Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor
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Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor

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Presentation at Communicating risk across the project portfolio, 4th July 2013

Presentation at Communicating risk across the project portfolio, 4th July 2013

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Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor Presentation Transcript

  • © 2013 Rolls-Royce plc The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc. This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or associated companies. Applying Risk Factors in the Strategic Selection of Portfolio Projects - Case Study Date: July 2013 JT MacGregor BSc(Hons), MSc, CEng, MAPM, MIMMM Programme Executive – Customer Business & Services
  • © 2013 Rolls-Royce plc Applying Risk Factors in the Strategic Selection of Portfolio Projects  Session will be in two parts 1. Brief overview of Portfolio Project Risk Factors and in particular the use of CIFTER analysis tool 2. Worked example using a CIFTER risk analysis on the decanting and demolition of a building
  • © 2013 Rolls-Royce plc Doing the “Right” Projects Doing the “Right” Project Doing the Project well
  • © 2013 Rolls-Royce plc Applying Risk Factors in the Strategic Selection of Portfolio Projects Net Project Priority Gross Project Priority Project Cost* Key element of Project cost is the Complexity or Risk Factors associated with doing the Project
  • © 2013 Rolls-Royce plc Project Complexity ≡ Risk  One of the most well-known means of measuring Project complexity is to use a CIFTER (Crawford – Ishikura) analysis  Identifies seven risk factors that affect the management complexity of projects  Each factor is rated from very low to very high based on a qualitative assessment of that factor  Tool was developed as part of an international team - The Global Alliance for Project Performance Standards (GAPPS) as part of a framework for Competency based standards in Project managers - Can be used in conjunction with APM Body of Knowledge (BoK) skills and experience assessments
  • © 2013 Rolls-Royce plc Project Risk Factors  Cifter Risk factors 1. Stability of the overall project context. 2. Number of distinct disciplines, methods, or approaches involved in performing the project 3. Magnitude of legal, social, or environmental implications from performing the project 4. Overall expected financial impact (positive or negative) on the project's stakeholders. 5. Strategic importance of the project to the organisation or organisations involved 6. Stakeholder cohesion regarding the characteristics of the project. 7. Number and variety of interfaces between project and other organisational entities
  • © 2013 Rolls-Royce plc Project Risk Factors - Example Standard Output from Cifter Analysis
  • © 2013 Rolls-Royce plc Project Complexity Standard Output from Cifter Analysis
  • © 2013 Rolls-Royce plc Project Risk Factors  Basic CIFTER Limitations  Information generated from traditional CIFTER Risk / Complexity model is limited to PM Competency  One dimension  Dominated from a supply chain perspective rather than customer  If however Risk / Complexity information is linked to  (a) the Project benefits  (b) Cost Elements of doing the Project in the Portfolio  Then a much more comprehensive decision can be made with respect to which project to launch in which order (Multiple dimensions) - Can be applied to Programmes / Portfolios
  • © 2013 Rolls-Royce plc Risk Based Project Prioritisation 8 9 10 11 12 13 14 15 16 17 Cifter Assessment $SavingperAnnum Project A Project E Project B Project F Project C Project G Project D Project H Low Complexity High Complexity HighBenefitLowBenefit 2 1 3 4/5 4/5 6
  • © 2013 Rolls-Royce plc Applying Risk Factors in the Strategic Selection of Portfolio Projects  Summary  Conducting a CIFTER risk analysis at the beginning of Portfolio Project selection process provides a quick, easy to use method of assessing different projects dimensions before the project starts.  Tool can be used by non-experts  but should be checked by experienced Project Manager to ensure consistency  Provides key decision making information when agreeing scope and launch criteria with Sponsor and major stakeholders  Provides clear communication to Project Team and all of the stakeholders of the risks that must be addressed if project is launched
  • © 2013 Rolls-Royce plc  References  GAPPS (2006) A Framework for Performance Based Competency Standards for Global Level 1 and 2 Project Managers Sydney: Global Alliance for Project Performance Standards  Crawford, a.l., “Crawford-Ishikura Factor table for Evaluating roles” 2005  Crawford, L.,”Global Body of Project Management Knowledge and Standards” in The Wiley Guide to Managing Projects, P.W.G. Morris, Pinto, Jeffrey K.,,Editor. 2004, John Wiley and Sons. P1150 –1196.  Crawford, L., “Senior Management Perceptions of Project Management Competence”., in IRNOP V.(2004a): Rotterdam, Netherlands.  Aitken, A.C., Dr Lynn,”A study of Project Categorisation based on Project Management Complexity” in IRNOP VIII, 2007: Brighton, United Kingdom, 2007  MacGregor, JT, Identification of key factors in the development of TotalCare® Aftermarket Services” MSc Dissertation: University of Manchester, School of Mechanical, Aerospace & Civil Engineering, 2008 Applying Risk Factors in the Strategic Selection of Portfolio Projects
  • © 2013 Rolls-Royce plc Part 2 Worked example using a CIFTER analysis on the decanting and demolition of a building
  • © 2013 Rolls-Royce plc Applying Risk Factors in the Strategic Selection of Portfolio Projects  Workshop Project scenario  The decanting and demolition of a multi-storey building built in the 1960’s  Building occupied by approximately 330 people -  Timescale for project - 6 months  Project cost £0.5m, Cost Saving £0.75m
  • © 2013 Rolls-Royce plc Risk Assessment Sheet CIFTER Risk Project Complexity Assessment Tool Project APM Joint Risk and Portfolio Management event Overall CIFTER Risk Complexity Score: Recommended PM Role to Lead Project : CIFTER Factor 1 2 3 4 Comments 1 Stability of the overall project context. Very high High Moderate Low 2 Number of distinct methods and approaches involved in performing the project Low Moderate High Very high 3 Magnitude of legal, social, or environmental implications from performing the project. Low Moderate High Very high 4 Overall expected financial impact (positive or negative) on the project's stakeholders. Low Moderate High Very high 5 Strategic importance of the project to the organisation or organisations involved. Very low Low Moderate High 6 Stakeholder cohesion regarding the characteristics of the product of the project. High Moderate Low Very low 7 Number and variety of interfaces between project and other organisational entities. Very low Low Moderate High Project APM Joint Risk and Portfolio Management event Project Manager Date 4th July 2013 Rating 7 14 21 28 Level D Level C Level B Level A CIFTERRating PM Role recommended to lead Project Project APM Joint Risk and Portfolio Management event © 2013 Rolls-Royce plc
  • © 2013 Rolls-Royce plc Applying Risk Factors in the Strategic Selection of Portfolio Projects  Workshop Project scenario  The decanting and demolition of a multi-storey building built in the 1960’s - Building is nearing end of useful life, is known to have asbestos and is located next to main road  Building occupied by approximately 330 people - To create enough decanting space will require nearly 600 other people moving  Timescale for project - 6 months  Project cost £0.5m, Cost Saving £0.75m