Risk – GleeYM https://www.gleeym.com GleeYM offers complete risk management , PMO, Mind Mapping, Training and Digital Transformation Servces! Sun, 06 Nov 2022 07:02:49 +0000 en-CA hourly 1 https://wordpress.org/?v=6.9.4 https://www.gleeym.com/wp-content/uploads/2022/01/cropped-gleelogo-1-1-32x32.png Risk – GleeYM https://www.gleeym.com 32 32 166212591 Rethinking Risk Management – Why? Seeking Smart Solutions by 1 Expert! https://www.gleeym.com/2022/11/06/rethinkingrisk/ https://www.gleeym.com/2022/11/06/rethinkingrisk/#respond Sun, 06 Nov 2022 05:14:35 +0000 https://www.gleeym.com/?p=6048

Rethinking Risk Management – Why? Seeking Smart Solutions

The pandemic was the ultimate shock to the system for organizations, redefining how project leaders proactively plan for risks of any scale. But the need for teams to prepare for the unexpected persists. Amid geopolitical unrest and supply chain disruptions, concerns that organizational blind spots could knock projects off course remain front of mind.

According to the World Economic Forum’s The Global Risks Report 2022, 42 percent of business and government leaders believe volatility and surprises will reign over the next three years. And those threats can have long-term consequences.

Reducing the Element of Surprise! - Rethinking Risk Management

There’s also a need to drill down on existing risk mitigation efforts, says Yasir Masood, PMI-RMP, PMP, project and risk consultant, GleeYM, Toronto. Masood develops risk register supporting documents like mind maps, influence diagrams and decision trees. He also performs “What if?” analyses to assess different scenarios, particularly unknown risks.

“My goal is to keep the risk register simple and easy to understand by all stakeholders,” says Masood, who served on a committee this year to update PMI’s Risk Management Professional (PMI-RMP)® certification exam. “People try to add information to the risk register, and it creates confusion, particularly when the risk register is reviewed by the top management and people who are not directly involved. So my goal is to keep it simple and to the point so everyone in the organization can understand the language and context.”

Seeking Smart Solutions

AI and machine learning can be particularly helpful to assess risks for supply chain interruption and during infrastructure or environmental projects, Masood says. But he cautions project leaders to not blindly follow bots—they need to balance those insights against human input and analysis.

“Projects are for people and managed by the people,” Masood says.

While it’s good that AI and other tech tools are being used to maximize productivity and improve projects, many people who are change-averse get biased and try to find ways to make the technology fail, resulting in cost overruns and delays Masood says. Beyond that, AI can’t account for valuable feedback from major stakeholders who have the power to apply pressure that can either delay or stop a project. Software can help teams select a route for a pipeline or railway based on available data, but AI-driven decisions can be rejected or changed based on feedback from community members as well as government and regulatory bodies.

“Therefore, balance is important between people and AI while decision making,” Masood says.

Case in point: The European Space Agency says the planned 2022 launch of its first Mars rover will likely be delayed by at least four years after it suspended relations with Russia’s Roscosmos space agency, a project partner, because of Russia’s invasion of Ukraine. The postponement will also force scientists to wait for the mission’s ultimate payoff: critical research data. Meanwhile, supply chain barriers have slowed the launch of solar farm projects in South Africa. Potential project backers retreated amid the rising costs of shipping photovoltaic panels, putting on hold plans to build out more sustainable energy in the region.

Read full article by visiting:

https://www.pmi.org/learning/publications/pm-network/digital-exclusives/rethinking-risk-management

 

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]]> https://www.gleeym.com/2022/11/06/rethinkingrisk/feed/ 0 6048 Capital Project Petrochemical Process Plant, IRR, and NPV Analysis – Webinar https://www.gleeym.com/2020/08/25/capitalproject/ https://www.gleeym.com/2020/08/25/capitalproject/#respond Tue, 25 Aug 2020 22:10:20 +0000 https://www.gleeym.com/?p=1607

Capital project for the petrochemical process plant (downstream) is slightly different from other capital projects. It requires estimating Total Installed Cost (TIC) plus Owner cost in order to find the complete project cost. Cost estimation for petrochemical process plant is comprised of equipment specification and definite plant facility information.

In this case study, there are 2 products that will be sold in two regions. The price strategy is different so the IRR and NPV will be calculated for base case and under uncertainties and risks. Then we’ll compare the IRR and NPV under different scenarios.

Also visit following link to watch recorded webinar

Digital Product Development and Decision Making Under Uncertainty

Petrochemical plant project management - www.gleeym.com/qra
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]]> https://www.gleeym.com/2020/08/25/capitalproject/feed/ 0 1607 Risk Management with Mind Maps https://www.gleeym.com/2020/05/26/webinarmm/ https://www.gleeym.com/2020/05/26/webinarmm/#respond Tue, 26 May 2020 20:37:09 +0000 https://www.gleeym.com/?p=1525

It was a great interactive risk management process walk through with real examples. Discussed:

1- Risk Management plan along with its components

2- Risk Identification. Using sticky notes digitally.

3- Qualitative Risk Analysis. Discussed in details Risk Matrix and who aligned it with Enterprise Risk Management.

4- Quantitative Risk Analysis. Discussed schedule, schedule audit, cost estimates and Monte Carlo simulation in considering real example that is ” Digital Risk Management Project”.

5- Risk Responses: What to consider and how to plan a mitigation actions. Discussed Risk Contingency and how to calculate it.

6- Risk Register: Shown risk register with example

7- Risk Communication: Stakeholder Identification, Stakeholder Analysis and communication with them on a priority basis.

8-Risk Mitigation Actions: SMART, avoid ensure and meetings words. Planned Vs Actual.

Last but not the least ” Threat To opportunity”. Develop new type of simplified BowTie with Mitigation actions instead of impacts.

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QUANTITATIVE RISK ANALYSIS

MIND MAPPING SOLUTIONS

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Schedule and cost estimates after creating mind map
Pic - Schedule and Cost Estimate with Mind Map

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Areas of expertise in Mind mapping, but not limited to:

  1. Project Risk Management; qualitative and quantitative risk analysis for cost and schedule using Monte Carlo Simulation. Enterprise Risk Management (ISO 31000)
  2. Facilitating project planning, risk and project management. Experienced with both physical and virtual)
  3. Visual project management by integrating Mind maps with MS Projects
  4. PMO set up, process Improvement
  5. Enterprise Project Management software planning, deployment and implementation
  6. IT project within Agile, scrum and waterfall (hands on experience with JIRA and Confluence)
  7. Digital Risk Management (Integrating risk management with Cyber security)
  8. Process Safety, HSE and Fire Safety for Oil & Gas
  9. Product Development Physical and Digital
  10. Digital Transformation and Change Management
  11. Training (Experience with both in person and virtual. )

This webinar was recorded for the Biggerplate PRO members.  To find out more, visit https://www.biggerplate.com/PRO

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]]> https://www.gleeym.com/2020/05/26/webinarmm/feed/ 0 1525 Quantitative Cost and schedule Risk (QCRA, QSRA) Modelling of Weather event. https://www.gleeym.com/2020/02/06/qraw/ https://www.gleeym.com/2020/02/06/qraw/#respond Thu, 06 Feb 2020 16:35:02 +0000 https://www.gleeym.com/?p=1210

Introduction

Tough, rigid, and uncertain conditions ground and environmental conditions in a remote location can be treacherous. Weather calamity can be a known-unknown or unknown – unknown event with huge impact.

Generally, quantitative cost & schedule and Cost (QSRA & QCRA) model are developed for catastrophic events like Hurricane, Tornado and flood etc.

Case Study – simulating Flash flood what if scenarios Gas Processing Facility project in a difficult terrain.

One possible threat is “flash food”. That can be a result of a heavy rains etc.

Biggest concern is:

1- What if flash flood hit the project site and the access road to the Gas processing Facility?

2- What will be the impact to project schedule and cost?

Developed quantitative cost & schedule (QCRA, QSRA) uncertainty and risk model to analyze the flash flood impact. A small event can be disaster in seconds.

Schedule

Pic 1 - Project Level 1 Schedule -Subproject

Resources

Pic 2 - Resources

Scenario

Access road is critical to establish Gas processing facility. As it’s in mountain terrain, the possibility of flash flood is quite obvious during summer. Considered, flash flood will hit and cause a delay of one (1) week from May to September. 

Uncertainity and Weather Risk

Uncertainty is added to project activities because of lack of information during project beginning. Furthermore, weather risk is added to cater the impact of flash flood using Monte Carlo Simulation.

Results can be beneficial to evaluate the risk further and propose option for risk mitigation. Cost is the key factor and in Oil & Gas demonstration of As low As Reasonable Practicable (ALARP) is mandatory for high and medium risks. 

 

Results

First Monte Carlo Simulation is performed by assigning uncertainty to activities. Initial planned cost is estimated $ 1.536 M. Cost with Uncertainty and weather risk is:

Pic 3 - TimeScaled cost After Monte Carlo Simulation


References

Palisade @RISK

Softvative Inc.

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]]> https://www.gleeym.com/2020/02/06/qraw/feed/ 0 1210 Project Risk Management Plan – Mind Map. What? Only 1 Picture! https://www.gleeym.com/2020/02/06/riskmindmap/ https://www.gleeym.com/2020/02/06/riskmindmap/#respond Thu, 06 Feb 2020 16:29:34 +0000 https://www.gleeym.com/?p=1206

Project Risk Management Plan – Mind Map. What? Only 1 Picture!

Standard mind map
Risk Management Plan - MindMap

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]]> https://www.gleeym.com/2020/02/06/riskmindmap/feed/ 0 1206 SCHEDULE RISK ANALYSIS (SRA) – SCHEDULE UNCERTAINTY https://www.gleeym.com/2019/10/23/sra/ https://www.gleeym.com/2019/10/23/sra/#respond Wed, 23 Oct 2019 18:17:57 +0000 https://www.gleeym.com/?p=922

SCHEDULE RISK ANALYSIS (SRA) - SCHEDULE UNCERTAINTY

Keywords:

Schedule, Critical Path (CP), Milestone, Deterministic Value, 3-Point estimates, Monte Carlo Simulation, Correlation, Iteration, Cumulative Frequency Chart, Probabilistic Branching, Distribution, Triangular Distribution, Categories, Duration, Finish Date, Uncertainty, Skewness, Positively Skewed, Negatively Skewed.

Summary:

A schedule risk analysis (SRA) uses a risk-based project schedule (derived from the master schedule) to apply statistical techniques to envisage a level of confidence in meeting a project’s completion date. This analysis focuses on uncertainty they affect the schedule overall and activities durations and completion date. SRA starts with reviewing the project schedule and performing schedule quality checks as specified by DCMA 14-points. A sequence of activities and activities relationship plays an important role to avoid “Garbage in and Garbage out”.

Project Schedule Quality Check for Schedule Risk Analysis:

There can be several other parameters that can contribute to quality SRA. Like:

  • Contain all the activities that are necessary for the SRA.
  • Keep in mind there is a difference between “Master Schedule” and Schedule for risk analysis.
  • All activities should be linked together.
  • The sequence of activities plays an important role. Improper sequence of activities is one of the causes of conflicts in major complex projects.
  • Get the buy-in from all the key stakeholders.
  • Specify the assumptions and analyze the assumption during the simulation.
  • Specify the uncertainties for each activity i.e. min. most likely and the max. Avoid heuristics estimates. 
  • Try to get rid of “Cognitive Bias”. Although it is very difficult. Support from top executives may help.
  • Depending upon the level of schedule. It takes days or weeks or even months to develop a schedule. There is no magic to perform SRA and visualize the data in seconds. Need to perform SRA several times with different scenario to compare results.
  • Overlay results to analyze and visualize the difference between various output by varying the input data.
  • Uncertainties may cover lack of knowledge activity duration estimation error, resource availability, organisational culture, internal and external factors, market conditions, political scenario, project execution methodology, resource availability, productivity, project constraints, technology constraints, Biased opinion, known – Known and even unknown – unknown (This scenario should be analyzed separately to understand the impact) etc.

 

Perform quality checks on Schedule before Monte Carlo simulation as per DCMA 14-points may be a good choice for quality checks. Few points are given below

  • Activity logic
  • Leads and Lags: Schedule must be not containing any activity with leads and lags. Decompose the activity into two activities to avoid leads and lags.
  • Check activity relationships. Avoid Hard constraints.
  • Avoid high floats in the schedule. Also, if there is any negative float then fix it up.
  • Check other DCMA’s constraints as per project nature and schedule level.

Schedule Risk Analysis (SRA):

Schedule risk analysis (SRA) helps to analyze the uncertainty in the project schedule using Monte Carlo Simulation. Deterministic schedule duration and finish date don’t provide enough information to answer flowing questions:

  1. What is the probability of completing the project on the target date?
  2. What if the predecessor of an activity finishes late?
  3. What is the eighty (90%) chance of finishing the project?

SCR scope is:

  1. Schedule Risk Analysis (SRA) to analyze uncertainty
  2. Correlating the activities
  3. Probabilistic Branching

List of Activities:

List of activities are given below with duration and predecessors

Picture 1 - List of Activities

Parameter Entry Table:

Parameter Entry Table is created for 3-Point estimates collected after a brainstorming session with the Subject Matter Experts (SME). Collect data is also benchmarked with archives available for similar-sized projects within the organization. Chain-of-causes is a good approach to understand the various factors contributing to uncertainty in the activity. Another development is using the Casual Loop Diagram (CLD). It helps not only to identify the key variables but to draw a relationship between cause and effect. Another methodology is Mind mapping. Mind Mapping helping to analyze the problem by lining the different variables.

Picture 2 - Parameter Entry Table

Parameter Entry Table is shown above with min. most likely and max. values. Most likely is the schedule actual duration. For this article, optimistic value is adjusted to 10% of the most likely value. While Pessimistic value is 50% of the most likely value. For 3 points estimates either use PERT or Triangular distribution. The triangular distribution is the best choice to have positively skewed data with wider distribution of data.

Simulation and Results:

Run the Monte Carlo Simulation (MCS) for SRA. There is a 90% chance that the project will finish before June 18th, 2020.  Surprisingly, there is only less than a 5% chance to complete the project on the target date.   Why there are shoulders in the output graph?  It is because the project calendar is set to five (5) working days. It is representing off days.

Results are:

Picture 2 - SRA - 5 Days Calendar

What if to simulate project risk analysis for a project schedule with seven (7) days working calendars? It depends on the project nature. Usually, construction projects, commissioning and outages are following seven (7) working days calendar.

In the case of seven (7) working days calendar the project target finish date is Feb 23, 2020.  results are:

Picture 3 - SRA - 7 Days Calendar

Again, there is less than a 5% chance to meet the target date. There is a 90% chance that the target date will be close to Mar 30, 2020.

Correlation:

Correlation is required for Schedule Risk Analysis to avoid merged biased because of parallel paths along with critical Path (CP) i.e. near Critical paths. During a simulation, these paths merged together resulting shorter project completion duration. A risk driver is an approach to deal with it. However, another approach is to correlate related activities. correlating related activities results in wider distribution. Keep in mind activities in parallel or in series also play an important role in simulation and results.

Picture 4- SRA - Activities Correlated

There is a 90% chance that the target date will be Mar 30, 2020. Almost seven (7) days of difference between SRA with activities correlated and without correlation.

Probabilistic Branching:

Probabilistic branching is useful to analyze the scenarios within schedule during Scheduling Risk Analysis (SRA). For this project, there are two branches and executed simultaneously. The interesting part is that one Probabilistic branch lies in the Critical path (CP) while other path lies in a near-critical path.

Probabilistic branches are:

  1. Activity B – Activity D – Activity E – Activity F
  2. Activity C – Activity G -Activity H – Activity I

Results are:

Picture 5- SRA - 2 Probabilistic Branching

Results are negatively skewed. It is because of various reasons and one is having two branches in a schedule. Further analysis can be carried out like Sensitivity Analysis and Probabilistic Gantt chart to analyze the behavior of the activities.

Conclusion:

SRA is good for analyzing the project schedule statistically. Prior quality checks help to prepare schedule for a SRA. Running MCS, again and again, helps to analyze the various scenarios and compare results.

Thank you:

for @RISK

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]]> https://www.gleeym.com/2019/10/23/sra/feed/ 0 922 Driving Project Portfolio Risk & Opportunity Management for Benefit Realization https://www.gleeym.com/2019/07/28/portfolio-risk/ https://www.gleeym.com/2019/07/28/portfolio-risk/#respond Sun, 28 Jul 2019 20:17:03 +0000 https://www.gleeym.com/?p=843

Driving Project Portfolio Risk & Opportunity Management for Benefit Realization

“Enhance opportunities and reduce threats by aligning sub-portfolios, programs and projects to meet organizational strategic goal”

 

This article illustrates the high-level components of Portfolio Risk & Opportunity Management. The risk is both threats and opportunity. The main goal is to minimize threats and maximize the opportunities for an organization. Consolidated, organized and well-connected approach is required to manage portfolios, programs, and projects at an enterprise level. Nache and robust system is needed to synchronize all the components of the risk management at corporate level i.e. Enterprise solution.

In this era of digitalization where sustainability and profitability are the main concerns for the big organization. Business transformation (Organizational Change) can only be successful if all the components are connected systematically to achieve organizational strategic goals.

This article provides headway to design, plan, and implement a Portfolio Risk management system at an enterprise level. This article is applicable to Oil & Gas, Construction, IT, Telecomm. Govt, and Utility sectors etc.!

What is Portfolio?:

A portfolio is, a collection of programs and projects, managed as a group to achieve organizational strategic goals by aligning and optimizing 2P & 2S; People, Process, System, and Structure with the corporate policy and the strategy.

Portfolio Risk Management:

Planning, designing and implementation of effective Project Portfolio Risk and Opportunity Management system mainly depends on organizational culture, top management commitment to risk management, stakeholders engagement, open and fair communication, processes and business objectives alignment to meet organizational strategic goals.

Portfolio dynamics play a pivotal role in shaping up the Portfolio Risk and Opportunity management system. These factors are fiscal boundaries, return on investment, organizational capacity and capability, internal and external forces, change drivers, business transformation dynamics, informational management system, and stakeholder dynamics (especially strategic stakeholders) etc.

Pic 1 - Portfolio Risk & Opportunity System Drivers

Portfolio Risk & Opportunity Management System Drivers:

Portfolio Risk and Opportunity management is decisively or crucially important for the success of managing portfolios where the cost of portfolio component failure is significant, or when risks of one portfolio component increase the risks in another portfolio component.

Portfolio Risk and Opportunity management contributes to portfolio component performance that may enhance customer satisfaction, product or service quality and productivity for sub-portfolios leading to substantial profitability and sustainability for an organization. 

One of the goals of Project Portfolio Risk and Opportunity Management is to aligning sub-portfolios, programs, and projects risks with organizational strategic goals.  Portfolio Risk Metrics / Key Performance Indicators (KPIs) help to check and validate the efficacy of the Portfolio Risk and Opportunity Management system i.e. planned vs actual. Successful and conclusive system foundation depends primarily on Portfolio Risk & Opportunity Management plan and Identifying Key Portfolio Risk Indicators (KPRI) at the portfolio level. Driving program and project risk management through Portfolio Risk & Opportunity Management plan and KPRI help to align the complete risk management process to meet organizational strategic goals.

Reasons for Portfolio Risk and Opportunity Management failure:

Two (2) cardinal reasons for Portfolio Risk and Opportunity Management failure are:

  •  In large organizations project portfolio management fails because of managing each sub-portfolios in an isolation. Even the processes are not identical within the same portfolio in different regions or units, resulting in a backlash for an organization to achieve her organizational strategic goals. Therefore, it is required to manage portfolio at the enterprise level by aligning sub-portfolios, programs and projects to overall organizational strategic goals for Benefit Realization i.e. Aligning resources, reduce costs, improve productivity, enhancing customer satisfaction and increase profitability.
  • The second main reason of Project Portfolio Management failure is the absence of Portfolio Risk & Opportunity Management system at the portfolio level. 

Portfolio BreakDown Structure:

Portfolio Risk and Opportunity management plan gives direction to achieve optimum desired results from the whole risk management process.

According to PMI Standard for Portfolio Management:

“Portfolio Risk is an uncertain event or condition that, if it occurs, has positive or negative effect on one or more project objectives. Risk may have one or more causes and, if it occurs, the corresponding effects may have positive or negative impact on one or more portfolio success criteria.”  

Pic 2 - Portfolio BreakDown Structure

Portfolio Risk & Opportunity Process Flow:

Portfolio Risk and Opportunity Management is a structured process for assessing and analyzing portfolio, programs and projects risks with the goal of maximizing the opportunities and minimizing the threats. Also, mitigating those events, activities, or circumstances which can adversely impact the portfolio is an essential step towards benefit realization.

Simplified Portfolio Risk and Opportunity process flow is portraying underneath:

Pic 3- Simplified Portfolio Risk & Opportunity Process Flow

Portfolio Risk & Opportunity Framework:

A well-connected, structured, process driven and stakeholder focused framework should be considered to plan, design and implement Portfolio Risk & Opportunity Management. Each complement of the portfolio, whether there is inter-dependency or not, must be aligned to achieve overall portfolio management objectives.

Integrating risk management to a portfolio level is challenging and require practical insight into how Portfolio Risk Management can be effective for benefits realization and meeting strategic organizational objectives. Risk management maturity across the organization can be achieved gradually by communicating with stakeholders on regular basis. Establish Portfolio Risk Governance framework for better control and direction. 

Pic 4 - Portfolio Risk & Opportunity Framework

Portfolio Risk Governance Framework:

Began the Portfolio Risk & Opportunity Management process by developing Portfolio Risk and Opportunity Management plan followed by conducting a series of Risk workshops, brainstorming session, and interviews with top management and managers at department level including Portfolio, Program and Project Managers to collect the initial inventory of risks. Each of these risks club together to make a list of ten (10) to fifteen (15) risks, Key Portfolio Risk Indicator (KPRI), that may hamper the portfolio objectives. Assign the departmental head of specific department as a Risk owner. Cluster identified t Program and Project Risks around KPRI for better monitoring and control. It helps to enhance the opportunities and reduce the threats in meeting organizational strategic goals. 

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]]> https://www.gleeym.com/2019/07/28/portfolio-risk/feed/ 0 843 CONSTRUCTION RISK MANAGEMENT, A DIFFERENT PERSPECTIVE: WHAT? WHY? https://www.gleeym.com/2019/07/28/construction-risk/ https://www.gleeym.com/2019/07/28/construction-risk/#respond Sun, 28 Jul 2019 20:08:18 +0000 https://www.gleeym.com/?p=836

CONSTRUCTION RISK MANAGEMENT, A DIFFERENT PERSPECTIVE: WHAT? WHY?

Introduction:

External pressures like Digital transformation, volatile economic situations, lower rates and changing political scenarios are somehow putting more pressure to stay competitive. Disintegration and lack of information flow in 360 degrees (Up and down, internal and external) are the internal factors that constrict an organization’s growth. The ultimate result is falling market share and a decrease in profit. 

Construction program/project execution is cumbersome in nature. Involvement of various stakeholders, internal and external factors and nature of the project itself drive complexity. Regardless of the region, many construction programs/projects are an ultimate failure or jeopardized and require recovery plans; over budget and behind schedule.

The construction project is truly a portfolio or program with many facets. Harnessing the different phases and different facets are the key drivers in construction management.

 Risk management helps to navigate through the complete project cycle and identify the minor to major pitfalls and even the Show Stoppers. Planning, designing, structuring, implementing a risk management system and software in a systematic way are crucial for managing complex construction projects.

Process Driven Risk Management - KRI

Process driven approach is good, but during process design, the most neglected part is people or stakeholders. People plan, design, implement, execute and drive the process. It is not the other way around. Stakeholder focussed, adaptable and agile system provides value to the organization.

Process driven risk management is more robust and structured than software risk driven system. Software is a tool and an integral part of the system. In reality, not a single software alone helps to map risks effectively.

 Key Risk Indicators (KRI) approach to managing program and projects at the portfolio level gives a systematic and structured way to align efforts for achieving overall strategic goals. KRI drives Key Performance Indicators (KPI) for analytics and reporting.  Cluster risks to KRI and risk management based on the priorities provide analytics for decision making. Flexible and adaptive KRI can be helpful for organizational growth and sustainability. Establish constructions KRI with respect to internal, external context, organizational project management methodology and way of managing projects itself. 

Portfolio Construction Risk Management:

Planning and managing projects in silos are common in the construction industry. Managing project at the program and portfolio level helps to align and drive resources to achieve goals. Capacity and the Capability (C&C) alignment and optimization help organization to manage Risks effectively under the umbrella of the Portfolio. A complex project with high budget/capital cost & high resource utilization (C&C) is normally a risky project, but often generates more Return on Investment (ROI) then a low budget small project. The picture given below illustrates an overview of a project portfolio in a bubble chart.

Structuring the project portfolio system around KRI, as a driving force to overall project portfolio risks, helps to understand the common pitfalls and align risk management for Organizational growth, profitability, and sustainability. Does the question arise about profitability? Structured and process driven system help to Quality Conformance i.e. reduces extra work, improve efficiency and optimize all 3M’s (Man {workforce}, Machine, and Material). Given below figure illustrates a simplified process flow of Portfolio risk management. KRI directions are flowing from top to bottom while project risks are escalated to the program and then the portfolio. 

Pic 1 - Capacity and the Capability (C&C)

Risk Management Process Flow:

Simplified risk management process flow illustrates steps for risk management:

Pic 2 - Risk Management Process Flow

Risk management plan documents the flow of information dissemination it to the stakeholders on a regular basis as per requirement. Risk management plan mind map highlights the necessary components of the Risk management plan.  

Pic 3 - Risk Management Plan Mind Map

Risk Advisor Vs Risk Clerk:

Decide whether to hire Risk advisor or risk clerk (collecting data and entering it to risk register, a risk repository). Access denial or hiding risk information from the risk advisor is a common dilemma in the construction industry.

ire risk advisor (specialist, advisor, etc.) based on the following key attribute qualities:

1-     Experience, not a certification only

2-     Exposure (Least considered, but most important quality)

3-     Emotional intelligence

4-     Due Diligence

5-     Networking and socialization (again most neglected part. Risk professional should spend time with coworkers to get insight into the facts)

6-     Learn and train abilities

7-     Adaptability

8-     Act like a Smart Sensor ( According to Wikipedia, Smart transducer, an analog or digital transducer or actuator combined with a processing unit and a communication interface)

9-     Strategic

10-  Process focused, but keep an eye on stakeholder engagement

Project Risk Management a Driver or Driven:

Throughout in the construction industry, Project control drives the risk management. 

Pic 4 - Project Risk Management as Driven

Driven state unconsciously bringing and backing Risk Tangent. Risk Tangent is a source of cognitive biases. Cognitive biases, difficult to judge and manage, lead to a false alarm.

Successful Construction management lies in effective risk management. Proactive and receptive risk management approach helps to drive other components of project management. Get/receive or retrieve information, process it and send back signals, feedback control system, to the respective component for preventive or corrective actions. Scope baseline, schedule baseline, cost baseline, etc. should be set after performing a risk.

Pic 5 - Project Risk Management as Driver

Risk Maturity:

Risk Management maturity provides a road-map to benchmark the risk management process. 

Pic 6 - Risk Maturity Level

Most of the organizations, especially construction organization are in the bottom tier or second (2nd) last bottom tier. Top reasons are a poor Project & Risk management system, lack of commitment and vision and lack of stakeholders involvement.

Risk maturity in projects directly influenced by an organizational project management structure and culture. Conducting project risk maturity assessment is a good start. It provides a baseline to measure system efficacy. It also helps to provide data for analytics to measure success for achieving long-term strategic goals and short-term “Quick wins”.

Transitioning From Threat to Opportunity:

Project management, engineering design, procurement management and execution of construction, etc. require talented human resources. Client, contractor, and consultants discussing and complaining shortage trained workforce. It is phenomenal in construction projects and growing industry-wide.

This known – known (or sometimes Known -Unknown) threat has been predominately highlighted in the risk registers and dashboard reports to management. Grappling with this threat requires to understand root causes and find out the best possible solution out of many alternatives in the long-term. This is a strategic program or portfolio risk. 

Project manager alone can’t resolve or mitigate it alone. Salary/compensation and organizational culture, including the behavior of the immediate boss are the hidden root causes. that hindered to engage and retain a skilled workforce.

This risk impacts every construction project badly, irrespective of project execution region. Best way to mitigate this risk is to transform it into an opportunity. Identify your requirements and establish either training institute or partner with the training institute to have skilled workers/labors ready for current and upcoming construction projects. Construction productivity is directly impacted by the unavailability of skilled labor during construction. Let us understand the risk and discuss possible mitigation actions.  

Cause: Because of 1- Many projects executing in an area

      Risk: Unavailability/shortage of skilled labor for construction

Impact: 1- Schedule Delay

               2- Cost over run

               3- Poor Quality

 

The paradigm shift from threat to opportunity requires management support. It is a Business Risk. Mitigating this threat to opportunity requires the involvement of various key stakeholders. A high-level illustration is given below, and pictures show the transition from threat to opportunity.

 

Pic 7 - Unavailability of Skilled Worker During Construction

Construction Risk Management Areas

  • Workforce
  • Labor cost
  • Contractual risk
  • Liquidity
  • Profits
  • contracts
  • Procurement risks
  • Penalties
  • Deadlines
  • Project Management
  • Construction Equipment ( Types and depreciation)
  • Long lead items (LLI)
  • Construction sequence
  • Schedule priorities
  • injuries on construction sites
  • Construction Defects
  • Fire
  • Site Protection
  • Natural Disasters
  • Financing Big Projects
  • Regulatory Changes
  • New Technologies
  • Missed Deadlines
  • Insurance Claims

Future Opportunities:

  1. Drones – UAV (Unmanned Air Vehicle)
  2. Digital Transformation
  3. RoboLabour
  4. 3D printing
  5. Enterprise Software
  6. Artificial Intelligence – AI

Decision Making:

Decision making is tedious and long curve task. It involves connection dots, data analytics and expert opinion by the Subject Matter Expert (SME). Sometimes a risk requires more drill down to draw a complete picture for better visualization and making the right decision.

Subcontracting is a good risk mitigation strategy to transfer the risk in case of threat or share responsibility for gaining a competitive edge (opportunity). Subcontracting doesn’t eliminate the risk or liability, possible Secondary risk with multiple impacts over a period. Given below picture portrays a situation in which a decision has to be made to select the best alternative among various scenarios.

Conclusion:

Maximize the impact of opportunities and minimize the impacts of threats is crucial to remain competitive in this digital era.

Quantitative Risk Analysis

GleeyM Offer services to identify risks and perform Quantitative Schedule Risk Analysis (QSRA) and Quantitative Cost Risk Analysis (QCRA) for mega complex projects!
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GleeYM Offers Workshop Facilitation to help you to make the best decisions for your business and projects.
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