BK-CPS 2002
EHAG
Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO Assessment cont‘dExample : IACO Assessment cont‘d
See the rating and interaction for each system at ones
© Copyright BK-CPS 2002
EHAG
Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO Assessment cont‘dExample : IACO Assessment cont‘d
Set your individual dependencies and see
the resulting relations without reassessment
© Copyright BK-CPS 2002
EHAG
Software-supported Portfolio Management:Software-supported Portfolio Management:Example : IACO Assessment cont‘dExample : IACO Assessment cont‘d
Have an overview on all of your Systems
in relation to eachother
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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
© Copyright BK-CPS 2002
EHAG
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)