APM Risk SIG Conference 2019

1. 1
Antidotes to Optimism
Bias
Embedding Quantitative Risk Analysis into
Enterprise Risk Management
Kevin Shelton
Head of Risk & Value Management
Network Rail

2. 2
Preventing bias
Any decision made in a project environment is based on personal
experience and will, inevitably, be based on biased to some extent.
The risk management process attempts to minimise the effects of bias
and increase the chance of success through a structured process of
evaluating all options for achieving project objectives, opportunities for
improvements and identifying threat reduction actions.

3. 3
https://www.networkrail.co.uk/who-we-are/

4. 4
▪ We work to provide certainty for customers
▪ Through leading edge cost & schedule risk analysis
▪ This counters unhelpful Optimism Bias
▪ Informing decision making under uncertainty
▪ And helping assure value for money
Risk & value management for Network Rail’s capital
delivery portfolio:

5. 5
What happens when it goes well….
▪ Projects & programmes are safely delivered on time/cost
▪ Passengers reach their destinations on time
▪ Freight arrives on-time
▪ We have happy customers
▪ Government and business invest more money
▪ Industry grows and so it continues

6. 6
What happens when it doesn’t go so well….
The opposite……

7. 7
▪ Primary objective: Safely deliver projects and programmes for
customers on time and to budget.
▪ Risk: Failure to do the above across the capital projects portfolio
▪ ‘Level 0’ risk – Network Rail Executive Level
Risks linked to strategic objectives in the business plan:

8. 8
Level 0 = Executive Level Risk

9. 9
P3M Risk Management key ingredients:
▪ Risk & Value Profession
▪ P3M Risk & Value Management Framework
▪ Risk & Value Management Plans
▪ Risk Registers
▪ Quantitative analysis and reporting
▪ QCRA – cost (£s)
▪ QSRA – schedule (days/hours)
▪ Risk Assurance & governance inc. peer review
▪ Lessons learned
▪ Portfolio risk management

10. 10
Pre-requisites:
▪ Executive level buy-in and support
▪ Individual project & programme level support
▪ Risk levels for projects (LoC)
▪ Governance framework and procedures
▪ Quantitative analytical capability
▪ Monthly reporting on QRA compliance and metrics
▪ Quarterly updates for the portfolio position
▪ Commitment and a degree of tenacity

11. 11
Questions & discussion…..