Transcript Scott Wilson master - North West Universities Association

Government Office for the North West
Objective 2
24/25th February 2003
APPs Risk Training Workshops
Introduction
Steve Martin
The need for better risk and
programme management





Imminent & continuing threat of
decommitment
Urgent requirement to mitigate risks and
reallocate funding to minimise funds lost
Need for a more proactive approach to
programme management
Opportunity to improve programme
management capability within GONW & APPs
Context: Reebok event, mid-term review
Risk management information
system





Focus on spend; ultimate importance of
outputs
Shared resource: only as good as information
inputted
Co-owned system: need feedback from
partners to improve
Realistic forecasts: measure of project
management capability
Normal part of project management: more
systematic structured approach
Objectives of workshop

To establish the basis for inputting to the
new management information

To develop a common understanding of risk
assessment and its role in project
management

To provide some good practice benchmarks
and guidance on its use in an APP context
Agenda

Richard Caseley


Heather Heaton


Risk assessment and its role in project management
Glyn Roberts


The risk form
Risk in the context of APPs
Working session
The Risk Form
Richard Caseley
Risk Form




Overview
Inputs – clarification of requirements
Practical usage issues
Outputs / benefits for active management
Overview
Claim profile &
decommitment risk
Improved
project management
capability
Clear
& timely
management info
Claim Form
RISK FORM
Risk Register
Inputting



Web-based tool using GONW server and linked to
interactive claim form (ICF) to avoid double-entry
Claims not outputs are main focus
Inputs to come from projects via APs:




Each AP will have 1 password with which it can access
all of its projects
Each project will have its own password
Data input by project
AP reviews data and issues to EPS
Inputs required


Data imported from Interactive Claim Form –
inputs to Risk Form minimised
Basic input for all projects, more details for
approved projects


Input level



informs on delivery and pipeline
P1, P2 - project level
P3 - claim element
Monthly input
Milestones
Milestone
Phase
0 – project synopsis (project identified,
described and quantified in terms of cost
and outputs)
Unallocated money
1 – completed ERDF form submitted to AP
Projects in pipeline
2 – AP issue signed offer letter to project,
with contracted claim profile
Projects delivering but
not yet claiming
3 – 1st financial claim
Projects delivering and
claiming
4 – last claim
ar
-0
3
Ju
n0
Se 3
p0
De 3
c03
M
ar
-0
4
Ju
n0
Se 4
p0
De 4
c04
M
ar
-0
5
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
M
Spend
Spend profile variability
Min
Most likely
Max
Benefits - general


Reports at AP, county/sub-region, priority and
programme level
Regular management reporting







Most probable claim
Minimum and maximum possible spend
Forecast vs actual
Focuses on biggest variances
Claim profile
Timeline for projects (and claim elements for P3)
Visibility of pipeline
Introduction to risk
Heather Heaton
The Risk Register


Decisions about spend variability in the
Risk Form are based on the degree of risk
inherent in a project
A Risk Register is a tool for


Understanding the nature and level of risk
Managing risk effectively
Risk management – the basics




The concept of risk
Its role and relevance in project management
Assessment of risk
Management of risk
What is risk?

… any potential threat or occurrence which
may prevent objectives being achieved in
terms of:
Timescale
Cost
Quality/benefits
Risk Management Process for
each project
Brainstorm
Risk Identification
Risk
Register
Risk Analysis
Risk Management
•Eliminate
•Mitigate
•Transfer
•Accept
Risk tools

Risk register





Advisory
Helps to prepare for the risk form
Useful management & review tool
Can be used at different levels of sophistication
Risk form



Required
Will be used to assess likely spend profile
Will assist in reallocation decisions
Brainstorming the risk register



Risk
Stage
next 1/4
Dec-03
Time (T)
w hole life
1-5
Think of all the possible
risks which the project
faces
Note them down, being
careful to define them
clearly
Note the phase of the
project they are most
likely to impact
Cost ©
1-5
Quality (Q) Impact (I) Probability (P) Severity
1-5
T+C+Q
1-5
Ix P
Ranking
Assessment of Risk

IMPACT



Risk’s effect on cost/time/quality, if it occurs
An impact is an effect on £ or days or deliverables
PROBABILITY


Likelihood of the risk occurring
Expressed as a % chance
Assessments are input to the risk
register
Risk
Stage
next 1/4


Dec-03
Time (T)
w hole life
1-5
Cost ©
1-5
Quality (Q) Impact (I) Probability (P) Severity
1-5
T+C+Q
1-5
Ix P
Classify impacts as VL / L / M / H / VH on scale 1-5
Risks around outcomes & outputs should be
considered but are not relevant to the risk form at this
stage
Ranking
Combined impact

A simple sum of the time cost & quality
effects
Risk
Stage
next 1/4
Dec-03
Time (T)
w hole life
1-5
Cost ©
1-5
Quality (Q) Impact (I) Probability (P) Severity
1-5
T+C+Q
1-5
Ix P
Ranking
Consider the likelihood of the risk
occurring





Risk
Stage
next 1/4
Dec-03
Very low
Low
Moderate
High
Very High
Time (T)
w hole life
1-5
Cost ©
1-5
Quality (Q) Impact (I) Probability (P) Severity
1-5
T+C+Q
1-5
Ix P
Ranking
Impact and likelihood combined
are used to rank risk
Impact
of
Risk
High
Medium
High
High
Medium
Low
Medium
High
Low
Low
Low
Medium
Low
Medium
High
Likelihood of risk occurring
Risk ranking & prioritisation



Impact x probability = score
Higher score = higher risk
Rank and prioritise actions accordingly
Risk
Stage
next 1/4
Dec-03
Time (T)
w hole life
1-5
Cost ©
1-5
Quality (Q) Impact (I) Probability (P) Severity
1-5
T+C+Q
1-5
Ix P
Ranking
Linking project risk assessment
to risk form inputs


Take an overview of the project’s risk register
Consider the overall degree of risk around the
project’s delivery



Greater risk will mean greater variability



In terms of the value of claims
In terms of timetable
In claim forecasts
In delays and durations
eg greater difference between max & min
claim forecasts for higher risk projects
ar
-0
3
Ju
n0
Se 3
p0
De 3
c03
M
ar
-0
4
Ju
n0
Se 4
p0
De 4
c04
M
ar
-0
5
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
M
Spend
Spend profile variability
Min
Most likely
Max
Management of risk



Identifying mitigation
Allocating responsibility
The importance of regular review
Risk management
Risk
Ranking Mitigation Owner
Review
1
2
3
4



Identify reasonable mitigation action
Allocate a risk owner
Set a date for review
Questions to ask at review

Each month consider:






Are all risks still relevant?
Are there any new risks?
Have they been mitigated as far as possible?
Has mitigation reduced their likelihood or impact?
Update risk register
Update risk form
Risk review is an essential component
of good project management

Risk Review Allows:
- Tracking of risk mitigation actions
- Up-to-date accurate forecasting

Risk Review May:
- Lead to project modification / re-structuring
- Lead to project cancellation
Risk in the context of APPs
Glyn Roberts
APPLYING RISK
ASSESSMENT/MANAGEMENT







The Task
Key risk principles
Other funds risk requirements
Typical Risks
Key Stages for Assessment/Management
Dealing with Common Risks
Timing & extent of process
Objectives




Delivery of Action Plan contract
Partnerships responsible for
PROACTIVE management
… and report back to EPS if problems
Does Action Plan need adjustment?
Key Principles




Understand risk assessment
Understand the projects
Risk Awareness
Common Sense (not rocket science!)
Consider risks to:

Claim levels/profile (underspend/overspend/delays)


Outputs (undershoot)
Outcomes - quality
Other Funders’ Requirements
•
•
•
•
Match funds require risk assessment in appraisal
Not much detailed guidance
Tend not to emphasise risk management
SRB Appraisal Guidance:
•
•
identify & consider each component of risk
take steps to minimise 'downside risks' (that make
project under-perform)
• Similar - RDA, Lottery Funds, EP Gap Funding
Typical Risk Categories

Generic Risk categories






Funding e.g. no & types of sources
Political risks/approvals
Management capacity/capability
Accommodation & equipment
Cost escalation & overruns
Market risk e.g. insufficient demand
Typical Risk Categories
Additional Priority 3 Risk Categories
Land acquisition
Unanticipated Site Issues
Legal Risk
Contractual Risk
Other risks - examples:
3rd Party actions
Underspend
Overspend
No claim
Weather
Costs associated with transfer to private sector
Project risk process
-
Risk register (guidance approach/other)
Identify risks for each element of project
Plan of action – risk plan
Take action
Performance review to track results
Ongoing risk assessment in
project management

Start early for greatest benefit




Part of project appraisal
Identify mitigation and allocate clear
ownership within project team
Project Manager to manage risk and review
regularly (monthly)
APs may need to take more of a lead for
Priority 2 projects
Dealing with Common Risks
APPs & EPS should consider:
-
Any pattern of common risks in groups of projects?
Ask questions
Collaborative or across the board actions to mitigate
common risks? (as started from Reebok)
Even with good assessment
unforeseen risks often arise
therefore…
Risk assessment & mitigation a continuous process
To project completion/exit/succession
Not just at development & appraisal
Link to monitoring and evaluation
Feedback experience
Build capability to deal with risk
Process Outputs
Pulling it all together

Risk analysis software combines all the
project level information to provide


An overview at AP level
An overview at GO level
At Action Plan level





Report will show profile and variability of total
AP spend
AP will be able to target mitigation actions
appropriately
Overprogramming decisions can be made on
the basis of robust analysis
AP may choose to reallocate funds between
projects
AP may voluntarily decommit funds for
redistribution
At EPS level

Level of management intervention will be
proportional to capability displayed



In forecasting
In delivery
Programme wide analysis will inform
decisions about



Reallocation of funds between APs
Decommitment
Overprogramming
Next steps
Risk Analysis Programme
Date
Activity
Now
APs undertake risk assessment at project
level
mid March
Risk Form website goes live
Early April
Completed risk forms required back from
APs for all projects
Late April
EPS issue management reports (output from
risk analysis) to APs
Ongoing
Process repeated each month ie APs
complete Risk Form, EPS run risk analysis
and issue reports to APs, APs use them to
actively manage their projects
Outcomes of workshop

A basis for inputting to the new management
information

A common understanding of risk
assessment and its role in project
management

Some good practice benchmarks and
guidance on its use in an APP context
Conclusion: some key points




Co – owned system; shared benefits
Partner feedback; continuing support from
Scott Wilson and GO-NW
Information system reflects quality
of risk management
Immediate need , but long-term capacity
building