Deltek Insight 2011: Deltek Active Risk Manager (ARM)

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  • Use gold tie guy here instead of slick guy. Can’t get information I need. Waste time manually presenting info. Constant Crisis mode. We can’t executeIn talking with executive and project managers across many companies, large and small, in multiple industries we found a recurring set of challenges or pains. As we walk through these think to yourself how many times have you or someone on your team said almost these exact quotes? SURPRISE!! I have 18 late deliveries and no one saw it coming…now we are in crisis mode….Our hair is on fireMy team cant execute so my profit margins are eroding…we have to meet our profit expectations or we may not be in business next year.I am wasting so much time manually gathering, reviewing, and presenting information. Not only am I wasting valuable time and energy but my teams are running around endlessly collecting and repackaging data. This is costing a lot of money and we could be applying our resources elsewhere…I can’t get the information I need when I need it…
  • Lets take a real life example of a project that was cancelled due to cost overruns and technical Issues. The reality today is that if you can’t meet your customers expectations for cost, schedule, and technical performance that project may well be cancelled. It happens even to the largest of companies.
  • Temperature gauge…Why would you change your current process on risk management? The first would be that your customer requires that you implement a risk/reward process or they may even supply you with a certain piece of software to use. You want the contract so you do it…The second is that a project has not executed to plan and profits eroded…It’s often been said that pain is a motivator…the pain of a major project failure that has resulted in embarrassment (for the company or for you personally) is so many times the catalyst for change. A termination will motivate change…
  • Bring attribution down and pop the stats…footnote the standish group report…$300M surprise…what would that do to you?Say real value in implementing a risk management system…put the takeaway…
  • In looking for a risk management solution or enabler..what would you be looking for…Web enabled. You and your team can have access no matter where you are…The entry of the data is simple and understandable…. It would help the organization speak one language around risk/opportunities Reports that are usable and understandable….common reports across projects or a portfolio of projects that can be viewed via the web for reviewsOne centralized system for all risks and opportunities in your organization. Everyone can see the information and use it. Help with compliance to company policy as well as any external requirements you may have such as ISO 31000, etc. The ability to see risks across a portfolio of projects….and the ability to score risks in a common manner…That solution is Deltek ARM. The spaghetti chart we looked at earlier can become a well oiled machine…giving the project and all of the stakeholders realtime information to make decisions and manage the project versus reacting and getting pulled in circles.
  • In looking for a risk management solution or enabler..what would you be looking for…Web enabled. You and your team can have access no matter where you are…The entry of the data is simple and understandable…. It would help the organization speak one language around risk/opportunities Reports that are usable and understandable….common reports across projects or a portfolio of projects that can be viewed via the web for reviewsOne centralized system for all risks and opportunities in your organization. Everyone can see the information and use it. Help with compliance to company policy as well as any external requirements you may have such as ISO 31000, etc. The ability to see risks across a portfolio of projects….and the ability to score risks in a common manner…That solution is Deltek ARM. The spaghetti chart we looked at earlier can become a well oiled machine…giving the project and all of the stakeholders realtime information to make decisions and manage the project versus reacting and getting pulled in circles.
  • If you implement a risk management system using ARM…you can receive the benefits that other customers are realizing….
  • All contractors are encouraged to use ARM…Let’s look at the language the AF is using here – “common and consistent” “time, budget, performance”Look for value quote of what they got out of it…What are our customers really saying about this…I can’t find a better quote…
  • If we look at the project risk mix you probably have different solutions for each of these categories of risk, with different projects doing their own thing, in different ways. There are often excuses that the customers requirements are different, that their process is better on so on. Each time a new project starts up you have to re-invent the wheel, increases time and cost and the risk of process failure – there is little re-use of information. Equally the information is usually locked away on desktops or spreadsheets so no-one outside the immediate person managing the data can get to it – other than through ppt OR xls they receive. Yet this is shared corporate information that benefits other people in doing their job. Even if they could the information is on different formats and measures and therefore can’t be brought together.Let’s take for example a risk that impacts the IMS – as well as impacting time, this risk is likely to impact cost and therefore the finance people need to know about it, it may be sourced from a supplier and therefore the supply chain people need to know about it, it may exist in multiple projects and therefore management needs to know about how many times it has impacted different projects as this escalates its overall impact on the business.It is about the integration not just the risk process but also the risk categories that most of the risk management guidelines require. Performing schedule risk analysis using @risk on its own adds no value to the organization – it is not risk management as there have been no identified specific risks, that can be assessed and have mitigating actions applied based on the level of materiality. Arguably it is the mitigation, the management part of the process that adds the most value. Without a core focus on risk mitigation the process is purely one of risk admiration.
  • When brought together in an integrated way, the benefits of risk management start to happen. Information is shared so those that have knowledge can collaborate and contribute to the identification and mitigation process. If the information is hidden away on a desktop then it is of little value – actually, by definition!To make the process efficient the information needs to flow from bid, to delivery to operational support. The engineers, the finance teams and the schedulers need to be talking the same language and sharing their information – otherwise critical information is not available for decision makers.Conspiracy theory says that this is deliberate from political motives, well the days of being able to do that are going – we live in a new world where efficiency overrides, transparency and accountability is king. To stay profitable businesses simply need to get more clever at what they are doing and integrated risk management drives this.Then how do we look across projects for key themes in risk root cause so we can be more intelligent about how we spend funds across projects – doing things smarter.While we are trying to identify the things that could erode our project profitability, let’s also look at the things that could increase performance – opportunities. What is the process for identifying, measuring and achieving these? Many organizations are now using opportunities as a competitive advantage in the tendering process as well as during the project to help buffer profit margins.ARM supports the opportunity process as well as the risk process. They are very different disciplines and mind sets but the process for handing them is the same.And at the end of the day bad things happen – the things that cause program managers to lose sleep – and companies to fail. So what are these losses, these issues. How many times have they occurred and what are we doing about reducing them – this impacts not only project performance but also company profitability, reputation and insurance premiums.While some project staff may be looking at quantified measures such as time and technical performance, others will only be able to assess risks on a qualitative basis. That’s fine but the integrated solution needs to support both forms of analysis.
  • If we look at the project risk mix you probably have different solutions for each of these categories of risk, with different projects doing their own thing, in different ways. There are often excuses that the customers requirements are different, that their process is better on so on. Each time a new project starts up you have to re-invent the wheel, increases time and cost and the risk of process failure – there is little re-use of information. Equally the information is usually locked away on desktops or spreadsheets so no-one outside the immediate person managing the data can get to it – other than through powerpoints they receive. Yet this is shared corporate information that benefits other people in doing their job. Even if they could the information is on different formats and measures and therefore can’t be brought together.Let’s take for example a risk that impacts the IMS – as well as impacting time, this risk is likely to impact cost and therefore the finance people need to know about it, it may be sourced from a supplier and therefore the supply chain people need to know about it, it may exist in multiple projects and therefore management needs to know about how many times it has impacted different projects as this escalates its overall impact on the business.It is about the integration not just the risk process but also the risk categories that most of the risk management guidelines require. Performing schedule risk analysis using @risk on its own adds no value to the organization – it is not risk management as there have been no identified specific risks, that can be assessed and have mitigating actions applied based on the level of materiality. Arguably it is the mitigation, the management part of the process that adds the most value. Without a core focus on risk mitigation the process is purely one of risk admiration.Continual feedback loop...audit trail and not lost in just doing x...ideal solution for most have institutional knowledge
  • Stop and think…where is your organization on this maturity ladder…if you are in the initial stages that is okay…You can get started implementing your risk management system today no matter where you are on the maturity ladder. Deltek ARM will support your process at all 5 levels of maturity… it’s time to get started…
  • And this is reflected in our dynamic risk register showing our risk level is now below target. At this stage we may want to cancel the third mitigation action as we have achieved our objective.
  • The risk heat map shows us all our risks and opportunities from the filter that you run, showing the relationship between current and target level of risk. The Gold bands on the left of the chart show opportunities.
  • We then assess the risk from both a current and target perspective (if you don’t use target risk this can be switched off) against any relevant impact categories – in this case Cost, Time and Power Output.Handy descriptions can be created to help users score risks consistently – see next slide.
  • We can also assess risks from a quantitative perspective if required. ARM supports a qualitative to quantitative mapping meaning it doesn’t what type of assessment is used as both are managed in step. This means we can measure and aggregate risks in a common way regardless of the materiality/budgets/performance criteria on different projects.We can see here our qualitative risk score is High and a 22 score (again all the scoring is configurable in D-ARM) and can be different for different projects.
  • We can then track actual performance of each action against the objective of reaching the target risk score to ensure we are on track. As a result of the success of each action we would then re-assess the current risk level. Trending of risk levels in a project or portfolio of projects is a sign of a healthy and managed risk portfolio.Here we can see the white line represents our actual performance – we have completed two tasks very early and well on track to achieving our desired risk level.
  • And finally if useful, D-ARM has a very comprehensive email alerting capability that can inform users of new and changed risks, new actions, risk reviews due etc. In this case the risk owner has received an email alert saying that their risk exposure has now reached target levels and is ready to have the status changed.
  • Planning & Scheduling, Earned Value Management and Risk Management are key components to successfully controlling programs. Understanding the health of the program is essential to addressing critical issues and delivering on time and on budget. Deltek EPM’s program controls solution helps program controls to inform the organization the current program health and the future forecasted cost, schedule and completion
  • There are those who help government contractors with strategic goals and vision. They bring knowledge and experience. And there are those who provide tools to help you execute your vision. They bring systems for your processes. At Deltek, we provide both.
  • Deltek Insight 2011: Deltek Active Risk Manager (ARM)

    1. 1. EPM-104: DeltekActive RiskManager (ARM)Solution Deck for PMPresented by:Kim Koster, Director or Product Marketing-EPMApril 21, 2011
    2. 2. Finding Success in ThisComplex Environment Meet Profit Deliver On- Deliver a Win More Goals Time and Quality Business On-Budget Product Project Project Quality Business Manager Team Manager Development2 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    3. 3. Today’s Projects.. Forecast Curve Late Finish 120% 100% Plan Forecast 80%Percent Complete 60% Impact Profitability 40% No Advanced Warning 20% 0% January February March April May June July August September October November December January Project Duration Source: Construction Industry Institute 3 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    4. 4. Today’s Top Challenges VP of ProgramsWe are in Constant Crisis Mode! Can’t get information I need!Wasting time manuallypresenting information! Project Our data is wrong! Manager We can’t execute! I manage by instinct! 4 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    5. 5. Real LifePrograms canceled & systemic problems On Aug. 25, 2010, the U.S. Army announced cancellation of the original solicitation for its Ground Combat Vehicle (GCV) program. Defense media network “Poised at the beginning of a new era in satellite acquisition, the Defense Department continues to see its space programs dogged by significant and persistent cost overruns and sometimes declining capabilities, according to a new Government Accountability Office report”5 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    6. 6. A Crisis Causes Action?Managing when the sky is falling Customer Requirement Margin/ Profit ImpactMost corporate initiatives Majorstart because… Program• The customer requires it Problem• Margins are gone• We have really messed up!6 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    7. 7. Why Manage Risk Before a Crisis? Risk & PM Studies Customer Results • Annual 10% improvement on• 50% gain in productivity and quality delivery of projects improvements with risk management • Avoid Unplanned Cost,• 53% of IT projects are challenged Schedule and Technical • Over Budget Surprises • Over Schedule • Improved Business• 84% are over budget Performance• 31% are cancelled • 10% reduction in re-occurring losses • Saving of 6-10% per year on Insurance premiums Proven Risk Management Improves Performance, Reduces Liability and Saves Money 7 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    8. 8. Unanswered Questions Process Filtering Project Manager VP of Programs CFO Process Owners Project Manager VP of Programs CFO How is my portfolio Primary Questions and Is my project on track? How do I accurately performing? forecast sales and profit? • Execution to meet • Meeting corporate Concerns delivery expectations expectations • Making Money • Meeting profit • Delighting the customer • Predictability for expectations stockholders • Accurate Plans • R&O data to make • Compliance timely decisions • R&O data to make timely decisions • R&O data to make timely decisions • Process Consistency8 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    9. 9. Inefficient Processes Project Reports Customer Deliveries Are Impacted Customer Team Meeting Stockholders Risk Officer VP of Programs CFO Risk Approved Update Revenue Internal Executives Subs PCA PM Risk Manager Engineering Project Team Update EAC CAM Risk Identified Scheduler Update Schedule9 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    10. 10. Ideal Risk Management Solution Easy Web Delivery Portfolio View of Easy Data Entry Risk Risk Management Solution Simplifies & Standardized Enables Reporting, Analysis Compliance & Metrics One System for all Risks10 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    11. 11. Ideal Risk Management Solution Easy Web Delivery Portfolio View of Easy Data Entry Risk Deltek Active Risk Manager Simplifies & Standardized Enables Reporting, Analysis Compliance & Metrics One System for all Risks11 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    12. 12. What is Your Spreadsheet Costing You?Customers Save Money80% reduction in cost of mitigation 75% reduction in time spent by eliminating duplication identifying and assessing risk 450 man hours per month in 75% saving ($800k) in costs by reporting, escalating risks, & using a single integrated risk understanding opportunities management system12 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    13. 13. Deltek Active Risk ManagerClients Across the Globe13 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    14. 14. US Air Force“..to institutionalize rigorous risk management through one common andconsistent risk process delivered by one software package so as to enableon time, at budget, and to technical performance delivery of programs andprojects that equip the war fighter to protect the national interests of theUSA.“We see ARM as a „game changer‟ for the Air Force” Blaise Durante Deputy Assistant Secretary for Acquisition14 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    15. 15. The Primary Project Risk Elements 1 Schedule Risk 2 Cost Risk 3 Technical Risk 4 Supplier Risk15 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    16. 16. Integrated Risk Management Schedule Risks  Risks  Opportunities  IssuesTechnical Project Risk Supplier  Qualitative Management Risks Risks  Quantitative  Value driving mitigations Cost Risks16 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    17. 17. Capturing Institutional KnowledgeContinuous Lifecycle ERM Feedback Loop  Identification  Assessment Communicate  Mitigation Manage  Reviewing  Reporting Audit Trail Knowledge Base17 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    18. 18. Which Level Are You?18 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    19. 19. Managing Risk &Opportunity from the topdown…19 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    20. 20. Global Perspective Managing Risk & Opportunity Multiple Definable Color Coded Risk Structures Assessment20 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    21. 21. Understand the Risk & Opportunity Manage by Exception (+) (-)21 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    22. 22. Scoring a Risk for All Risks Configurable scoring of impact or cost Definable Risk Types Scoring22 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    23. 23. Standard Risk Templates Consistency across the organization Risk template create consistency23 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    24. 24. Risk by the NumbersQualitative and quantitative risk scoring Develop Quantitative Analysis24 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    25. 25. See the Risk Burn Down You know where you are… Manage the process to mitigate the risk25 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    26. 26. Risk Adjusted ScheduleSee the impact on the project plan How are we impacting performance? At 50% confidence our schedule will be 2 ½ months However approved and successful mitigation plans will late. Is this acceptable? actually deliver the project 1 day early – why? The risk register includes an opportunity to reduce delivery time.26 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    27. 27. Immediate Notification No more scrambling for information27 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    28. 28. Delivering The Most Complete Solution For Program Controls Complete, Compliant, Connected28 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    29. 29. Deltek EPM Ecosystem Earned Value Management (Cobra or MPM & wInsight) Cost Planning Management & Scheduling (Cobra) (Open Plan) PM Cost Compass Resource Estimating Management (Partner Solution) (Open Plan) Risk Management (Active Risk Manager) Team Member Apps Power User Apps Integrations29 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    30. 30. Questions www.twitter.com/deltek www.facebook.com/deltekinc www.linkedin.com/company/163414 www.youtube.com/user/deltekinc30 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved

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