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Brooks  Acquisition Center of Excellence Managing Risk in Your Acquisition Pat Tiner 311 HSW/AE DSN 240-5815 14 Mar 06
Agenda <ul><li>Guidance  </li></ul><ul><li>Risk Management </li></ul><ul><li>Risk Assessment </li></ul><ul><ul><li>Identif...
Guidance <ul><li>Defense Acquisition Guidebook  </li></ul><ul><ul><li>Numerous references to Risk Mgmt </li></ul></ul><ul>...
Risk is… <ul><li>“ A measure of the potential inability to achieve overall program objectives within defined cost, schedul...
<ul><li>RISK </li></ul><ul><li>MANAGEMENT </li></ul>
Risk Management <ul><li>What?  </li></ul><ul><ul><li>Disciplined approach to reduce program risk to acceptable level   </l...
Types of Risk <ul><li>Determined by “Who has control of the risk? </li></ul><ul><ul><li>Internal   </li></ul></ul><ul><ul>...
Risk - The Thread that Binds <ul><li>Requirements </li></ul>RISK Acquisition Strategy Internal Programmatic Technical Disc...
Phases Risk Management Identification Analysis Assessment Planning Handling Monitoring
<ul><li>RISK </li></ul><ul><li>ASSESSMENT </li></ul>
Identifying Risks <ul><li>Most important step </li></ul><ul><li>Elaborate engineering & scientific methods used in systems...
Identifying Risks  (con’t) <ul><li>Over the life of the program, what things could go wrong? </li></ul><ul><li>Use nouns a...
Root Cause  - Example <ul><ul><li>Requirement :  Contractor must provide technical support for environmental conservation ...
Analyzing Risks <ul><li>Probablility </li></ul><ul><ul><li>What is the chance of risk becoming reality? </li></ul></ul><ul...
  Analyzing Risks   <ul><li>Consequence </li></ul><ul><ul><li>What is the impact if risk becomes a reality?  </li></ul></u...
Analyzing the Impact <ul><li>What level of attention is required to resolve? </li></ul><ul><li>Negligible </li></ul><ul><u...
Analyzing the Impact  (con’t) <ul><li>What is the Cost/schedule/performance impact? </li></ul><ul><li>Negligible   </li></...
Analyzing Risks - Example <ul><li>Risk </li></ul><ul><li>If  service provider does not have experience in lodging mgmt,  t...
Risk Assessment Recap <ul><li>Follow these steps </li></ul><ul><ul><li>“ Requirement is …” </li></ul></ul><ul><ul><li>“ Wo...
Risk Analysis Tool <ul><li>Probability/Consequence Screening (PC_S) software </li></ul><ul><ul><li>Developed by EN/ASC, WP...
Assessing Risks  using PC_S Software
Matrix
Risk Report
<ul><li>RISK </li></ul><ul><li>HANDLING </li></ul>
RISK HANDLING STRATEGIES <ul><li>Avoid   </li></ul><ul><ul><li>Change requirement, practice, concept but still meet need <...
Risk Handling Techniques  In Acquisition Strategy <ul><li>Competition </li></ul><ul><ul><li>Maintaining competition as lon...
Risk Handling Techniques  In Acquisition Strategy <ul><li>Market research   </li></ul><ul><ul><li>Vital tool to identify r...
<ul><li>RFP </li></ul><ul><li>DISCRIMINATORS </li></ul>
RFP Discriminators <ul><li>Source selection is a process of discrimination </li></ul><ul><ul><li>All offerors come in on e...
Mitigation
Evaluation Criteria <ul><li>Section M, Subfactor 1.2 – Management Approach </li></ul><ul><li>This subfactor is met when th...
Summary <ul><li>All team members are a vital part of risk process </li></ul><ul><li>Acquisition strategy should be driven ...
Additional Information <ul><li>Acquisition Community Connection   </li></ul><ul><li>https://acc.dau.mil/rm </li></ul><ul><...
<ul><li>Questions? </li></ul>
Risk Management Plan (RMP)   <ul><li>No required format </li></ul><ul><li>Components of Risk Management Plan (RMP) from: <...
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Every Airman a Force Multiplier

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  • The DAG and many other documents talk about risk at great length. Here is one example. All this is saying is that DoD thinks Risk is important and should be assessed continuously throughout the program Risk has always been a concern in the acquisition of DoD systems. The acquisition process itself is designed, to a large degree, to allow risks to be controlled from conception to delivery of a system. Unfortunately, in the past, some PMs and decision makers have viewed risk as something to be avoided . Any program that had risk was subject to intense review and oversight. This attitude has changed. DoD recognize that risk is inherent in any program and that it is necessary to analyze future program events to identify potential risks and take measures to handle them. 1995 - The eight &amp;quot;Lightning Bolt Initiatives&amp;quot; Darlene Druyun announced are designed to … focus attention on risk management versus risk avoidance. Risk management is concerned with the outcome of future events, whose exact outcome is unknown, &amp; with how to deal with these uncertainties. is the art and science of planning, assessing, and handling future events to ensure favorable outcomes. The alternative to risk management is crisis management, a resource-intensive process that is normally constrained by a restricted set of available options. . RISK MANAGEMENT GUIDE FOR DOD ACQUISITION, Jun 2003 , DAU http://www.dau.mil/pubs/gdbks/RMG%20June%2003.pdf . AFI 63-124, Performance Based Services Acquisition Senior Mgmt duty to ensure risk is considered
  • Several definitions of Risk some even call Risk an “Opportunity”– this is one from DSMC Risk Management Guide book AFTER listing your rqmts &amp; risks you will assess them… you will, as a team , determine the Probability (CHANCE) that this risk will occur And the Impact ( or consequence ) if it does After this is done the PC_S software tool will have enough information to plot your risks on the chart
  • Risk has always been a concern in the acquisition of DoD systems. The acquisition process itself is designed, to a large degree, to allow risks to be controlled from conception to delivery of a system. Unfortunately, in the past, some PMs and decision makers have viewed risk as something to be avoided . Any program that had risk was subject to intense review and oversight. This attitude has changed. DoD recognize that risk is inherent in any program and that it is necessary to analyze future program events to identify potential risks and take measures to handle them. 1995 - The eight &amp;quot;Lightning Bolt Initiatives&amp;quot; are designed to … focus attention on risk management versus risk avoidance. Risk management is concerned with the outcome of future events, whose exact outcome is unknown, &amp; with how to deal with these uncertainties. is the art and science of planning, assessing, and handling future events to ensure favorable outcomes. The alternative to risk management is crisis management, a resource-intensive process that is normally constrained by a restricted set of available options. . RISK MANAGEMENT GUIDE FOR DOD ACQUISITION, Jun 2003 , DAU http://www.dau.mil/pubs/gdbks/RMG%20June%2003.pdf
  • Ensures managers take measures to assess and handle risks
  • Many different types of risk that we must deal with. A good way to differentiate between them is to look at who has control over the risk. When we start to identify risks, we want to identify those that we have control over- risks that can be affected by our acquisition strategy or future contract performance. INTERNAL - This does not include risks such as your lead engineer being pulled from your program to work on a special project. So what we will be talking about are programmatic risks &amp; technical risks. PROGRAMMATIC - For example, if you are concerned about the experience level of contractors to perform this work – your RFP might very well want to address this risk TECHNICAL - Or if you have rqmts that have technical risks, you can address those as well in your RFP and you may also want to evaluate the offeror’s plan to manage the risks throughout the contract but you will also want to CONTINUE to track those risks throughout contract performance.
  • Risk ties everything together – Requirements – RFP- Acq Strategy – ASP If you get anything from today’s brief – know that if you understand your risks – in most cases you can mitigate them
  • Risk Mgmt has 4 Phases – it’s a continous process Planning basically involves: Identifying who’s involved Market Research Getting the plan down on paper (RMP) Do not regurgitate a tutorial on risk Structure plan for your progarm –process for tracking risks – address at every team meeting, assign POC, DON”T FALL THRU CRACK Address which risks will be monitired – top20% - resources be applied toward mitigating – others accepted How are you going to document – read only or whole team access Address approach for detrermining probablility &amp; consequence (define, e.g., what constitutes a severe impact to cost, scheudle, performance 10% increse, 6 mo schedule slip, etc???- ) Monitoring is such things as EVMS (predominantly after award) won’t get much into that today Today we will be concentrating on Risk Assessment Identification &amp; Analysis And Risk Handling – which is how to mitigate the risks using your acquisition strategy
  • Problem definition stage Includes Identifying, analyzing &amp; quantifying risks
  • As we begin identifying risks – there is a somewhat structured process that helps keep us focused. Easy to just brainstorm and start throwing out every possible negative thing that could happen but we have to keep some things in mind to keep us on track . And as you go through the process, you will understand what I’m saying more clearly A few things to remember - state as a negative event (Don’t just list topics) - use “ If/Then” statements If you do that then…..
  • You get to the root cause of the risk. 2 examples 1st one is not specific enough – need to delve into WHY the Ktr cannot provide support 2 nd one gets to the root cause of the risk – not enough expertise in conservation - could even narrow risk down further – why he can not obtain qualified people You can address both these issues in your RFP
  • Once the risk is verbalized – the next step is to establish the probability of occurrence Here are some suggestions for defining Probability -These are not in concrete - Idea is to r each Consensus and apply consistently
  • Next step is to define your consequence ratings Can have multiple consequences Consequence to C, S or P - may have to limit to most severe area - obvious that most schedule &amp; performance issues (risks) will have $$$ impact but … chart cluttered if list all There are several ways to determine
  • To help you determine the impact This approach focuses on level of attention to resolve Ground rules that team comes up with Again not in concrete
  • Not recommended -not specific enough - definition is the same as title Should Be Tailored for Each Program
  • In this case – cost impact Could also be schedule or performance impact
  • “ Requirement is …” 1st Step is LISTING YOUR RQMTS Systems Acq –Capabilities Document “ Won’t meet the requirement because…” you may know this because of market research
  • Here is a sample of how the results of your analysis will be displayed using PCS software Easy to take into a power point slide – use PRINT SCREEN Color Pattern can be changed Example: - SAFETY issue – may be very unlikely that it will occur BUT if it does – Could be catastrophic – may want to change color set up so tat block would be RED If you have a risk but it is already handled – give yourself credit
  • 1 . AVOIDANCE – Change requirements to a level that lowers risk to an acceptable level, but still meets user’s needs Addresses requirement rather than risk - we typically don’t use –Implies being Risk Averse ______________________________________________________ 2. TRANSFER – transfer rqmt to abate the risk - systems acq - transfer risk from one part of system to another, thus reducing overall risk -&amp;quot;redistribute&amp;quot; risks between Gov’t and the prime contractor or within Government agencies. ____________________________________________________________________ 3. ASSUMPTION - Accepting the risk w/out engaging in any special effort to control it - may want to accept the risk if benefits outweigh cost of mitigation - may be worth it for Research Cure for cancer – R&amp;D can be very risky but the pay off of a cure for cancer is huge By identifying a risk as acceptable, the worst-case outcome is being declared acceptable. 4. CONTROL – This is what we do - Most common result is reduced probability -take active steps to minimize the risk’s impact on the program
  • Next charts talk more specifically to how the acq strategy can mitigate risks Competition – Generally the longer you have competition – tends to motivate good behavior Commercial Products - can reduce risk in terms of cost &amp; schedule BUT… can add significant program risks e.g. if commercial suppliers go out of business or stops making item Contract types = net effect of shifting some of the performance risk from the government to the contractors Firm Fixed Price - Ktr assumes risks appropriate for services that can be objectively defined in the solicitation and for which risk of performance is manageable. The contractor is motivated to find improved methods of performance in order to increase its profits. Cost Reimbursable – more appropriate for technically risky programs appropriate for services that can only be defined in general terms or for which the risk of performance is not reasonably manageable. Where possible, include incentives in addition to award fee to insure that contractors are rewarded for good performance, as well as quality assurance deduction schedules to assure satisfactory performance. Source Selection Types can also be instrumental in handling your risks If you have questions about an offerors Past Perf, then you probably wouldn’t want to select Lowest Price/Technically Acceptable (LPTA). Better choice would be Performance/Price Tradeoff (PPT) or Full Trade-Off (FTO) If it is technically complex - wouldn’t want to use PPT
  • Market Research extremely important in identifying risky areas May find that your requirements are unrealistic May find that you have ample competition – affecting contract type May find that risks you thought you had no longer exist because of leaps &amp; bounds in technology Ktr can &amp; SHOULD also identify risks Also, (in RFP) have the potential offeror identify the program risks or evaluate the Gov’t identified risks so that you can evaluate whether they understand the challenges
  • One very important way to handle Pre-award risk is through RFP discriminators What I’m talking about here is: using evaluation criteria that allows discrimination among the offerors Even though Risk should be evaluated consistently throughout the program, talking here about using Risk assessment to develop your RFP
  • SS is a process of discrimination - All offerors are responding to the same RFP It should have been written to provide some stratification among proposals Discriminators are drivers for Section L &amp; Section M criteria that will allow for that stratification You want to provide the SSA with an evaluation that distinguishes among the competing proposals in those areas the Gov’t believes are IMPORTANT - definitely your high risk areas
  • Lets go back to this example
  • What are the characteristics of a successful risk program? Six basic characteristics for successful risk management programs are: 1). well-structured, 2). forward looking, 3). provides detailed processes, 4), easy to understand and use, 5). informative and 6). continuous. Successful risk management programs result in feasible, stable, and well-understood user requirements and threats and can help in establishing a close relationship with users, industry, and other program participants. How can you ensure successful Risk Management? The key to successful risk management is early planning and aggressive execution. Good planning enables an organized, comprehensive, and iterative approach for assessing the risk and handling options necessary to refine a program acquisition strategy. Assessments should be performed early in the life cycle to ensure that critical technical, schedule, and cost risks are addressed with mitigation actions incorporated into program planning and budget projections.
  • There is no presriibed format for RMP This URL gives suggestions as to what to include in each section – GREAT SOURCE -also has sample plans
  • Transcript of "Every Airman a Force Multiplier"

    1. 1. Brooks Acquisition Center of Excellence Managing Risk in Your Acquisition Pat Tiner 311 HSW/AE DSN 240-5815 14 Mar 06
    2. 2. Agenda <ul><li>Guidance </li></ul><ul><li>Risk Management </li></ul><ul><li>Risk Assessment </li></ul><ul><ul><li>Identification & Analysis </li></ul></ul><ul><li>Risk Analysis Tool </li></ul><ul><li>Risk Handling </li></ul><ul><li>RFP Discriminators </li></ul><ul><li>Summary </li></ul>
    3. 3. Guidance <ul><li>Defense Acquisition Guidebook </li></ul><ul><ul><li>Numerous references to Risk Mgmt </li></ul></ul><ul><ul><li>“ The program manager should establish a risk management process within systems engineering that includes risk planning, risk assessment (identification and analysis), risk management, and risk monitoring approaches to be integrated and continuously applied throughout the program, including the design process.” </li></ul></ul><ul><li>FAR 7.105, In Acquisition Plan… </li></ul><ul><ul><li>“ Discuss technical, cost, and schedule risks and describe what efforts are planned or underway to reduce risk and the consequences of failure to achieve goals.” </li></ul></ul><ul><li>AFI 63-124, Performance Based Services Acquisition </li></ul><ul><ul><li>“ Ensuring performance management focuses on risk management, cost, and schedule and performance baselines.” </li></ul></ul>
    4. 4. Risk is… <ul><li>“ A measure of the potential inability to achieve overall program objectives within defined cost, schedule, and technical constraints” </li></ul><ul><li>Two Components of Risk </li></ul><ul><ul><li>Probability of failing to achieve an outcome </li></ul></ul><ul><ul><li>Consequence of failing to achieve that outcome </li></ul></ul>Chance Impact Challenge/ Concern Risk is inherent in any program
    5. 5. <ul><li>RISK </li></ul><ul><li>MANAGEMENT </li></ul>
    6. 6. Risk Management <ul><li>What? </li></ul><ul><ul><li>Disciplined approach to reduce program risk to acceptable level </li></ul></ul><ul><ul><li>“ Crystal-balling&quot; possible future problems </li></ul></ul><ul><ul><li>Taking actions to head off or deal with these uncertainties </li></ul></ul><ul><ul><li>Included in acquisition strategy </li></ul></ul><ul><li>Who? </li></ul><ul><ul><li>All acquisition team members </li></ul></ul><ul><ul><ul><li>Program office, customer, key stake holders, industry </li></ul></ul></ul><ul><li>When? </li></ul><ul><ul><li>Throughout program from beginning to end </li></ul></ul><ul><li>Why? </li></ul><ul><ul><li>If you understand your risks – in most cases you can mitigate them </li></ul></ul>Focus today will be on pre-award-- risk based acquisition strategy
    7. 7. Types of Risk <ul><li>Determined by “Who has control of the risk? </li></ul><ul><ul><li>Internal </li></ul></ul><ul><ul><ul><li>Controlled by Organization </li></ul></ul></ul><ul><ul><ul><li>Example: Team member pulled for other task </li></ul></ul></ul><ul><ul><ul><ul><li>Mitigation: Not much you can do </li></ul></ul></ul></ul><ul><ul><li>Programmatic </li></ul></ul><ul><ul><ul><li>Controlled by Acquisition Strategy </li></ul></ul></ul><ul><ul><ul><li>Example: High technology risk </li></ul></ul></ul><ul><ul><ul><ul><li>Mitigation: Contract type, incentives, RFP evaluation criteria </li></ul></ul></ul></ul><ul><ul><li>Technical </li></ul></ul><ul><ul><ul><li>Controlled by Contract Performance </li></ul></ul></ul><ul><ul><ul><li>Example: System will not meet key performance parameter </li></ul></ul></ul><ul><ul><ul><ul><li>Mitigation: RFP evaluation criteria, post-award emphasis </li></ul></ul></ul></ul>
    8. 8. Risk - The Thread that Binds <ul><li>Requirements </li></ul>RISK Acquisition Strategy Internal Programmatic Technical Discriminators Sec M Sec L Organization RMP
    9. 9. Phases Risk Management Identification Analysis Assessment Planning Handling Monitoring
    10. 10. <ul><li>RISK </li></ul><ul><li>ASSESSMENT </li></ul>
    11. 11. Identifying Risks <ul><li>Most important step </li></ul><ul><li>Elaborate engineering & scientific methods used in systems acq </li></ul><ul><ul><li>May not be appropriate for Services </li></ul></ul><ul><li>Other sound methods </li></ul><ul><ul><li>Expert judgment </li></ul></ul><ul><ul><li>Comparison with other programs </li></ul></ul><ul><ul><li>Lessons learned </li></ul></ul><ul><ul><li>Brainstorming </li></ul></ul>
    12. 12. Identifying Risks (con’t) <ul><li>Over the life of the program, what things could go wrong? </li></ul><ul><li>Use nouns and verbs when stating risks </li></ul><ul><ul><li>Not just topics </li></ul></ul><ul><li>State as negative event </li></ul><ul><li>Use IF/THEN statements </li></ul><ul><ul><li>“ If the proposed design requires any unique tools, support and/or test equipment, then it would increase LCC” </li></ul></ul>
    13. 13. Root Cause - Example <ul><ul><li>Requirement : Contractor must provide technical support for environmental conservation planning and natural resource management. </li></ul></ul><ul><ul><li>Risk: If contractor doesn’t provide needed support, then mission requirements will not be met. </li></ul></ul><ul><ul><li>Risk: If contractor lacks sufficient technical expertise, then they will not be able to provide necessary support. </li></ul></ul><ul><ul><li>True but NOT SPECIFIC ENOUGH – Doesn’t get to root cause </li></ul></ul><ul><ul><ul><li>Won’t meet mission requirements – need to get at “WHY” </li></ul></ul></ul>GETS TO THE ROOT CAUSE – contractor’s lack of expertise. This can be addressed in RFP!
    14. 14. Analyzing Risks <ul><li>Probablility </li></ul><ul><ul><li>What is the chance of risk becoming reality? </li></ul></ul><ul><li>Doubtful ( 0 -10%) Most likely will not occur </li></ul><ul><li>Unlikely (11 - 40%) Believe this will not occur </li></ul><ul><li>Chance (41 - 60%) Toss-of-coin </li></ul><ul><li>Likely (61 - 90%) Believe this will occur </li></ul><ul><li>Sure (91 - 100%) Most likely will occur </li></ul>
    15. 15. Analyzing Risks <ul><li>Consequence </li></ul><ul><ul><li>What is the impact if risk becomes a reality? </li></ul></ul><ul><ul><li> Negligible </li></ul></ul><ul><ul><ul><ul><li>Minor </li></ul></ul></ul></ul><ul><ul><li> Moderate </li></ul></ul><ul><ul><li> Serious </li></ul></ul><ul><ul><li> Critical </li></ul></ul><ul><li>Several ways to determine </li></ul><ul><ul><li>Level of attention </li></ul></ul><ul><ul><li>Impact of risk on Cost/Schedule/Performance </li></ul></ul>
    16. 16. Analyzing the Impact <ul><li>What level of attention is required to resolve? </li></ul><ul><li>Negligible </li></ul><ul><ul><li>Day-to-day issues </li></ul></ul><ul><li>Minor </li></ul><ul><ul><li>PM/PM, programmatic workarounds required </li></ul></ul><ul><ul><li>Slip of weeks, cost increase > 10% </li></ul></ul><ul><li>Moderate </li></ul><ul><ul><li>SPD/VP involvement, tactical workarounds required </li></ul></ul><ul><ul><li>1-2 month slip, cost increase > 25% </li></ul></ul><ul><li>Serious </li></ul><ul><ul><li>DPEO/Pres involvement, severe mission impact </li></ul></ul><ul><ul><li>Multi-month schedule slip, cost increase > 50% </li></ul></ul><ul><li>Critical </li></ul><ul><ul><li>PEO/CEO involvement, mission failure </li></ul></ul><ul><ul><li>Program cancelled or major restructure </li></ul></ul>
    17. 17. Analyzing the Impact (con’t) <ul><li>What is the Cost/schedule/performance impact? </li></ul><ul><li>Negligible </li></ul><ul><ul><li>Almost no effect on the program </li></ul></ul><ul><li>Minor </li></ul><ul><ul><li>Small increase in cost/schedule </li></ul></ul><ul><ul><li>Requirements would still be achieved </li></ul></ul><ul><li>Moderate </li></ul><ul><ul><li>Moderate increase in cost/schedule </li></ul></ul><ul><ul><li>Requirements would still be achieved </li></ul></ul><ul><li>Serious </li></ul><ul><ul><li>Serious increase in cost/schedule </li></ul></ul><ul><ul><li>Secondary requirements may not be achieved </li></ul></ul><ul><li>Critical </li></ul><ul><ul><li>Program failure </li></ul></ul>
    18. 18. Analyzing Risks - Example <ul><li>Risk </li></ul><ul><li>If service provider does not have experience in lodging mgmt, then rooms may not be available for use, resulting in added cost to Gov’t for off-base lodging. </li></ul><ul><ul><li>Probability: Unlikely </li></ul></ul><ul><li>Logic in determining impact: </li></ul><ul><ul><li>Quality of Life issue </li></ul></ul><ul><ul><li>Cost Issue </li></ul></ul><ul><ul><ul><li>Additional funds required to send personnel to off-base lodging </li></ul></ul></ul><ul><li>Consequence (Cost): Serious </li></ul>
    19. 19. Risk Assessment Recap <ul><li>Follow these steps </li></ul><ul><ul><li>“ Requirement is …” </li></ul></ul><ul><ul><li>“ Won’t meet the requirement because…” IDENTIFY RISKS </li></ul></ul><ul><ul><li>“ Probability of risk occuring is …” </li></ul></ul><ul><ul><li>“ Consequence of not meeting the requirement is …” </li></ul></ul>
    20. 20. Risk Analysis Tool <ul><li>Probability/Consequence Screening (PC_S) software </li></ul><ul><ul><li>Developed by EN/ASC, WPAFB </li></ul></ul><ul><ul><li>Outcomes </li></ul></ul><ul><ul><ul><li>Risk Report </li></ul></ul></ul><ul><ul><ul><ul><li>Lists requirements, risks, assessment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Notes, assumptions, POC </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Mitigation strategies </li></ul></ul></ul></ul><ul><ul><ul><li>Color-coded risk matrix </li></ul></ul></ul><ul><ul><ul><ul><li>Visual depiction of all identified risks </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Easily transferred to Power Point </li></ul></ul></ul></ul><ul><ul><li>Download </li></ul></ul><ul><ul><ul><li>DAU Acquisition Community Connection </li></ul></ul></ul><ul><ul><ul><ul><li>ACC -> Systems Engineering -> SE Resources ->Tools & Forms-> PC_S Software </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>PCS.zip file </li></ul></ul></ul></ul></ul>h ttps://pmcop.ar.navy.mil/simplify/ev.php?URL_ID=7797&URL_DO=DO_TOPIC&URL_SECTION=201&reload=1035566629
    21. 21. Assessing Risks using PC_S Software
    22. 22. Matrix
    23. 23. Risk Report
    24. 24. <ul><li>RISK </li></ul><ul><li>HANDLING </li></ul>
    25. 25. RISK HANDLING STRATEGIES <ul><li>Avoid </li></ul><ul><ul><li>Change requirement, practice, concept but still meet need </li></ul></ul><ul><ul><ul><li>Replace high risk with a lower risk solution </li></ul></ul></ul><ul><ul><ul><li>Critical to have clear understanding of requirements </li></ul></ul></ul><ul><ul><ul><ul><li>Mission Critical or “nice-to-have” </li></ul></ul></ul></ul><ul><li>Transfer </li></ul><ul><ul><li>Redistribute risk among shareholders (could be contractor) </li></ul></ul><ul><ul><ul><li>Owner must be able to more effectively handle the risk </li></ul></ul></ul><ul><ul><li>Reallocate risk from one part of system to another </li></ul></ul><ul><li>Assume the risk without special efforts </li></ul><ul><ul><li>Conscious decision to accept risk </li></ul></ul><ul><ul><li>Appropriate for “low” risks </li></ul></ul><ul><ul><li>May be appropriate for high risk if worth the benefit </li></ul></ul><ul><ul><li>Worst-case outcome is being declared acceptable - be careful </li></ul></ul><ul><li>Control (Mitigate) through active steps </li></ul><ul><ul><li>Reduce probability, consequence or both </li></ul></ul><ul><ul><ul><li>Acquisition Strategy </li></ul></ul></ul>
    26. 26. Risk Handling Techniques In Acquisition Strategy <ul><li>Competition </li></ul><ul><ul><li>Maintaining competition as long as possible during program phases can lower risk </li></ul></ul><ul><li>Commerciality </li></ul><ul><ul><li>Use of commercial products/services drives down schedule, cost, and performance risks </li></ul></ul><ul><li>Contract incentives in cost-plus contracts </li></ul><ul><li>Contract Types </li></ul><ul><ul><li>Cost Reimbursable - more appropriate for technically risky programs </li></ul></ul><ul><ul><li>Firm Fixed Price - Ktr assumes risks </li></ul></ul><ul><li>Type of Source Selection </li></ul><ul><ul><li>Lowest Price Tech Acceptable vs. Performance/Price Tradeoff vs. Full Trade Off </li></ul></ul>
    27. 27. Risk Handling Techniques In Acquisition Strategy <ul><li>Market research </li></ul><ul><ul><li>Vital tool to identify risk reducing opportunities </li></ul></ul><ul><ul><ul><li>Are requirements realistic? </li></ul></ul></ul><ul><ul><ul><li>Ample competition? - Could affect contract type </li></ul></ul></ul><ul><ul><ul><li>Have leaps & bounds in technology eliminated some risks? </li></ul></ul></ul><ul><ul><ul><li>Get feedback through RFIs, draft RFPs, and Industry Days - Ask potential offerors to identify risks </li></ul></ul></ul>
    28. 28. <ul><li>RFP </li></ul><ul><li>DISCRIMINATORS </li></ul>
    29. 29. RFP Discriminators <ul><li>Source selection is a process of discrimination </li></ul><ul><ul><li>All offerors come in on equal footing </li></ul></ul><ul><ul><li>If SS properly structured and conducted </li></ul></ul><ul><ul><ul><li>Offerors w/ superior ideas, excellent past performance, or low risk will rise to the top </li></ul></ul></ul><ul><ul><ul><li>Offerors in over their heads, don’t understand the requirements, or inexperienced will drop to the bottom </li></ul></ul></ul><ul><ul><ul><li>Offerors who are mediocre, will be in the middle </li></ul></ul></ul><ul><ul><li>Worst case - all offerors rated the same </li></ul></ul>High Risks = Discriminators
    30. 30. Mitigation
    31. 31. Evaluation Criteria <ul><li>Section M, Subfactor 1.2 – Management Approach </li></ul><ul><li>This subfactor is met when the Offeror presents a Management Approach that meets all of the following criteria: </li></ul><ul><li>Sound and realistic staffing plan that demonstrates Offeror’s capability (e.g., “reach back” capability , “network”, on contract, 3rd country personnel , etc.) to quickly provide worldwide on-site expertise within a maximum of seven calendar days for OCONUS requirements and 48 hours for CONUS requirements. (P4A) It is more advantageous to provide worldwide on-site expertise for OCONUS within 48 hours and CONUS within 24 hours. (S1C) </li></ul><ul><li>(b) Sound and realistic Quality Control Plan that ensures adequate quality, schedule, cost, and performance by providing sufficient oversight to effectively manage and integrate subcontractors (P7B) (P5B). The Plan shall also include processes to effectively identify and resolve problems. (P1C). </li></ul>
    32. 32. Summary <ul><li>All team members are a vital part of risk process </li></ul><ul><li>Acquisition strategy should be driven by Risk </li></ul><ul><ul><li>Risk assessment is critical to a successful Source Selection, </li></ul></ul><ul><ul><ul><li>i.e., selection of best contractor(s) to satisfy mission need </li></ul></ul></ul><ul><ul><ul><li>Not just a block to “check off” </li></ul></ul></ul><ul><li>Evaluation criteria should originate from risk assessment and focus on discriminators </li></ul>If you understand your risks – in most cases you can mitigate them
    33. 33. Additional Information <ul><li>Acquisition Community Connection </li></ul><ul><li>https://acc.dau.mil/rm </li></ul><ul><li>Training </li></ul><ul><ul><li>AFIT </li></ul></ul><ul><ul><ul><li>SYS 165, Introduction to Risk Management </li></ul></ul></ul><ul><ul><li>DAU </li></ul></ul><ul><ul><ul><li>DAU continuous learning center </li></ul></ul></ul><ul><ul><ul><li>Risk Management, CLM 017 </li></ul></ul></ul><ul><ul><ul><ul><li>Access through URL above </li></ul></ul></ul></ul><ul><ul><ul><ul><li>On line </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Not necessary to register for course– just browse </li></ul></ul></ul></ul>
    34. 34. <ul><li>Questions? </li></ul>
    35. 35. Risk Management Plan (RMP) <ul><li>No required format </li></ul><ul><li>Components of Risk Management Plan (RMP) from: </li></ul><ul><ul><li>Risk Mgmt Community of Practice (CoP) </li></ul></ul><ul><ul><li>https://acc.dau.mil/simplify/ev.php?ID=3333_201&ID2=DO_TOPIC </li></ul></ul><ul><ul><ul><li>Introduction </li></ul></ul></ul><ul><ul><ul><li>Program Summary </li></ul></ul></ul><ul><ul><ul><li>Definitions </li></ul></ul></ul><ul><ul><ul><li>Risk Mgmt Strategy and Approach </li></ul></ul></ul><ul><ul><ul><li>Organization </li></ul></ul></ul><ul><ul><ul><li>Risk Mgmt Process and Procedures </li></ul></ul></ul><ul><ul><ul><li>Risk Planning, Assessment, Handling, and Monitoring </li></ul></ul></ul><ul><ul><ul><li>Risk Mgmt Information System, Documentation, and Reports </li></ul></ul></ul>URL has suggestions of what to include in each section
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