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Use of Risk Maturity Model to Benchmark Project Health, 26 May 2016

South Wales and West of England Branch event held on 26th May 2016. Presented by Martin Gosden, SWWE Branch Chairman

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Use of Risk Maturity Model to Benchmark Project Health, 26 May 2016

  1. 1. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Use of a Risk Maturity Model to Benchmark Project Health An exploration of the practical application of a risk audit model to benchmark project (and business) health and improve forecast cost and schedule out-turn 1 Mark Lee Principal P3M Consultant 26 May 2016
  2. 2. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Agenda • Introduce the principles of risk maturity assessment – Why a mature approach is important to project and programme cost and schedule control • Explore and explain the QinetiQ Risk Maturity Model (QRMM) – Context and history: development of the model – Construct and scope – Why this particular model offers advantage to projects/programmes and businesses – How it is applied in practice to benchmark projects/programmes and organisations • Demonstrate the value of the QRMM in application – Summary case examples from Defence and Oil & Gas 2
  3. 3. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Introducing QinetiQ • Formed in 2001 from Defence Evaluation and Research Agency (DERA) • FTSE 250 - £1.35bn market capitalisation • 6,250 people worldwide, with over 1,000 specialists in weapons and testing • Founding Member of The 5% Club – investing in graduates and apprentices • 37 sites across the UK – from Cape Wrath to Shoeburyness • 25 year Long Term Partnering Agreement (LTPA) with MOD, signed in 2006 • Empire Test Pilots’ School (ETPS) – training flight test professionals for over 70 years • More than 1,500 patents granted 3
  4. 4. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Advisory Services – P3 Consultancy • We are QinetiQ’s leading Cost, Risk and P3 capability • We provide independent, impartial advice to governments and industry • We work in Land, Air, Maritime and Joint Domains • We deliver innovation, supporting complex and often leading edge research and delivery programmes for international Defence and Commercial clients • Our products and services include – Our QinetiQ proprietary P3 tools: QRMM, CEHC and FACET – Project Management Office services and support, risk management, cost management, financial forecasting, resource management, stakeholder mapping and engagement, benefits mapping, business and P3 processes and governance 4 We enable our clients to make better decisions, based on good evidence and robust analysis, using a variety of proven tools and techniques
  5. 5. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Risk Maturity Principles Why a mature risk management approach is important to schedule and cost control 5
  6. 6. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why is P3 Risk Maturity Important? Examples of ‘Failed’ Commercial Projects Thermae Bath Spa Forecast: £13m and 2002 opening Actual: £45m and 2006 opening Scottish Parliament Forecast: £10-40m and 2001 opening Actual: £414m and 2004 opening 6 Source: Wikimedia.org
  7. 7. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Control of Risk Management Maturity Schedule Impact – QinetiQ Analysis of Historical NAO Data Current Schedule Performance vs Original Forecast of MOD Top 20 Major Projects 41% 46% 114% 47% 32% 51% 63% 54% 53% 42% 75% 8% 10% 0% 0% 0% 11% 0% 0% 20% 40% 60% 80% 100% 120% Typhoon(Nov-87) StingRay(May-95) NimrodMRA4(Jul-96) AstuteClassSub(Mar- 97) A400M(May-00) Type45Destroyer(Jul- 00) SupportVehicle(Nov-01) NGLAAW(May-02) Terrier(Jul-02) NavalEHF/SHFSat Comms(Aug-03) Soothsayer(Aug-03) MTADS(Sep-04) Watchkeeper(Jul-05) Falcon(Mar-06) Merlin(Mar-06) FutureLynx(Jun-06) AdvancedJetTrainer (Aug-06) TyphoonFuture Capability(Jan-07) Scheduleoverrunas%oforiginalforecast Risk Maturity Uncontrolled Risk Maturity @ Level 3+ Forecast schedule overrun calculated from the summary of post- Main Gate projects in NAO Major Projects Reports Many factors affect projects, but those with risk maturity applied at all CADMID stages are more aware of issues and have mitigations in place to respond to those risks Major projects from the NAO reports with risk maturity applied are statistically less likely to experience schedule overruns Schedule Performance vs Original Forecast of MOD Major Projects Source data: NAO Major Projects Reports Average schedule over-run = 56% Average schedule over-run = 4% 7
  8. 8. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Control of Risk Management Maturity Cost Impact – QinetiQ Analysis of Historical NAO Data Forecast cost overrun calculated from the summary of post-Main Gate projects in NAO Major Projects Reports Projects with Risk Maturity applied experience less budget volatility (overspend or underspend), compared with projects whose level of risk maturity is uncontrolled Current Schedule Performance vs Original Forecast of MOD Top 20 Major Projects -21% 28% 48% 0% 29% -7% -18% 6% -26% 42% -7% -1% -5% -1% 1% -5% -2% -30% -20% -10% 0% 10% 20% 30% 40% 50% Typhoon(Nov-87) StingRay(May-95) NimrodMRA4(Jul-96) AstuteClassSub(Mar- 97) A400M(May-00) Type45Destroyer(Jul- 00) SupportVehicle(Nov-01) NGLAAW(May-02) Terrier(Jul-02) NavalEHF/SHFSat Comms(Aug-03) Soothsayer(Aug-03) MTADS(Sep-04) Watchkeeper(Jul-05) Falcon(Mar-06) Merlin(Mar-06) FutureLynx(Jun-06) AdvancedJetTrainer (Aug-06) TyphoonFuture Capability(Jan-07) Currentoverspendas%oforiginalforecast Risk Maturity Uncontrolled Risk Maturity @ Level 3+ Budget Performance vs Original Forecast of MOD Major Projects Source data: NAO Major Projects Reports Average cost overspend = 8% Average cost underspend = 3% 8
  9. 9. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why is P3 Risk Maturity Important? Audit Evidence from Defence 9 Source data: NAO Major Projects Report 2013 700 600 500 400 300 200 100 0 £m Ships Combat Air Submarines Helicopters Air Support Information Land ISTAR Weapons Systems Support Equipment 0 0 Defence – average cost growth across all 73 projects in the ships, combat air and submarine sectors
  10. 10. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why is P3 Risk and Cost Maturity Important? Avoiding the News Headlines! 10 “BBC Chief Technology Officer sacked over failed £100m Digital Media Initiative” “A major £12m scheme to digitise patient records has so far failed to deliver and is now expected to cost the Health Department double its original budget, according to the Public Accounts Committee” “Canadian provincial health officials fire prime contractor after the firm missed 3 years of deadlines and failed to deliver the province’s flagship online medical registry” “Sacked bursar loses claim for unfair dismissal over school’s £2.5m expansion project” “Environment Minister demoted after bungled $2.4bn home insulation fiasco” Source: Pressgazette.co.uk
  11. 11. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why is P3 Risk and Cost Maturity Important? Avoiding the News Headlines! 11
  12. 12. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why is P3 Risk and Cost Maturity Important? Primary Causes of Project Failure 12 “Opportunities and risks were not defined” 31%
  13. 13. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why Does This Happen? Dealing with Uncertainty All projects and programmes have uncertainties and changing variables, arising from … • Budget changes • Schedule changes • Requirement changes • Omissions and errors • Failure to tackle risk at source • Things that “just go wrong” “…… because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know” Donald Rumsfeld Source: Wikimedia.org 13
  14. 14. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why Does This Happen? Dealing with Uncertainty – Defence Reform and QDC
  15. 15. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Why Does This Happen? Dealing with Uncertainty – Defence Reform and QDC
  16. 16. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Confidence … Driven by Uncertainty Confidence is a major factor in human behaviour … and decision-making • Sub-prime mortgage crisis – Missouri house prices crashed by 90% • Global recession - US companies began storing cash • Scottish Referendum – investors sold Sterling • ‘Brexit’ – value of Sterling and FTSE depressed(?), investments on hold Wouldn’t it be useful if we could have better confidence in our ability to manage uncertainty…? Source: Edinburghnews.com 16 Source: Dilbert.com
  17. 17. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 The QRMM Construct, context, scope, benefits and application of the QinetiQ Risk Maturity Model 17
  18. 18. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QinetiQ Risk Maturity Model (QRMM) A Brief History … • Developed by QinetiQ (1999) to improve confidence by objectively assessing risk management maturity • Referenced to and compliant with ― MOD’s Acquisition System Guidance (ASG) ― Project risk management best practice – APM Project Risk Analysis and Management (PRAM) Guide ― Combined Code (‘Turnbull Guidance’) for UK Corporate Governance – Financial Reporting Council • Proven capability and value in application over 15 years ― Circa £100bn of Defence projects/programmes (across all domains) assessed … and counting ― Also deployed in Oil & Gas (FTSE 100 multi-national), Rail and Manufacturing • QinetiQ analysis of NAO Major Projects Reports has indicated that RMM can ― Increase confidence in project success through improved cost/schedule adherence ― Deliver forecast improvement in schedule and cost out-turn on major projects and programmes 18
  19. 19. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM as an Enabler to Better P3 Delivery • Assesses and benchmarks the quality and consistency of risk management implementation • Improves confidence in the ability to predict and deliver against schedule and cost • Establishes an independent, objective and evidence-based baseline measure of risk maturity • Identifies strengths and weaknesses in risk management process and its enablers • Supports formulation of a prioritised ‘roadmap’ of improvement actions against the baseline • Supports identification of common issues across projects/programmes, to help tackle risk at source • Facilitates sharing of good practice within and across business units • Builds confidence in the quality of underpinning data (e.g. for Business Cases) • Scalable: applicable at all levels, at all points in the project/business lifecycle • Can be used to support supplier assessment 19
  20. 20. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Comparison of Risk Management Maturity Models QinetiQ Analysis (2013) - Summary 20 Defence Heritage Risk-Specific Maturity Model Implementation Guidance Available Implementable Risk Maturity Model Available Question and Anwer Set Developed and Available Questions Mapped to Maturity Levels Analysis and Reporting Tools Available Improvement Roadmap Guidance and/or Tool Available Number of Questions Implementable Without Investment Management of Risk (MOR®) Maturity Model 0 HM Treasury Risk Management Assessment Framework (RMAF) 38 Cabinet Office Portfolio, Programme and Project Management Maturity Model (P3M3) 9 QinetiQ Risk Maturity Model (QRMM) 50
  21. 21. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM Construct – Scope and Scoring • A maturity framework covering 6 risk management perspectives — Risk Identification; Risk Analysis; Risk Mitigation — Project Management; Stakeholders; Culture • Each perspective is scored within the algorithm, at one of 4 levels — Level 1 = Naive (process design or application flawed and probably not adding value) — Level 2 = Novice (some value-add, but weakness in process design or implementation) — Level 3 = Normalised (formalised process, implemented systematically and adding value) — Level 4 = Natural (applied at strategic level in driving objectives and optimising outcomes) • Level 3 is an acceptable score (complex programmes/projects may aspire to Level 4) 21
  22. 22. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM Construct – Top Level Output Risk Maturity Assessment Stakeholders Risk Identification Risk Analysis Risk Mitigation Project Management Culture Current Maturity Potential Improvement Level 4 - Natural Level 3 - Normalised Level 2 - Novice Level 1 - Naive “An organisation is only as strong as its weakest element” 22
  23. 23. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM – Example Characteristics of Maturity Levels 23 Level Descriptor Formal Definition Example Characteristics 1 Naïve Although a risk management process may have been initiated, its design or application is fundamentally flawed At this level, it is likely that the process does not add value • Low level of understanding of risk management principles and application • No formalised process for managing risk, or ad-hoc and/or poorly applied • Fundamental flaw in the design or application of the risk process • Critical risk process components are likely to have lapsed into disuse 2 Novice The risk management process influences decisions taken by the organisation in a way that is likely to lead to improvements in performance as measured against its objectives However, whilst the process may add value, weaknesses with either the process design or its implementation result in significant benefits being unrealised • At least a ‘light’ application of the risk process • The process itself is standardised and followed with robustness • A formal risk management process that follows best practice recently initiated • Larger organisation where process application may be an issue • Larger organisation where issues of process design may be difficult to correct
  24. 24. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM – Example Characteristics of Maturity Levels 24 Level Descriptor Formal Definition Example Characteristics 3 Normalised The risk management process is formalised and implemented systematically Value is added by implementing effective management responses to significant sources of uncertainty that could affect the achievement of business objectives • Disciplined risk process application across the whole organisation • Risk register underpins routine reviews of the implications of risk • The effectiveness and implementation of responses is designed to manage risk • Risks clarify all relevant and significant sources of uncertainty • The risk register contains the right risks (and they continue to be the right risks) • Risks are managed by the right risk owners, with engagement of stakeholders • Appropriate and sound methods are used to select and prioritise risks for review • Risk management is being used to support achievement of objectives 4 Natural The risk management process leads to the selection of risk-efficient strategic choices when setting business objectives and choosing between options for solutions or delivery Sources of uncertainty that could affect the achievement of objectives are managed systematically within the context of an organisational culture that is conducive to optimising business outcomes • Risk is managed from a strategic (not just tactical) perspective • Risk responses are likely to be executed from Sponsor level • Risk management is implicit, with over-reliance on the Probability Impact Matrix and an integrated risk register and Monte-Carlo simulation toolset avoided
  25. 25. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Empirical Assessment Process Review Documentary Evidence Audit Conduct RMA Workshop Analyse and Report Results Implement Improvement Plan RMA Benchmark (Level 1 to 4) Periodic re-assessment against current benchmark 25
  26. 26. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Risk Maturity Assessment Workshop – Use of Electronic Voting • Well-established method of group decision support • Used to elicit opinion — Primarily interested in the reasons for the votes — Votes are anonymous • Provides a framework to consider arguments before expressing opinion • Discussion is limited to clarification before voting — Understand the question and supporting narrative, in relation to risk maturity — Understand how the question and context relates to the project under assessment • Divergence in votes may provide additional insight: an opportunity for discussion Source: Wikipedia.org 26
  27. 27. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Risk Maturity Assessment Workshop – Use of Electronic Voting • Question is posed — Consider the question and context ... and vote • Facilitated discussion — Voting results presented — Salient points recorded for analysis/reporting — Record the consensus view (score, any narrative) • Re-vote (as necessary) • Why use Delphi Technique? — Decisions from a structured group facilitation are more accurate — In this scenario, exploring voting rationale can aid interpretation and understanding Source: Powervote.com 27
  28. 28. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Example Analysis Outputs 28
  29. 29. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Example Analysis Outputs 29
  30. 30. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Example Analysis Outputs 30
  31. 31. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Example Analysis Outputs 31
  32. 32. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Improvement Roadmap Implementation – Example Status Check 32 Recommendation Title Theme Value Complexity Status Comments R3.1 Risk Descriptions Process Alignment High Low Ongoing Will be satisfied through RMP R3.3 Risk Roles and Responsibilities in RMP Process Alignment High Low Ongoing Will be satisfied through RMP R3.4 Briefing of Risk Roles and Responsibilities Stakeholder Engagement High Low Ongoing Briefed through RMP and risk training R4.4 Use of Risk Reduction Strategies Process Alignment High Low Ongoing Will be satisfied through RMP R5.2 DOR Matrix Roles and Responsibilities High Low Ongoing Will be satisfied through RMP R1.2 Escalation Criteria Process Alignment High Medium Ongoing Will be satisfied through RMP R3.10 Secondary Risk Effects in RMP Process Alignment High Medium Ongoing Will be satisfied through RMP R3.11 Training on Secondary Risks Stakeholder Engagement High Medium Not started To be covered in risk training course R4.10 Risk Response Metric Audit and Assurance Medium Low Complete Already being implemented and ought to be reflected in RMP R4.11 XXXXX Risk Board TORs Audit and Assurance Medium Low Complete TORs have been drafted and will be included in RMP R4.2 Review of Risks for Fallback Decision Points Audit and Assurance Medium Medium Not started Suggest this is part of risk audit, planned for March 2016 R2.12 Risk Identification Metric Process Alignment Low Low Deleted Not required - risk status checked pre-Risk Board Recommendation Title Theme Value Complexity Status Comments R2.3 Top-Down Risk Identification in RMP Process Alignment High Low Not started Suggest this is written into RMP R2.14 Issue Management Process Alignment High Low Not started Suggest this is written into RMP R1.13 Portfolio Office Risk Support to DLODs Resourcing High Medium Deleted XXXXX Programme has determined this isn't needed R2.1 Assumptions Risk Identification High Medium Not started Consider bringing MDAL and 3OA under Programme control R2.2 Top-Down Risk Identification Risk Identification High Medium Not started Risk identification workshop scheduled for 4 November 2015 R2.13 Milestone Schedule Reviews Process Alignment High Medium Not started R4.6 Use of Risk Tolerance Threshold Process Alignment High Medium Not started CATEGORY 1 RECOMMENDATIONS CATEGORY 2 RECOMMENDATIONS
  33. 33. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Case Examples Examples of the QRMM in application to benchmark and improve project and programme performance in Defence and Oil & Gas 33
  34. 34. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 1 MOD Project Team – Analysis Summary and Plan 34 Perspective Number of Projects at Each Level – Feb ‘14 Level 2 Level 3 Level 4 Stakeholders √ √ √ √ Risk Identification √ √ √ √ Risk Analysis √ √ √ √ Risk Responses √ √ √ √ Project Management √ √ √ √ Culture √ √ √ √ • February 2014 forward improvement plans, focused to achieve — Project A: from high L2 (almost L3) to weak L3 in 3 months, consolidating to a firm L3 — Project B: from high L3 to a weak L4, consolidating to a firm L4 through secondary actions — Project C: from weak L3 (with risk of slipping back to L2) to a firm L3 — Project D: from weak L4 (risk of slipping back to L3) to a firm L4 A good example of where focused MOD effort, and periodic RMA, can enhance risk execution
  35. 35. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 2 MOD 1* Portfolio – Analysis Summary Current Schedule Performance vs Original Forecast of MOD Top 20 Major Projects -21% 28% 48% 0% 29% -7% -18% 6% -26% 42% -7% -1% -5% -1% 1% -5% -2% -30% -20% -10% 0% 10% 20% 30% 40% 50% Typhoon(Nov-87) StingRay(May-95) NimrodMRA4(Jul-96) AstuteClassSub(Mar- 97) A400M(May-00) Type45Destroyer(Jul- 00) SupportVehicle(Nov-01) NGLAAW(May-02) Terrier(Jul-02) NavalEHF/SHFSat Comms(Aug-03) Soothsayer(Aug-03) MTADS(Sep-04) Watchkeeper(Jul-05) Falcon(Mar-06) Merlin(Mar-06) FutureLynx(Jun-06) AdvancedJetTrainer (Aug-06) TyphoonFuture Capability(Jan-07) Currentoverspendas%oforiginalforecast Risk Maturity Uncontrolled Risk Maturity @ Level 3+ Stakeholders Risk Identification Risk Analysis Risk Responses Project Management Culture Category1 Category2 Level 1 Level 2 Level 3 Level 4 Level of maturity after • Level 1 across all 6 perspectives – the worst ever RMA score recorded by QinetiQ! • Risk improvement roadmap established to target — Level 2 in 3 months (22 actions) — Level 3 in a further 9 months (16 actions) Source: MoD 35
  36. 36. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 2 MOD 1* Portfolio – Outcomes Source: MoD • Improvements were not implemented, due to — Lack of capacity within MOD to implement the plan — Conflicting demands and changing priorities — Ongoing organisational uncertainty — Realisation that implementation of improvements at 1* level would be insufficient • QinetiQ was then requested to — Formulate a transformation programme covering the 2* group (4 x 1* units) — Develop and roll-out improvements to enhance risk and cost management and control • What happened next? • MOD secured stakeholder buy-in to implement the ~18 month transformation programme • In-FY underspend was secured to fund the initial phase • Other areas developed an interest in improving their risk and cost maturity A good example of where a localised RMA can uncover a need for wider risk/cost improvement 36
  37. 37. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 2 Example Transformation Programme – Benefits Realisation Forecast Risk Maturity (left-hand scale) Phase 1 Phase 3Phase 2 Potential for Schedule/Cost Overrun (right-hand scale) Naïve (Level 1)  Risk process flawed  No real value-add Novice (Level 2)  Risk process influencing decisions  Risk process adding value  Improving performance against objectives  Some process/implementation weaknesses  Potential for significant unrealised benefits Normalised (Level 3)  Risk process formalised  Process implemented systematically  Effective risk responses executed  Sources of uncertainty under control  Significant value-add Natural (Level 4)  Risk process informing strategic choices  Sources of uncertainty managed systematically  Risk culture conducive to maximising outcomes Level 1 Level 4 Level 3 Level 2 RiskMaturityLevel 0-10% 100%+ 60-99% 11-60% Schedule/CostOverrun (asa%ofbaselineschedule/budget) 37
  38. 38. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 3 MOD HQ Programme - Results 38 • A high performing programme with excellent structural and cultural characteristics • Key shortfalls noted in risk analysis due to personnel failing to record this in the risk tool • Risk improvement roadmap established to target — Clear consolidation at Level 3 (49 actions), a significant number of which were RMP shortfalls — Longer-term improvement to Level 4 (45 actions)
  39. 39. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 3 MOD HQ Programme - Outcomes 39 • What happened next? — The programme enhanced its internal capability through the recruitment of additional P3M resource — QinetiQ’s contract was extended to upskill the new P3M team and advise on improvement execution — The programme targeted a further calibration of its risk management maturity in circa 6 months A good example where even a risk-robust programme can benefit from targeted risk improvement • QinetiQ was advised of another programme (under the same SRO) which required calibration − QinetiQ briefed the benefits of conducting a formal risk maturity calibration to the other PMO − The (new) PMO Head of Risk is introducing changes, having recognised some shortfalls − QinetiQ will be contracted to undertake a risk maturity assessment in circa 3-6 months
  40. 40. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 QRMM in Application Case Example 4 Oil & Gas FTSE 100 Multinational – Analysis and Outcomes 40 • FTSE 100 Oil & Gas multi-national approached QinetiQ to pilot an RMA on a UK project • QinetiQ amended the RMA framework Q&A set to reflect O&G-specific language − Underlying model and algorithms were unchanged • The pilot was conducted on the UK project − Identified that lack of risk disclosure from the JV partner was a significant threat − RMA was extremely well received by the client organisation − Actions to address the shortfalls were apparently not progressed − There were serious repercussions for both JV partners A good example where failure to address risk maturity shortfalls can impact business health • What happened next? − QinetiQ undertook a further RMA on an operation in Asia, on completion of the UK pilot − The Asia RMA identified significant pockets of good practice to share across the company − QinetiQ was requested to develop a new corporate Cost & Schedule Risk Analysis standard Source: Wikipedia.org
  41. 41. QINETIQ PROPRIETARY QINETIQ PROPRIETARY The document and information contained herein is proprietary information of QinetiQ Limited and shall not be disclosed or reproduced without the prior authorisation of QinetiQ Limited. © QinetiQ Limited 2016 Summary 1. Introduce the principles and importance of risk maturity assessment − There is inherent uncertainty in all projects, programmes and businesses − Formalised risk management help us understand and respond to uncertainty − Control of risk maturity is a key enabler to good project and programme management 2. Explore QinetiQ Risk Maturity Model (QRMM) − Audits and benchmarks project and programme health and focuses P3M improvement initiatives − Enhances confidence in the likelihood of an out-turn to schedule and within budget − Enables us to more confidently establish our risk appetite and inform strategic choice 3. Demonstrate value of QRMM in application − Case 1 – focused improvement and periodic re-assessment enhanced project control − Case 2 – localised RMA can trigger wider imperative to enhance risk management − Case 3 – even projects/programmes which appear mature can benefit from targeted intervention − Case 4 – failure to address risk maturity improvement can impact business health Source: Pressgazette.co.uk
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