Integrating risk and benefits management

1. Integrating Risk and Benefits Management
Bruce Phillips and William Foulds

2. Life Cycle
Engineering
content
Life Cycle
Engineering
Case Studies
Who are we?
Why ‘risk and
benefits’?
Understanding the risk/benefit
relationship
Context, integration and themes
…and what do we do?
Success Factors The important enablers

3. Consultancy Services Solutions
Collaborative Solutions –
ensuring the information and
processes our customers need
are securely shared, better
organised and available at the
point of need
Management Services –
supporting and delivering critical
projects and programmes,
managing risk and providing
assurance and governance
our business
Lifecycle Engineering –
managing and supporting
assets, ensuring they are
available and affordable
through life
Information & Knowledge
Management – delivering
confidence in the quality and
assurance of our customers’
information
Visualisation Solutions –
advanced solutions that work
with the growing big data
challenge, and more information
systems to support more
informed decision making
Data Analytic Solutions - helping
our customers to work smarter
and make better decisions

4. Will Foulds Bruce Phillips
The business – Management Services,
Project Management Group Leader
The business – Management Services,
Risk Management Group Leader
our people
The profession - Institute of Risk
Management (IRM) Member and
MSc Risk Management, PRINCE2 and
APMP
The ‘sharp-end’ - Delivering enterprise,
portfolio, programme and project risk
management architectures and
solutions worldwide
The ‘sharp-end’ - Delivery and
leadership of many projects,
programmes and transformation
changes in Defence, Security and ICT
The profession – APMP, MSP, APM
Benefits SIG and APM SWWE
Committee

5. making it up as you go along…

6. why ‘risk’?
• “Effect of uncertainty on objectives” (ISO 31000).
• Golden Rule: “Risk is in the eye of the beholder”.
• Determined by:
• Perception: What is the risk, and how big is it?
• Appetite: What risk am I willing to accept?
• Value: What’s it worth to me?
• Coin-toss game
• Flying in an aeroplane
• We use risk management as a mechanistic process
to achieve objectives.
• But, our actions are a balance of Risk and Benefit
• Individuals, project teams, stakeholders
• The intended project benefits
It’s all about
Risk…isn’t it?

7. Strategic
Objectives
Identify
Assess
Plan
Manage
• Identify elements of uncertainty
• Balance appetite, perception and value
• Focus management attention
• Communicate - Monitor, report and update
• Fundamentally linked to Strategic
Objectives
why risk management?
• Recent Trends: Objectives biased, not benefits
• Compliance: Birth of the ‘compliance’ approach restricts benefits identification
• Integration: Little alignment of Benefits and Risk Management functions

8. why ‘benefits’?
• Outcome considered to be an advantage by one or
more stakeholders.
• Delivery of benefits is the rationale behind the
investment in business change.
• In project management, success can only be
achieved through delivery of benefits.
• Like risk management, it contributes towards the
achievement of strategic objectives.
• Therefore, integrated risk and benefits management
enables success.
• Experience tells us that there is a poor record of
transformational change initiatives realising the
benefits they were intended to deliver.
• Lack of benefits identification or management?
• Not managing the uncertainty?
It’s all about
Benefits…isn’t it?

9. why benefits management?
Strategic
Objectives
Identify
Plan
Deliver
Review
• Supports:
• The decision to invest
• Delivering the vision
• Defining project outputs
• Ownership and contribution
• Helps harness (the inevitable) changes and
opportunities as they come along.
• It’s also about non-benefits i.e. risk!
• Fundamentally linked to Strategic Objectives
• Business Case: Investment decisions not based upon the balance of risk v benefits!
• Understanding: Benefits and risk management seen as a ‘black arts’.
• Measuring Success: We don’t - we just move on to the next project.

10. key risk/benefits themes
Strategic
Objectives
Plan
Execute
Harvest
Learn
• Integration: Positive cumulative effect through managing risk and benefits together
• Engagement: Improved collaboration, communication, ownership and visibility
• Learning: Helps to ensure experiential learning is encouraged and exploited
• Plan: Simple strategies to integrate… integrated risk
and benefits management strategy
• Execute: Bring risk and benefits into alignment through
monitor and control… benefits/non-benefits
focused risk register
• Harvest: Review of what benefits were delivered and
when… updated risk/benefits realisation plan
• Learn: Understanding the risk/benefit relationship and
what we learnt (good and bad)… continuous
improvement plan

11. typical lifecycle
Potential Risk
Impacts not
Integrated in to
Benefits Realisation
Plan
Risk
Management
Strategy
Outputs Transitioned
to Users
Embedding the New
Capability
New Capability Seen
as BAU and Used
Effectively
Benefits Realisation Value Curve
Risk Impact Curve
Pre-Project Project Transition Early Operations
Sustained
Operations
Risk Register
No Real Validation of
Risks Against
Benefits and their
Profiles
Delivery
Understand the
context
Monitoring
Risk with No Direct
Consideration of
Impact on Benefits
Little or No Risk v
Benefits
Performance Review
Focus on Benefits.
Insufficient Focus on
Non-Benefits
No Benefits
Realisation
Measurement or ROI
Assessment
No Appetite for
Opportunity Benefits
or Trade-offs
Benefits
Management
Strategy

12. target lifecycle
Integrated Risk and
Benefits Realisation
Planning
Integrated Risk and
Benefits
Management
Strategy
Embedding the New
Capability
Benefits Realisation Value Curves
Risk Impact Curves
Pre-Project Project Transition Early Operations
Sustained
Operations
Benefits Focused
Risk Register
Validating Candidate
Risks Against
Agreed Benefits and
their Profiles
Delivery
Schedule and Cost
Risk/Benefit Analysis
Understand the
context
Monitoring Risk and
Controlling Benefits
Review of Risk v
Benefits
Performance against
Baseline
Risk Impact of Non-
Benefits
ROI and Assess
Contribution towards
Strategic ObjectivesOpportunity and
Trade-off Decisions
‘before’
‘after’
‘before’
‘after’
Minimise
Maximise
New Capability Seen
as BAU and Used
Effectively
Outputs
Transitioned
to Users

13. arms factory build
Scenario
• Design/build; Risk Management to ensure
programme planning and decision support.
• Objectives: a) factory build, b) markets and
exports serviced and c) deliver long-term
economic return.
• Traditional methods of risk management to be
deployed under contract: T, C and P.
Solution
• Working with local stakeholders and project
team to identify benefits: a) local recruitment,
b) sustainability for dual-purposes and c) 25%
increase in production ahead of rivals
• Benefits-based risk register.
• Graphic of risk ‘burn-down’ and realisation of
benefits to the local people and economy.
Benefits
• Novel risks/opportunities that traditional
methods would have missed.
• Increased support from local stakeholders
(linked to motivation).
• Benefits approach enhanced risk register.
• Delivering value, not just a product.

14. security services
Scenario
• Significantly under-performing service provision
• Original objectives around demand/capacity
management, product quality, value
• Concept of risk and benefits completely alien
• Threat of losing the contract
Solution
• Understand risk impact on current baseline
• Define new service levels based on delivery of
achievable benefits
• Risk aligned benefits realisation planning
• Joint team continuously reviewing risk and
affects on benefits, via skilled PMO
• Benefits measured using same baseline
approach and metrics
Benefits
• Culture shift in attitude to risk and benefits
• Increased project and programme success
• Customer satisfaction
• Value driven by increased productivity x6

15. army communications programme
Scenario
• Objectives around managing equipment
obsolescence and reducing training burden
• No defined benefits
• Benefits not really understood - at all levels
• Decisions being taken without understanding
risk and impact on benefits
Solution
• Benefits workshops, seniors/decision-makers
• Identify, prioritise benefits and understand risk
• Goal based benefits realisation plan focused
on the management of risk
• Integrated risk mitigation of non-benefits and
end benefits
• Decision-making based on impact on benefits
Benefits
• Realisation that ‘it’s all about delivering benefits’
• Risk to benefit relationship understood
• Benefits selected on value, prioritisation and risk
• Benefit options, based on risk impact

16. defence systems engineering
Scenario
• Environmental protection system for armoured
vehicle procurement programme
• Two options: ‘active’ (self-regenerating filters)
and ‘passive’ (disposable filters)
• Risks and benefits of each option not
considered or understood
• Decision required for business case
Solution
• Through-life assessment of both options
based on risk and benefits relationship
• Considering risk/benefit curves for both
options determined ‘passive’ as optimum
• Recommendation based on balance of risk
and delivery of benefits, approved by ChEng
Benefits
• Clear risk/benefit assessment based on
capability, financial, organisational and
regulation categories
• Decision-makers know the impact of their
decision
• Approach adopted for other areas of the vehicle
enabling fleet based benefits/risk trade-offs

17. navy communications programme
Scenario
• Complex ICT transformation programme
• Process, organisation, technology and
information but no coherence
• Poor governance - and new SRO!
• Integrated risk and benefits management
immature
Solution
• Creation of a blueprint with under-pinning
benefits and risks
• Creation of a programme plan that defines
how outputs and outcomes will be delivered
• Creation of a scheduling approach that
integrates risk and benefits
• Exploring the relative schedule and cost
risk/benefits of different delivery options
Benefits
• Risks and benefits traceable from vision to
implementation
• Coherence in future state of the programme
• Accountability: known cost of risk and cost
of benefits
• Culture change

18. critical success factors
Simplicity: Empowerment,
Process, Transparency
Culture: Leadership, Attitude,
Collaboration
Habit: Methodology,
Motivation, Sustainability

19. Any Questions?