Risk Management ProcessTraining Session Victor Allen.docx

Risk Management Process
Training Session
Victor Allen
April 3, 2012
1
What are risks?
Project Management Institute definition of risk:
“an uncertain event or condition that, if it occurs, has a positive
or negative effect on at least one project objective“ (i.e. scope,
time, cost, quality, safety, etc…)
2

What are risks?
My Definition of risk:
“A negative risk event is something that has not yet happened
on your project, but if it did happen it would negatively impact
your project to the extent that it would be worthwhile to reduce
the likelihood that it will occur or reduce the negative impact if
it occurred”
“A positive risk event is something that has not yet happened on
your project, but if it did happen it would positively impact
your project to the extent that it would be worthwhile to
increase the likelihood that it will occur or increase the positive
impact if it occurred”
3
Risk/Issue/Action?
4
(Risk)
An undesirable event that has not yet happened
(Issue)
An undesirable event that has happened and needs attention
(Action)
Work that needs to be done

Which of the following are risks?
The project may go over budget
I ran over a pot hole coming into work today and my tire is flat
Decisions in the site engineering area are not being made in a
timely manner
Using unproven technology may require frequent re-design
work resulting in a schedule delay
The project may go over budget
This is more of an impact than a risk. There are many reasons
why a project may go over budget. The real question is what
are the things that would cause you to go over budget? The
answer to this question is the risk. Here are some examples of a
better way to write this risk statement:
It may take more time than planned to secure internal employees
to work on this project which will require us to hire consultants
resulting in a cost overrun on the project.
The contractor productivity level may be less than quoted in the
contract resulting in a cost overrun.

I ran over a pot hole coming into work today and my tire is flat
This is not a risk because it already happened. It has now
become an issue that you have to deal with. Time to execute
your contingency plan – hopefully you have a spare or AAA.
Decisions in the site engineering area are not being made in a
timely manner
This is not a risk because it already happened. Decisions are
already not being made timely, so the risk has occurred. It has
now become an issue that you have to deal with.
Using unproven technology may require frequent re-design
work resulting in a schedule delay
This is a risk.
5 Characteristics of a Risk Event
Risk is clear and understandable to anyone who reads it

Risk describes the impact or “so what” factor
Risk has not yet happened
Risk is something your actually worried about.
Risk affects your project, not another project or the company in
general
10
Why do we manage risks?
To improve our chance of project success
Meeting your objectives
Meeting your budget
Meeting your schedule
Working Safely
Delivering with quality
Satisfying your customers and stakeholders
Avoid surprises
11“The first step in the risk management process is to
acknowledge the reality of risk. Denial is a common tactic that
substitutes deliberate ignorance for thoughtful planning” ~
Charles Tremper“If you don’t manage the risks, the risks will
manage you” ~ Victor Allen
Program Risk Manager
Project Risk Manager(s)
Project 1

Project 2
Project 3
Risk Management Database
Risk Register
Risk Assessment Reports
Risk Scorecard
Processes and Methods
Risk Response Planning
Mitigation Planning
Contingency Planning
Reviews
12
External
Audit
DOE
Expert
Internal
Corporate Risk
General Audit
Compliance

Risk Management Framework
The Risk Register
13Project X: Risk PlanImpacts#
Risk Event Description
What is the event?Category
Sub-project, Project Phase, Location etc.
(Optional)LikelihoodSchedule CostQualitySafetyScopeTotal
ScoreRisk Event Drivers
What are the conditions, actions, or events that are likely to
trigger the risk event to occur or is a leading indicator to the
risk event occurring?Response/ Mitigation Strategy
What action(s) will be taken to limit the likelihood of these
event occurring or limiting the impacts?1Contracted vendor
under performs resulting in schedule delays, rework and cost
overrunsContractHHMMML75Drivers to monitor:
- Schedule slippages and missed milestones.
Drivers that have occurred:
- Re-work occurring.
- Change orders issued.
Planned Actions:
- Conduct weekly monitoring of schedule adherence.
- Implement change review process to manage scope, time, cost
changes effectively.
- Develop and implement quality management plan for vendor
work.
Completed Actions:
- Negotiate cost plus incentive fee contract based upon
milestone completion

Risk Register – Impacts Defined
14Risk impact level
MatrixLikelihoodLowMediumHighUnlikelyLikelyAlmost
CertainImpactsLowMediumHighSchedule No Impact to Critical
Path or Field WorkPotential to Affect Critical Path or Field
WorkCertain to Affect Critical Path or Field WorkCostLess
Than $ 250,000 $ 250,000 to $1,000,000 Greater Than $
1,000,000 QualityMinor impact to product deliverablesModerate
impact to product deliverablesMajor impact to product
deliverablesSafetyNo Impact to worker safetyMinor impact to
worker safetyMajor impact to worker safetyScope< 1%2% to
5%> 5%
Responding to Risks
15
Risk: I may run out of gas on my way to work in the morning
and be late for an important meeting which will make my boss
very angry.
What are you going to do to respond to this risk?
Responding to a risk mean that you are going to try one or more
of the following:
Mitigate the risk: try to reduce the likelihood it will occur

and/or the impact if it occurs (i.e. fill up your tank with gas the
night before).
Transfer: give some or all of the risk to a third party (i.e. hire a
cab)
Avoid: Eliminate the possibility (i.e. walk to work or stay at
nearby hotel)
Accept: Do nothing and take your chances
The Risk Register
16#
What is the event?Contingency Plan
What action(s) will be taken if this event occurs?Owner
Risk Timeframe
Critical date(s) or period of exposureOrganizational or Cross-
Project ImpactsComments
1Contracted vendor under performs resulting in schedule delays,
rework and cost overruns- Negotiate contract with alternate
vendor to perform services.
- Complete work with internal resources.Jane DoeOn-
goingNo(01/12) Vendor has repeatedly failed weld inspections
on structural steel.
The Risk Register
17 Financial Analysis#

What is the event?FA Review Required?$
ImpactSourceProbabilitySourceEMVComments1Contracted
vendor under performs resulting in schedule delays, rework and
cost overrunsY $ 500,000 PM input0.9Default $ 450,000
The Risk Register
18 Schedule Analysis Risk Closure#
What is the event?Scheduler Review Required?Critical Path
?Scheduler Response Comments
(Activity #, Quantified impact etc.)Closure StatementNotes /
Lessons Learned1Contracted vendor under performs resulting in
schedule delays, rework and cost overrunsY This risk will
impact the Critical Path Built 20 days of contingency into the
Schedule Steel Erection Work Package delays will impact
Siding and Roof Construction Work Packages.
Tips for Successful Risk Management
Executive Champion who understands Risk Management
Risk Manager who owns process, coaches and mentors
Good set of processes, tools, and templates
Risk Training for the team (concept and processes)
Make Risk Management a priority
Benchmark your process and effectiveness regularly
Establish Historical Risk Database and leverage the past

Work the Risk Plan
Develop Contingency Plans for high risk items
Don’t sweat the small risks
19
VISION OF SUCCESS
What outcomes or results do you want to see?
What does success look like for our customer?
What does success look like for other stakeholders (staff,
partners)?
PROJECT MILESTONES & SCHEDULE
RESOURCES
Internal resources: needed to complete the project.
External resources: needed to complete the project.
Equipment: needed to complete the project.
Materials: needed to complete the project.
< TITLE>
<date>

<sponsor>
CONTEXT / ISSUES
What is the problem or opportunity and why is it important?
What is the purpose, the business reason for choosing this
project?
What are the anticipated benefits to customers and staff from
the project?
What performance measure needs to improve?
Note: The bulleted items in this document help to explain what
the section is and what you should be thinking about when you
fill this project charter out. The bullets are not meant to be
addressed individually.GOALS
What specific, measurable , attainable, relevant, time-bound
results do you want or need to accomplish?
Show visually how much, by when, and with what impact.
NOTE: Be careful not to state a solution as a goal!
SCOPE (IN BOUNDS)
What is the first step and last step in the process?
What is the program and geographic area?
NOTE: Be mindful of what you can realistically accomplish
with available resources and time.SCOPE (OUT OF BOUNDS)
What is off the table due to resources?
What are the givens or assumptions for the project?
Record out of scope issues in a “Parking Lot”
Customers/Stakeholders
Who is the end-user customer?
Who are other stakeholders who have a role or interest in the
success of the process? Team Members
Team Leader:
Team Members:
CUSTOMER REQUIREMENTS
What are the customers specific requirements or
expectations?Project MilestonesOwnerProposed DateActual
DateEach milestone or significant accomplishment should be
listed with the respective person or group responsible to

complete it, and planned date. The actual date can be left blank.
A3 PROJECT CHARTER:
Date:
Sponsor:
An A3 Project Charter is a visual tool for communicating
critical project information on one page. It helps ensure all
parties working on the project are clear about what they need to
accomplish and their role in the project.
Typical CI Project Benefits:
Improved quality and timeliness of services
Improved productivity and reduced service costs
Redeploy staff resources to higher priority areas
Enhanced service consistency
Easier to onboard and train new employees
Improved customer and staff satisfaction
Increased capacity for improving work
How will the project benefit/impact the end user customer
(quality, timeliness, costs, results)?
How will the project benefit/impact staff and stakeholders?
How will the organization reinvest or reassign staff time that is
saved?
What new work will the organization take on because of freed
up staff time?
What are expected cost savings: <> one-time cost savings and
<> ongoing/annual cost savings?
1
VISION OF SUCCESS
PROJECT MILESTONES & SCHEDULE

RESOURCES
Time commitment for a 4 day Kaizen, excluding time to
implement changes: Sponsor (6-10 hrs.); Team Leader (40 hrs.);
Team Members (32 hrs.); Facilitator (40-50 hrs.)
External Resources:
Equipment:
Materials:
< TITLE>
<date>
<sponsor>
CONTEXT / ISSUES
GOALS
SCOPE (IN BOUNDS)
SCOPE (OUT OF BOUNDS)
Customers/Stakeholders
Team Members
Team Leader:
Team Members:
CUSTOMER REQUIREMENTS (CTQ)
Project MilestonesOwnerProposed DateActual Date1. Set
project scope and goals (prepare Project Charter, engage team,
collect data)Sponsor/Team Leader, Facilitator2. Understand the

current situationFacilitator/ Team3. Analyze the current
situation (root causes)Facilitator/ Team4. Define a vision of
successFacilitator/ Team5. Generate, evaluate and select
improvementsTeam/ Sponsor6. Implement changes and make
adjustmentsTeam Leader/ Staff 7. Measure
performanceSponsor/Team Leader 8. Document standard work
and lessons learnedTeam9. Sustain improvementTeam
Leader/Process Owner
A3 PROJECT CHARTER:
Date:
Sponsor:
2
InstructionsRisk Plan OverviewRisk Event DescriptionWhat is
the event? A Source of a risk or hazard – the thing which has
the potential to harm or assist e.g. a dangerous chemical,
competitors, government.An Event or Incident – Something that
occurs such that the source of risk has the impact concerned e.g.
a leak, competitor expands into or leaves your market, new or
revised regulations, or some level of observation reaching a
particular trigger level.A Consequence, outcome or impact on a
range of stakeholders or assets e.g. environmental damage, loss
or increase of market/profits, regulations increase or decreased
competitivenessRisk DriversWhat are the conditions, actions, or
events that are likely to trigger the risk event to occur or is a
leading indicator to the risk event occurring?There are two
beneftits to identifying risk drivers:
- Focus attention on the probable root cause(s) to aid in
developing a Risk Response Strategy
- Identify events or trends that should be monitored Response/
Mitigation Strategy What action(s) will be taken to limit the
likelihood of these event occurring or limiting the

impacts?Accept: This response accepts or ignores the risk. This
may be the appropriate choice when the impact or likelihood of
the risk is so low that it does not warrant further attention or if
you have no control whatsoever over the impact or likelihood of
the risk. (e.g. the risk that your project will be terminated or be
placed on hold due to a company merger).Transfer: This
response involves moving all or part of the risk to another
party. (e.g. purchase automobile insurance and transfer the risk
to the insurance company, for a small monthly fee of course).
Transferring risk comes with a cost.Mitigate: This response
involves reducing the likelihood that the risk will happen,
reducing the impacts of the risk or both. This is what most
people are referring to when they are discussing risk
management. Most risks can be mitigated with some effort.
Although it is unlikely that you can reduce the impact and
likelihood of occurrence to zero, this would in essence be
eliminating the risk, it is often possible to significantly reduce
them. For example, if you have a technical team member who is
critical to the success of the project and if that person left, the
project schedule would be at risk, you may be able to mitigate
the risk by training a backup person to reduce the impact or
offer that individual a bonus or incentive to stay reducing the
likelihood of occurrence.Avoid: This response focuses on
eliminating the risk from the project. This sounds like a great
choice, so you might ask why we don’t choose this all the time.
The reason, it often comes at great cost. To eliminate a risk
generally requires that you remove the source of the risk from
scope. For example, you may have a schedule risk associated
with a new version of software that has not been released yet by
the vendor. Although the customer may be expecting this
software as part of their project, removal from scope would
eliminate this risk.These general response strategies can be used
in combination to address a single risk event. This may be done
in the event that your chosen strategy is not working effectively
or as a way to attack certain types of risks. For example, you
may begin by mitigating a risk reducing both the likelihood and

impact. The remaining risk could then either be avoided by a
smaller scope reduction, transferred to a vendor or accepted.
Contingency PlanWhat action(s) will be taken if this event
occurs?Complete the “Contingency Plan” column for all risk
events that the Project Manager deems necessary to adequately
address the risks of the project. The contingency plan describes
what needs to be done in the event that the risk actually occurs.
When the risk event actually occurs, it is no longer a risk event;
it is simply an event and may require a response or plan to be
activated. The project manager will need to determine what the
criteria are to trigger the need for a contingency plan. One
method is to use the “Total Score” column of the risk plan
template to determine a threshold that requires the development
of a contingency plan. For example, a total score of 85 or higher
may be the threshold which triggers the need for a contingency
plan to be developed. However, there may be a need to develop
a contingency plan for a risk event that scores much lower due
to likelihood, but has a high impact. In the end, the project
manager must be comfortable with the decision around when to
develop a contingency plan.Risk TimeframeCritical date(s) or
period of exposureSome risks are related to specific events,
milestone dates or time periods. These critical dates should be
documented to focus attention on the associated risk at the
appropriate time.
Impacts DefinedRisk impact level
MatrixLikelihoodLowMediumHighUnlikelyLikelyAlmost
CertainImpactsLowMediumHighSchedule No Impact to Critical
Path or Field WorkPotential to Affect Critical Path or Field
WorkCertain to Affect Critical Path or Field WorkCostLess
Than$ 100,000$ 100,000to$ 500,000Greater Than$
500,000QualityMinor impact to product deliverablesModerate
impact to product deliverablesMajor impact to product
deliverablesSafetyNo Impact to worker safetyMinor impact to
worker safetyMajor impact to worker safetyScope< 1%2% to
5%> 5%
Risk PlanHMYesLNoProject Name: Risk PlanDate:

##/##/##Impacts#
What is the event?Category
Sub-project, Project Phase, Location etc.
(Optional)LikelihoodSchedule CostQualitySafetyScopeTotal
event occurring or limiting the impacts?Contingency Plan
Risk Timeframe
Critical date(s) or period of exposureOrganizational or Cross-
Project ImpactsComments
Status1Insufficient number of skilled internal technical
resources available to support the development of the new
system.DevelopmentHHHMLL75Drivers to monitor:
- Development schedules slips
- Excessive overtime is needed to keep pace with the schedule
- High number of quality errors discovered during the testing
cycle
-Planned Actions:
- Train additional internal resources
- Hire additional contractors
- Add contingency to the budget to allow for overtime work
Completed Actions:
-Planned Actions:
- Outsource portions of the development to an outside vendor
- Adjust project schedule and budgetJane Smith3/1/11 -
6/30/11YesERROR:#REF!20Drivers to monitor:
-
-Planned Actions:
-

-
Completed Actions:
-Planned Actions:
-
-ERROR:#REF!30Drivers to monitor:
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-

-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-
-
Completed Actions:
-Planned Actions:
-
-
-Planned Actions:
-

-
Completed Actions:
-Planned Actions:
-
-ERROR:#REF!Closed Risks!OxOpen ItemCompleted Activity
Page &P of &N
Applies to AllHMLAMI Project: Risk PlanDate:
01/27/2010Applies to All Project List#
What is the event?Applies to AllLikelihoodImpactsTotal
Risk Timeframe
Critical date(s) or period of exposureComments
●Schedule CostQualitySafetyScope√68Corporate financial
position changes and does not support project execution
planYHHMLLH75●●●Norlin4System integration scope is not
well definedYHLHHLM75●√●Melton3System integration costs
are higher than expectedYHLHHLM75●√●MeltonCombine
3&4?1Project may not be funded to end and benefits may not be
realizedYHHMLLH75●●●Norlin97Inadequate # of IT human
resources to support the project (project &
operations)YHHLMLL55●●●Norlin53Required
firmware/software upgrade negatively impacts production
devicesYMHHHLL51●●●Moccia86Operational business units /
contractors not staffed properly to support
projectYHMLMLL45●●●Norlin55Lack of adequate vendor
documentationYHMLMLL45●●●Moccia87AMI failures or
problems at other utility adversely affects
projectYMHMMLL39●●●Sitkauskas6MPSC disallows a

component of the plan impacting benefit realization or cost
recovery(example: remote
disconnect)YMMHLLM39●●●Sitkauskas57Organization human
resources not adequate to accept and utilize as required (too
busy, other focus)YHMLLLL35●●●Sitkauskas49Catastrophic
storm occurs impacting Communications (meters to
AMI)YHMLLLL35●●●Switala48Catastrophic storm occurs
impacting rollout scheduleYHMLLLL35●●●Jamerson105Higher
than expected work required at customer site due to aging
infrastructureYMLMLML27●●●Jamerson101Failure to follow
proper installation procedures impacts
customersYMLLMML27●●●Jamerson100Higher than expected
inclement weather
conditionsYMMLLML27●●●Jamerson96Inadequately defined
design freeze date &
procedureYMMLLLM27●●●Melton95Later than expected IT
system changeYMMLLLM27●●●Melton94Higher than
anticipated number of IT system
changesYMMLLLM27●●●Melton78Loss of key personnel
without effective knowledge transfer or replacement (DTE &
Contractors)YMMLMLL27●●●Sitkauskas59Future state
business processes not properly defined prior to milestone
dateYMLMMLL27●●●McCormick56Discover a problem in the
field that was not anticipated causing cost and schedule
overrunsYMMMLLL27●●●Switala7Security vulnerability
discovered with outward equipment(meters, cell relays, home
area network, other)YMMLMLL27●●●Melton104DTE may not
have adequate diagnostic tools to support post-meter
installationYHLLLLL25●●●Switala58Ineffective change
management strategy Leads to low employee
engagementYMLLMLL21●●●SitkauskasMay affect ability to
realize benefits2New firmware technology does not perform to
specificationsYMMLLLL21●●●Melton16Itron is acquired by a
competitor which leads to technology
changeYLHHMLH19●●●Kret15Itron goes out of business /
defaults on contractYLHHMLH19●●●Kret8Security breach

takes place with outward equipment(meters, cell relays, home
area network, other)YLHHHLM19●●●MeltonSafety is M for
SmartCircuits108Significant schedule delay may result in
technology obsolescenceYLMHMLM15●●●Norlin102Customer
complaints may be higher than
expectedYMLLLLL15●●●Jamerson98Ineffective stakeholder
engagementYMLLLLL15●●●Norlin73Installation causes higher
levels of property damage than
projectedYMLLLLL15●●●Jamerson61Takes longer than
anticipated for Operations to understand and effectively utilize
new technology &
processesYMLLLLL15●●●McCormick39DOE payments to DTE
come in later than expected.YMLLLLL15●●●Hull83Project cost
is grossly underestimatedYLMHLLM13●●●Norlin70DOE
terminates grant for convenienceYLHHLLL13●●●HullWould
return to original project plan pre-DOE34DOE grant is not
executed - Never reach agreementYLHHLLL13●●●HullScope
=H for other projects81Higher than expected failure rates of
metersYLMLHLL11●●●Kret43Itron may not be able to keep up
with the scheduleYLHMLLL11●●●Jamerson42Itron may not
provide materials according to the
scheduleYLHMLLL11●●●Kret17Itron could introduce security
risk into productYLMHLLL11●●●Moccia9DTE employee
misuse role resulting in
sabotageYLMHLLL11●●●McCormick107Lack of effective
Testing Plan YLMLMLL9●●●Moccia84Itron system fails to
perform according to
standardsYLMLMLL9●●●Moccia82DOE(or other Federal) rule
change impacts project execution
planYLMMLLL9●●●Hull80New technology standards require
infrastructure changeYLMMLLL9●●●Melton79Communication
technology may change impacting meter operation /
communication(AT&T)YLMMLLL9●●●Melton72Union
employees go on strikeYLMLLML9●●●Jamerson65DOE rejects
customer behavior study planYLMLMLL9●●●HullHull: Review
Impacts64DOE rejects risk analysis/benefits

planYLMLMLL9●●●HullHull: Review Impacts63DOE rejects
project executionYLMLMLL9●●●HullHull: Review
Impacts62DOE rejects cyber security
planYLMLMLL9●●●HullHull: Review Impacts52Single point
vulnerability with communications
architectureYLLMLLM9●●●Melton38Supply chain does not do
proper debarment due diligenceYLLHLLL9●●●Kret37Supply
chain does not include necessary flow-down provisions to
vendorsYLLHLLL9●●●Kret36DOE audit disallows some
costsYLLHLLL9●●●Hull35Unanticipated action related to
Davis-Bacon ActYLLHLLL9●●●Hull33Improper costs are
included in DOE accountingYLLHLLL9●●●Hull32Time
keeping for DOE reporting is inaccurate or
incorrectYLLHLLL9●●●Hull31DTE time keeping system
cannot provide necessary information for DOE
ReportingYLLHLLL9●●●Hull30Accounting for DOE reporting
is inaccurate or incorrectYLLHLLL9●●●Hull29DTE accounting
system cannot provide necessary information for DOE
ReportingYLLHLLL9●●●Hull28Vendors do not provide in
kind-services (Cost share)YLLHLLL9●●●Hull27Terms of DOE
grant are violatedYLLHLLL9●●●Hull26Vendors / contractors
do not provide timely info for DOE
ReportingYLLHLLL9●●●Hull25Vendors / contractors do not
provide proper info for DOE
ReportingYLLHLLL9●●●Hull24DOE Reporting is not
completed in a timely mannerYLLHLLL9●●●Hull23Report to
DOE is inaccurateYLLHLLL9●●●HullRegardless of Rating
DOE related Items need to be closely tracked.22Third party
claims that the technology we are using violates a patent or
trade secretYLLHLLL9●●●Kret110Project does not take
appropriate steps to maintain confidentiality of Customer
dataYLLMLLL7HullWould affect company not necessarily the
project60Project Team not adequately trained in new processes
& technologyYLLLMLL7●●●Switala51Installer commits
crime/fraud in the fieldYLLLLML7●●●Jamerson50Safety
incident occurs resulting in process change or

trainingYLLLLML7●●●Jamerson40Contractor/sub-contractor
fails DOE auditYLLMLLL7●●●Kret18Interveners or grassroots
groups negatively impact customer
opinions(SH)LLLLLL5●●●Sitkauskas12DTE call center volume
may increase due to 5,000 meter changes per day increasing
wait time
significantly(SH)LLLLLL5●●●McCormick91Negative media as
a result of ineffective employment
communicationsYLLLLLL5●●●Sitkauskas67Communication
plan with regulators is inadequate (does not explain benefits and
detriments of the system)YLLLLLL5●●●SitkauskasRegardless
of rating this issue should be tracked closely66Communication
plan with customers is inadequate (does not explain benefits and
of rating this issue should be tracked closely21Prolonged data
center outage impacts AMI
systemYLLLLLL5●●●Melton106Lack of effective Quality
Management PlanY0●●●StasekSee # 8893Project or vendor
scope is not adequately definedY0●●●NorlinSee #
8888Inadequate project managementY0●●●NorlinNeed to
expand1200●●●1190●●●1180●●●1170●●●1160●●●1150●●●1
140●●●1130●●●1120●●●Legend●Open Item√Completed
Activity
Detroit Edison Confidential Page &P of &N
Applies to All (Printable)AMI Project: Risk PlanDate:
01/27/2010Identified Risks that Apply to All Smart Current
Projects#
What is the event?Applies to AllLikelihoodImpactsTotal

Risk Timeframe
Critical date(s) or period of exposureComments
●Schedule CostQualitySafetyScope√68Corporate financial
position changes and does not support project execution
planYHHMLLH75●●●Norlin4System integration scope is not
well definedYHLHHLM75●√●Melton3System integration costs
are higher than expectedYHLHHLM75●√●MeltonCombine
3&4?1Project may not be funded to end and benefits may not be
realizedYHHMLLH75●●●Norlin97Inadequate # of IT human
resources to support the project (project &
operations)YHHLMLL55●●●Norlin53Required
firmware/software upgrade negatively impacts production
devicesYMHHHLL51●●●Moccia86Operational business units /
contractors not staffed properly to support
projectYHMLMLL45●●●Norlin55Lack of adequate vendor
documentationYHMLMLL45●●●Moccia87AMI failures or
problems at other utility adversely affects
projectYMHMMLL39●●●Sitkauskas6MPSC disallows a
component of the plan impacting benefit realization or cost
recovery(example: remote
disconnect)YMMHLLM39●●●Sitkauskas57Organization human
resources not adequate to accept and utilize as required (too
busy, other focus)YHMLLLL35●●●Sitkauskas49Catastrophic
storm occurs impacting Communications (meters to
AMI)YHMLLLL35●●●Switala48Catastrophic storm occurs
impacting rollout scheduleYHMLLLL35●●●Jamerson105Higher
than expected work required at customer site due to aging
infrastructureYMLMLML27●●●Jamerson101Failure to follow
proper installation procedures impacts
customersYMLLMML27●●●Jamerson100Higher than expected
inclement weather
conditionsYMMLLML27●●●Jamerson96Inadequately defined
design freeze date &
procedureYMMLLLM27●●●Melton95Later than expected IT
system changeYMMLLLM27●●●Melton94Higher than

anticipated number of IT system
changesYMMLLLM27●●●Melton78Loss of key personnel
without effective knowledge transfer or replacement (DTE &
Contractors)YMMLMLL27●●●Sitkauskas59Future state
business processes not properly defined prior to milestone
dateYMLMMLL27●●●McCormick56Discover a problem in the
field that was not anticipated causing cost and schedule
overrunsYMMMLLL27●●●Switala7Security vulnerability
discovered with outward equipment(meters, cell relays, home
area network, other)YMMLMLL27●●●Melton104DTE may not
have adequate diagnostic tools to support post-meter
installationYHLLLLL25●●●Switala58Ineffective change
management strategy Leads to low employee
engagementYMLLMLL21●●●SitkauskasMay affect ability to
realize benefits2New firmware technology does not perform to
specificationsYMMLLLL21●●●Melton16Itron is acquired by a
competitor which leads to technology
changeYLHHMLH19●●●Kret15Itron goes out of business /
defaults on contractYLHHMLH19●●●Kret8Security breach
takes place with outward equipment(meters, cell relays, home
area network, other)YLHHHLM19●●●MeltonSafety is M for
SmartCircuits108Significant schedule delay may result in
technology obsolescenceYLMHMLM15●●●Norlin102Customer
complaints may be higher than
expectedYMLLLLL15●●●Jamerson98Ineffective stakeholder
engagementYMLLLLL15●●●Norlin73Installation causes higher
levels of property damage than
projectedYMLLLLL15●●●Jamerson61Takes longer than
anticipated for Operations to understand and effectively utilize
new technology &
processesYMLLLLL15●●●McCormick39DOE payments to DTE
come in later than expected.YMLLLLL15●●●Hull83Project cost
is grossly underestimatedYLMHLLM13●●●Norlin70DOE
terminates grant for convenienceYLHHLLL13●●●HullWould
return to original project plan pre-DOE34DOE grant is not
executed - Never reach agreementYLHHLLL13●●●HullScope

=H for other projects81Higher than expected failure rates of
metersYLMLHLL11●●●Kret43Itron may not be able to keep up
with the scheduleYLHMLLL11●●●Jamerson42Itron may not
provide materials according to the
scheduleYLHMLLL11●●●Kret17Itron could introduce security
risk into productYLMHLLL11●●●Moccia9DTE employee
misuse role resulting in
sabotageYLMHLLL11●●●McCormick107Lack of effective
Testing Plan YLMLMLL9●●●Moccia84Itron system fails to
perform according to
standardsYLMLMLL9●●●Moccia82DOE(or other Federal) rule
change impacts project execution
planYLMMLLL9●●●Hull80New technology standards require
infrastructure changeYLMMLLL9●●●Melton79Communication
technology may change impacting meter operation /
communication(AT&T)YLMMLLL9●●●Melton72Union
employees go on strikeYLMLLML9●●●Jamerson65DOE rejects
customer behavior study planYLMLMLL9●●●HullHull: Review
Impacts64DOE rejects risk analysis/benefits
planYLMLMLL9●●●HullHull: Review Impacts63DOE rejects
project executionYLMLMLL9●●●HullHull: Review
Impacts62DOE rejects cyber security
planYLMLMLL9●●●HullHull: Review Impacts52Single point
vulnerability with communications
architectureYLLMLLM9●●●Melton38Supply chain does not do
proper debarment due diligenceYLLHLLL9●●●Kret37Supply
chain does not include necessary flow-down provisions to
vendorsYLLHLLL9●●●Kret36DOE audit disallows some
costsYLLHLLL9●●●Hull35Unanticipated action related to
Davis-Bacon ActYLLHLLL9●●●Hull33Improper costs are
included in DOE accountingYLLHLLL9●●●Hull32Time
keeping for DOE reporting is inaccurate or
incorrectYLLHLLL9●●●Hull31DTE time keeping system
cannot provide necessary information for DOE
ReportingYLLHLLL9●●●Hull30Accounting for DOE reporting
is inaccurate or incorrectYLLHLLL9●●●Hull29DTE accounting

system cannot provide necessary information for DOE
ReportingYLLHLLL9●●●Hull28Vendors do not provide in
kind-services (Cost share)YLLHLLL9●●●Hull27Terms of DOE
grant are violatedYLLHLLL9●●●Hull26Vendors / contractors
do not provide timely info for DOE
ReportingYLLHLLL9●●●Hull25Vendors / contractors do not
provide proper info for DOE
ReportingYLLHLLL9●●●Hull24DOE Reporting is not
completed in a timely mannerYLLHLLL9●●●Hull23Report to
DOE is inaccurateYLLHLLL9●●●HullRegardless of Rating
DOE related Items need to be closely tracked.22Third party
claims that the technology we are using violates a patent or
trade secretYLLHLLL9●●●Kret110Project does not take
appropriate steps to maintain confidentiality of Customer
dataYLLMLLL7HullWould affect company not necessarily the
project60Project Team not adequately trained in new processes
& technologyYLLLMLL7●●●Switala51Installer commits
crime/fraud in the fieldYLLLLML7●●●Jamerson50Safety
incident occurs resulting in process change or
trainingYLLLLML7●●●Jamerson40Contractor/sub-contractor
fails DOE auditYLLMLLL7●●●Kret18Interveners or grassroots
groups negatively impact customer
opinions(SH)LLLLLL5●●●Sitkauskas12DTE call center volume
may increase due to 5,000 meter changes per day increasing
wait time
significantly(SH)LLLLLL5●●●McCormick91Negative media as
a result of ineffective employment
communicationsYLLLLLL5●●●Sitkauskas67Communication
plan with regulators is inadequate (does not explain benefits and
of rating this issue should be tracked closely66Communication
plan with customers is inadequate (does not explain benefits and
of rating this issue should be tracked closely21Prolonged data
center outage impacts AMI
systemYLLLLLL5●●●Melton106Lack of effective Quality

Management PlanY0●●●StasekSee # 8893Project or vendor
scope is not adequately definedY0●●●NorlinSee #
8888Inadequate project managementY0●●●NorlinNeed to
expand1200●●●1190●●●1180●●●1170●●●1160●●●1150●●●1
140●●●1130●●●1120●●●Legend●Open Item√Completed
Activity
Detroit Edison Confidential Page &P of &N
Mitigation Results
Risk Mitigation Results
0 0 0 0 0 0 0 0 Event Did not Occur /
No Action Taken Event Did not Occur / Mitigation Succesful
Risk Transferred Risk Avoided Risk Accepted Event
Occurred - Impacts Mitigated Event Occurred - Treatment
Ineffective Duplicate / Combined with Other Risk
# of Risk Events Identified and Closed
Risks to ConsiderRisk Categories to ConsiderCapital Project
Portfolio1Funding availability (likelihood of approval)2Project
justification (IRR, need, fleet strategy…)3Timing of the
project4Regulatory influence5Commitment to the project
(FosGen, GenOpts)Engineering6Overall project concept 7Scope
(definition, supporting documentation, realistic goals,
stability…)8As-built conditions (known, assumed,
documented...)9Technology (existing at DTE, established, new
concept…)10Design (complexity, integration, past similar
experience…)11Configuration management12ESO resources
(availability, experience, knowledge, track record…)13A/E
resources (availaibility, experience, knowledge, track
record…)14Schedule (likelihood to meet agreed upon
deadlines)15Cost (likelihood to control the engineering cost

within the agreed upon budget)Project Management16Project
team composition (experience level, competence and skills,
compatibility, track record…)17Roles and responsibilities
(established, understood, agreed…)18Communication
(stakeholders identified)19Scope (expectations understood and
agreed upon, realistic goals, stability…)20Plant Management
commitment to the project21Weather (impact on outdoor
construction work)22Past experience on a similar project
(lessons learned incorporated…)23Plant operational
constraints24Outage constraints (limited flexibility and
opportunities, labor and contractors mandates, micro
management, additional requirements…) 25Cost estimating
(scope quality, WBS, task duration, unit costs, labor plan,
outage project or not…)26Scheduling (scope, WBS, task
duration, dependencies, integration with outage or plant
operation…)27Adherence to the PMP process by all project
team membersSupply Chain ManagementMaterial28Lead
time29Raw material (availability, cost fluctuation...)30Material
origin (logistics, imports…)31Competitive situation32Vendor
performance (level of service, reliability, track
record…)33Technology (existing at DTE, established,
new…)34Schedule (likelihood to meet agreed upon
deadlines…)35On site storage requirementsContracted
Labor36Competitive situation37Vendor selection (new or well
established relationship, past performance,
reliability…)38Availability and workload (contractor,
supervision, key personnel…)39Union labor (availability,
productivity, skills…)40Safety record41Construction
permits42Contract terms (firm bid, T&M, …)43Cost (potential
for exceeding contracted labor budget…)44Schedule (likelihood
to meet agreed upon deadlines…)Construction45Access to
site46Access to equipment (lifting, rigging,
scaffolding…)47Weather 48Safety requirements49Training
requirements (safety and other)50Labor plan (DeCo labor or
contractor)51DeCo labor (availability, crew consistency,
productivity, …)52Lay down areas53Plant operational

constraints (equipement availability, shut down
potential…)54Outage constraints (limited flexibility and
opportunities, equipment availability, shut down potential…)
55Site conditions (soil quality…)56Cost (potential for
exceeding the construction budget…)57Schedule (constraints,
deadlines, key dependencies…)Other58Soil
Assessment59Excavation60Planning and Coordinating with
Vendors61Inclement Weather62Regulations and
Policy63Inadequate Bearing Soil Layer64Working on or near
Water65Special Equipment Availability66Improper
Engineering67Improperly Trained Workforce68Poor
Planning69Communications
Problems70Logistics71Theft72Craft Shortage73Permit
Delay/Inspection Delay74Hazardous
Materials75Missing/Inadequate Drawings or
Specifications76Scope Creep/Change Requests77Late Delivery
of Material/Supplies78Lay down/Confined Space79Contract
Award Process80Technological Advancement
Score Defined
High = 5
Medium = 3
Low = 1
Total Score = (Schedule + Cost + Quality + Safety + Scope) x
Likelihood
Components of a risk
Components of a Risk
•A Source of a risk or hazard – the thing which has the potential
to harm or assist e.g. a dangerous chemical, competitors,
government.
•An Event or Incident – Something that occurs such that the
source of risk has the impact concerned e.g. a leak, competitor
expands into or leaves your market, new or revised regulations,

or some level of observation reaching a particular trigger level.
•A Consequence, outcome or impact on a range of stakeholders
or assets e.g. environmental damage, loss or increase of
market/profits, regulations increase or decreased
competitiveness
•A Cause (what and why) for the presence of the hazard or the
event occurring e.g. design, human intervention, funding,
prediction or failure to predict competitor activity, failure to or
expansion of market presence
•Controls and their level of effectiveness e.g. detection systems,
clean up systems, policies, security, training, and market
research.
•When could the risk occur and Where would it occur.
List of ValuesH●M√LLife of
Project2010201032010Q1201132010 Q22011 1/1132010
Q32010120132010 Q42010 Dec 120112010 Q12011 Q12010
Q22011 Q22010 Q32011 Q32010 Q42011 Q42011 12 012011
Q1 2011 Q22011 Q32011 Q4
Rd 2 Directions1)
Major correction to wording
("wordsmithing" can be done later)2)
Does this risk apply to all SmartCurrent projects
(AMI, Smart Home, Smart Circuit)3)Identify Likelihood *# of
Risks Identified109204)Identify Impacts *Available
Time240705)Identify OwnerMinutes/Risk2.23.5*Risk Plan is a
living document - these ratings can/will change56%
New Process MapMajor Enterprise
ProjectsDRAFT:<<Date>>Project Risk Plan Management :
Process MapProject Manager / Risk Plan ManagerProject

StakeholdersRisk
OwnersFinancial AnalystSchedulerMonthly Update Coordinator
Begin Process
Identify Key Stakeholders
Plan and Schedule Risk Assessment
Conduct Risk Identification Session
Conduct Risk Quantification Session
Develop Risk Response Strategy
Develop Contingency Plan
Send out Request for Updates
Monthly Update Cycle
Integrate Identified Risks into Forecast
Integrate Identified Risks into Schedule
Incorporate Risks into Status Update
Compile Updated Risk Plan
Update Risk Plan
Update Risk Plan
Repeat Monthly Update Cycle Until Project is Complete
Provide Final Update to Risk Plan
File Risk Plan in Historical Archive
Monitor & Control Risks
Update Risk Plan
Publish Risk Plan
Review Industry/ Vendor Information for Lessons Learned &
Project Specific Risks to Consider
Review Historical Risk Database For Related Risks
Review Current Projects for Related/Common Risks
Provide Input
Provide Input
Document Interdependencies in Work Scope

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