UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF UNIQUE NATURE OF

PROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENTPROJECT RISK MANAGEMENT

Presentation to: National Treasury Risk ForumPresentation to: National Treasury Risk Forum

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Significance of project managementSignificance of project management

A framework for project risk managementA framework for project risk management

ClosingClosing

TheThe statestate ofof thethe nationnation addressaddress 33 JuneJune 20092009 -- ExcerptsExcerpts::

..Community Work Programme.

..Infrastructure Development Cluster R787 billion budget.

..2010 FIFA Soccer World Cup.

Programme

management

comprises a group of

related projects

managed in a

coordinated way to

obtain benefits and

control not available

from managing them

individually.

Programs may

include elements of

related work outside

Strategic fit for project management

3

..the BRT system.

..digital broadcasting & signal distribution infrastructure.

..National Health Insurance scheme

..the urgent rehabilitation of public hospitals.

related work outside

scope of the

discrete projects in

the program.

– PMBOK pg 368

No two projects are

ever the same, so a

typical project

management

approach should

allow for some

degree of flexibility

– Treten ES

Link between strategy and projects

Strategic Objectives

Programme1 Programme2

4

Project A Project B Project C

� Group of inter-related activities

� Planned and executed in a certain sequence

� Create a unique product or service

� Within a specific time frame

Project management

is a formalised and

structured method

of managing change

in a rigorous

manner. It focuses

on producing

specifically defined

deliverables by a

certain time, to a

defined quality and

with a given level of

resources so that

What is a project?

5

� Within a specific time frame

Projects are often critical components of an organisation's

business strategy or relate directly to policies and

initiatives of the Government.

resources so that

planned outcomes

are achieved.

Risk should be

managed through

scenario planning. A

scenario that has

become reality is

beyond risk. It’s a

crisis.

-- Treten ES

Typical project life cycle

Design

Implementation

Benefits Realisation

6

Concept & Initiation

Design

1. Project sponsors are often not committed to the

objective.

2. Some projects do not meet the strategic vision of the

company.

3. Projects are started for the wrong reasons.

4. Inadequate staffing and skills for projects

5. Incomplete project scoping.

6. Lack of formal and practical project planning.

There’s an old saying

about how there are

a million ways to fail,

but only one way to

be right. When it

comes to projects,

nothing’s further

from the truth.

Projects fail the same

few ways over and

over again.

Why projects fail

7

6. Lack of formal and practical project planning.

7. Poor financial management in projects.

8. Insufficient funding and incorrect budgeting.

9. No formal project management methodologies and

practices.

10.Not all projects are going through a formal sign-off

process.

Risks can result in four types of consequences:

� Benefits are delayed or reduced;

� Timeframes are extended;

� Outlays are advanced or increased; and/or

Nobody sets out to

fail, but for some

reason people just

accept that flawless

success in projects is

a myth.

Talking about failure

causes discomfort, because nobody wants to give or take that kind of criticism.

Impact of risk on projects

8

� Outlays are advanced or increased; and/or

� Output quality (fitness for purpose) is reduced.

The case of Tacoma Narrows Bridge - 1940

1. Not all failures arecatastrophic and easy tonotice

2. The Tacoma Narrowsproject failed the momentthe first block of concretewas laid

3. Although, to plain sightthere was nothing wrong

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3. Although, to plain sightthere was nothing wrongwith the bridge, excessivecost cutting led to theinevitable

A more personal case for risk management

PROJECT MANAGER VIEW

1. Innovative technology to beintroduced for passengerflights

2. Save on energy

3. R50bn in sales by 2015

10

RISK MANAGER VIEW

1. Is technology tested?

2. What backup energy source?

3. Are there any potential law-suits ifwe sell faulty planes?

Significance of project managementSignificance of project management

A framework for project risk managementA framework for project risk management

ClosingClosing

Components of project risk management

Take calculated

risks. that is quite

different from being

rash.

-- George Patton

Project Control Environment & Governance

Project Planning

Risk Identification

Risk Assessment

Risk Response Strategy

Ongoing Communication

12

Issues management

Monitoring & review

Risk Management Plan

To drive project risk and issue management, a formal

risk management plan should be formulated at

project business plan stage.

3 pillars of project risk management

"Whatever name

they put on it--

business ... holistic

... strategic ...

enterprise--leading

organizations around

the world are

breaking out of the

'silo mentality' and

taking a

comprehensive

approach to dealing

with all the risks

13

with all the risks

they face."

-Towers Perrin

Initiation stage: Initial assessment

When you want to

test the depths of a

stream, don't use

both feet.

-- Chinese Proverb

14

� Detailed questions listed under each category

� Sections/ categories should be weighted depending on project

� These checklists can provide guidance to Internal Audit for

projects to focus on

� Checklist sections should be adapted to organisation as relevant

Initial assessment: look & feel

Risk should be

managed through

scenario planning. A

scenario that has

become reality is

beyond risk. It’s a

crisis.

-- Treten ES

# Questions and possible considerations

Answer

(Y/N)

3001 Has the Project leader's authority been established?

3002 Is the core team appointed?

3003 Does the core team understand the project purpose?

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Does the core team understand the project purpose?

3004Have the project stakeholders been clearly

identified?

� Simple yes/ no answer questions

� Answers given drive risk rating

� Possible impact and risks are pre-empted and relevant responses

suggested

� Checklist questions should be adapted to organisation

Design stage + ongoing: project risk assessment

Risk should be

managed through

scenario planning. A

scenario that has

become reality is

beyond risk. It’s a

crisis.

-- Treten ES

16

Project risk assessment: look & feel

Risk should be

managed through

scenario planning. A

scenario that has

become reality is

beyond risk. It’s a

crisis.

-- Treten ES

Risk Likelihood Impact

Low Med. High Low Med. High

Loss of funding X X

Influenza epidemic X X

The Risk Register should cover:

17

The Risk Register should cover:

� A unique identifier for each risk;

� A description of each risk and how it will affect the project;

� An assessment of the likelihood & impact per risk;

� A description of the mitigation strategies that can include

preventative (to reduce the likelihood), and contingency actions (to

reduce the impact);

� Who is allocated responsibility; and� In larger projects, costings of each mitigation strategy.

Implementation: issue and problem mgt

Take calculated

risks. that is quite

different from being

rash.

-- George Patton

18

Issue & problem management: look & feel

Risk should be

managed through

scenario planning. A

scenario that has

become reality is

beyond risk. It’s a

crisis.

-- Treten ES

Tips for issues management:

IssueNumber

Description Raised By

Date Priority Responsible

Officer

Actions &

ProgressNotes

Status Date Resolved

1.1 Lack of

Business Unit

representation

on Project

Working

Group.

Working

group

11/09/08 High Amma Letter of

invitation from

Project

Manager to

Business Units

who are not

represented

Open

19

Tips for issues management:

� Solve the root cause of the issue

� Resolve issues quickly to proceed as quickly as possible.

� It is good practice to encourage people to help identify solutions

along with the Issues.

� Engage the Project Sponsor/Steering Committee in the resolution of

issues from very early in the project.

� If a large issue looks too difficult to be resolved in a timely manner,

break it down into logical sub-issues.

� Inter-related issues should be resolved simultaneously

� Resolve major issues before POINT OF NO RETURN

1. The project manager - monitoring and managing all aspects

of the risk management process, including:– the development of the risk register and plan;

– the continual monitoring of the project to identify any new or changed risks;

– continual monitoring of the effectiveness of the risk management plan; and

– regular reports on status of risks to the Project Sponsor and the Steering Committee.

2. The other project team members can assist with the

identification, analysis and evaluation of risks and can assist

in the development of the risk management plan. They can

also be responsible for risk mitigation actions.

3. The steering committee oversees the risk management plan

Roles & responsibilities

“A common

misconception is

that ERM transfers

the responsibility for

risk from the line

managers to a

centralized,

bureaucratic unit. In

fact, the opposite is

true. A universal

principle of ERM is

that risk must be

managed by the

20

3. The steering committee oversees the risk management plan

and its periodic review. They are responsible for ensuring an

effective risk management plan is in place.

4. The project sponsor has ultimate accountability for risk

management.

5. Remember, risk management cannot be entirely the

responsibility of one person and that it is a communal

activity involving a range of stakeholders.

managed by the

business unit that

incurs it.”

-- Treten ES

Significance of project managementSignificance of project management

A framework for project risk managementA framework for project risk management

ClosingClosing

1. One of the major government spend categories is

programme/ project spend

2. Formalise project risk & governance (framework)

3. Build strategic relevance and position yourselves

4. Get involved earlier in projects/ programmes – say it

now, document later

5. Tell the truth all the time – no matter how

inconvenient

Closing remarks

“We have presented

to the nation our

programme for the

next five years.

Attached to each

commitment we

make is a detailed

project plan, with

targets and critical

milestones.”

-The Presidency

3 June 2009

22

inconvenient

6. Always test everything

7. The fastest way through the project should be the

right way

8. Our problems have, in the past been solved over and

over again.

9. Lets learn from history & stop ignoring the solutions.

End of Presentation – Thank you

Take calculated

risks. that is quite

different from being

rash.

-- George Patton

CONTACT DETAILS:CONTACT DETAILS:

Treten Enterprise Support: Specialists in Strategy and Treten Enterprise Support: Specialists in Strategy and Risk AdvisoryRisk Advisory

NameName : Terence Murasiki: Terence Murasiki

EmailEmail : : terence.murasiki@tretengroup.comterence.murasiki@tretengroup.com

MobileMobile : +27 (: +27 (0) 83 0) 83 465 6970465 6970

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Don’t limit yourself

Belief becomes reality. Many people limit

themselves to what they believe they can

achieve.

Treten Enterprise Support

Infinite solutions | Infinite possibilities