Government Office for the North West Objective 2

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Government Office for the North WestObjective 2

• 24/25th February 2003
• APPs Risk Training Workshops

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Introduction

• Steve Martin

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The need for better risk and programme management

• Imminent continuing threat of decommitment
• Urgent requirement to mitigate risks and
  reallocate funding to minimise funds lost
• Need for a more proactive approach to programme
  management
• Opportunity to improve programme management
  capability within GONW APPs
• Context Reebok event, mid-term review

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Risk management information system

• Focus on spend ultimate importance of outputs
• Shared resource only as good as information
  inputted
• Co-owned system need feedback from partners to
  improve
• Realistic forecasts measure of project
  management capability
• Normal part of project management more
  systematic structured approach

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Objectives of workshop

• To establish the basis for inputting to the new
  management information
• To develop a common understanding of risk
  assessment and its role in project management
• To provide some good practice benchmarks and
  guidance on its use in an APP context

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Agenda

• Richard Caseley
• The risk form
• Heather Heaton
• Risk assessment and its role in project
  management
• Glyn Roberts
• Risk in the context of APPs
• Working session

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The Risk Form

• Richard Caseley

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Risk Form

• Overview
• Inputs clarification of requirements
• Practical usage issues
• Outputs / benefits for active management

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Overview
Claim profile decommitment risk
Improved project management capability
Clear timely management info
RISK FORM
Claim Form
Risk Register
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Inputting

• Web-based tool using GONW server and linked to
  interactive claim form (ICF) to avoid
  double-entry
• Claims not outputs are main focus
• Inputs to come from projects via APs
• Each AP will have 1 password with which it can
  access all of its projects
• Each project will have its own password
• Data input by project
• AP reviews data and issues to EPS

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Inputs required

• Data imported from Interactive Claim Form
  inputs to Risk Form minimised
• Basic input for all projects, more details for
  approved projects
• informs on delivery and pipeline
• Input level
• P1, P2 - project level
• P3 - claim element
• Monthly input

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Milestones
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Spend profile variability
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Benefits - general

• Reports at AP, county/sub-region, priority and
  programme level
• Regular management reporting
• Most probable claim
• Minimum and maximum possible spend
• Forecast vs actual
• Focuses on biggest variances
• Claim profile
• Timeline for projects (and claim elements for P3)
• Visibility of pipeline

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Introduction to risk

• Heather Heaton

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The Risk Register

• Decisions about spend variability in the Risk
  Form are based on the degree of risk inherent in
  a project
• A Risk Register is a tool for
• Understanding the nature and level of risk
• Managing risk effectively

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Risk management the basics

• The concept of risk
• Its role and relevance in project management
• Assessment of risk
• Management of risk

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What is risk?

• any potential threat or occurrence which may
  prevent objectives being achieved in terms of
• - Timescale
• - Cost
• - Quality/benefits

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Risk Management Process for each project
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Risk tools

• Risk register
• Advisory
• Helps to prepare for the risk form
• Useful management review tool
• Can be used at different levels of sophistication
• Risk form
• Required
• Will be used to assess likely spend profile
• Will assist in reallocation decisions

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Brainstorming the risk register

• Think of all the possible risks which the project
  faces
• Note them down, being careful to define them
  clearly
• Note the phase of the project they are most
  likely to impact

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Assessment of Risk

• IMPACT
• Risks effect on cost/time/quality, if it occurs
• An impact is an effect on or days or
  deliverables
• PROBABILITY
• Likelihood of the risk occurring
• Expressed as a chance

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Assessments are input to the risk register

• Classify impacts as VL / L / M / H / VH on scale
  1-5
• Risks around outcomes outputs should be
  considered but are not relevant to the risk form
  at this stage

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Combined impact

• A simple sum of the time cost quality effects

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Consider the likelihood of the risk occurring

• Very low
• Low
• Moderate
• High
• Very High

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Impact and likelihood combined are used to rank
risk
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Risk ranking prioritisation

• Impact x probability score
• Higher score higher risk
• Rank and prioritise actions accordingly

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Linking project risk assessment to risk form
inputs

• Take an overview of the projects risk register
• Consider the overall degree of risk around the
  projects delivery
• In terms of the value of claims
• In terms of timetable
• Greater risk will mean greater variability
• In claim forecasts
• In delays and durations
• eg greater difference between max min claim
  forecasts for higher risk projects

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Spend profile variability
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Management of risk

• Identifying mitigation
• Allocating responsibility
• The importance of regular review

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Risk management

• Identify reasonable mitigation action
• Allocate a risk owner
• Set a date for review

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Questions to ask at review

• Each month consider
• Are all risks still relevant?
• Are there any new risks?
• Have they been mitigated as far as possible?
• Has mitigation reduced their likelihood or
  impact?
• Update risk register
• Update risk form

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Risk review is an essential component of good
project management

• Risk Review Allows
• - Tracking of risk mitigation actions
• - Up-to-date accurate forecasting
• Risk Review May
• - Lead to project modification / re-structuring
• - Lead to project cancellation

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Risk in the context of APPs

• Glyn Roberts

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APPLYING RISK ASSESSMENT/MANAGEMENT

• The Task
• Key risk principles
• Other funds risk requirements
• Typical Risks
• Key Stages for Assessment/Management
• Dealing with Common Risks
• Timing extent of process

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Objectives

•  
•         Delivery of Action Plan contract
•         Partnerships responsible for
  PROACTIVE management
•         and report back to EPS if problems
•        Does Action Plan need adjustment?

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Key Principles

•         Understand risk assessment
•         Understand the projects
•         Risk Awareness
•         Common Sense (not rocket science!)
• Consider risks to
•        Claim levels/profile (underspend/overspend
  /delays)
•        Outputs (undershoot)
•        Outcomes - quality

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Other Funders Requirements

•  
• Match funds require risk assessment in appraisal
• Not much detailed guidance
• Tend not to emphasise risk management
• SRB Appraisal Guidance
• identify consider each component of risk
• take steps to minimise 'downside risks' (that
  make project under-perform)
• Similar - RDA, Lottery Funds, EP Gap Funding

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Typical Risk Categories

• Generic Risk categories
• Funding e.g. no types of sources
• Political risks/approvals
• Management capacity/capability
• Accommodation equipment
• Cost escalation overruns
• Market risk e.g. insufficient demand

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Typical Risk Categories

•  Additional Priority 3 Risk Categories
• -         Land acquisition
• -         Unanticipated Site Issues
• -         Legal Risk
• -         Contractual Risk
•  
• Other risks - examples
• -         3rd Party actions
• -         Underspend
• -         Overspend
• -         No claim
• -         Weather
• -         Costs associated with transfer to
  private sector

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Project risk process

• -         Risk register (guidance approach/other)
• -         Identify risks for each element of
  project
• -         Plan of action risk plan
• -         Take action
• -         Performance review to track results

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Ongoing risk assessment in project management

• Start early for greatest benefit
• Part of project appraisal
• Identify mitigation and allocate clear ownership
  within project team
• Project Manager to manage risk and review
  regularly (monthly)
• APs may need to take more of a lead for Priority
  2 projects
•  

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Dealing with Common Risks

•  APPs EPS should consider
• - Any pattern of common risks in groups of
  projects?
• - Ask questions
• - Collaborative or across the board actions to
  mitigate common risks? (as started from Reebok)

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Even with good assessment unforeseen risks often
arise therefore
Risk assessment mitigation a continuous
process -         To project completion/exit/succ
ession -         Not just at development
appraisal  Link to monitoring and
evaluation -         Feedback experience Build
capability to deal with risk

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Process Outputs
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Pulling it all together

• Risk analysis software combines all the project
  level information to provide
• An overview at AP level
• An overview at GO level

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At Action Plan level

• Report will show profile and variability of total
  AP spend
• AP will be able to target mitigation actions
  appropriately
• Overprogramming decisions can be made on the
  basis of robust analysis
• AP may choose to reallocate funds between
  projects
• AP may voluntarily decommit funds for
  redistribution

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At EPS level

• Level of management intervention will be
  proportional to capability displayed
• In forecasting
• In delivery
• Programme wide analysis will inform decisions
  about
• Reallocation of funds between APs
• Decommitment
• Overprogramming

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Next steps
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Risk Analysis Programme
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Outcomes of workshop

• A basis for inputting to the new management
  information
• A common understanding of risk assessment and
  its role in project management
• Some good practice benchmarks and guidance on
  its use in an APP context

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Conclusion some key points

•  
•        Co owned system shared benefits
•        Partner feedback continuing support from
  Scott Wilson and GO-NW
•        Information system reflects quality
• of risk management
•        Immediate need , but long-term capacity
• building