Learning to Thrive in a
Risk-averse Culture
Understanding the nature of risk, and the relationship it has
with your organizational culture
Chris Vandersluis
[email protected]
President, HMS Software
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
HMS History
1984
1985
1994
1995
1995
1997
1997
1999
2001
2004
2005
2006
2007
2007
HMS Software founded. First project: automating the project office at Philips
Information Systems and creating a project timesheet
HMS becomes a Welcom Software alliance partner
HMS releases TimeControl 1.0
HMS releases TimeControl 2.0 for Windows with links to Microsoft Project
HMS joins Microsoft Project Solution Partner program
HMS becomes a Primavera Technology Alliance Partner
HMS releases TimeControl 3 as a client/server product
HMS releases first web timesheet interface for TimeControl
HMS releases TimeControl 4.0, a full web-based version
HMS named as a Premier Microsoft Project Solution Provider
HMS becomes a Microsoft Gold Certified Partner
HMS named as a “First to Market partner” by Microsoft
HMS releases TimeControl Industrial 4.7
HMS releases TimeControl 5
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Defining Project Risk

Classic Definition
Risk management is the systematic process of identifying,
analyzing, and responding to project risk. It includes
maximizing the probability and consequences of positive
events, while minimizing the probability and
consequences of events adverse to project objectives

Real-world Interpretation
Risk management is the prevention of being blind-sided
early and often by events not under the full control of
project managers. It includes the timely response by
project sponsors and senior mangers to serious risk that
can adversely impact project success and business
objectives
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Urban Legends About Risk

We can’t really manage the unknown, so why try?
Reality: Only an estimated 10% of all risks are actually
unforeseeable

We tried managing risk, but projects still failed.
Reality: You were either tracking the wrong risks, or failed
to get management action on the most serious risks

Management never responds to risk, so why
bother?
Reality: If projects aren’t linked to business objectives,
management often will not see the value in taking action
(compared to other priorities)
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Balance Risk Management
0%
Effort
Unaware of
or Ignore
Risks
Project
Manager
“Death
Wish”
Can Management quickly
grasp which risks are a real
threat to project & business
objectives?
Achieving Balance:
Be aware of all known risks,
but be proactive in managing
the most serious threats
© 2007 Heuristic Management Systems Inc.
100%
Effort
MicroManaging All
Known Risks
www.hmssoftware.ca
Major Dimensions of Risk
Project Risks
External Risks *
 Cost, schedule, planning,
 Economic downturn,
resources, scope changes,
dependencies, quality…
competition, outsourcing,
partner roles, regulatory…
Internal Risks *
Technology Risks *
 Sponsorship, resource
 Disruptive technologies,
conflicts, legal, financial,
contract issues…
integration, vendor
reliability, IT competency…
(*) Often not within the Project Manager’s control
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Practical Risk Tools
Three templates that can help improve
consistency and early warning response to
serious project risks:
 Standard PM Life Cycle with Phase Gate Reviews
 Standard Risk Management Process
 Accelerated Project Recovery Template
 PERT Analysis
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Controlling
Standardized PM Methodology
Phase 1:
Phase 2:
Phase 3:
Phase 4:
Initiating
Planning
Execution
Closeout
Identify
Needs
Develop
Project Plan
Product Life
Cycle
Business
Case
Time/Cost
Estimates
Reporting
& Analysis
Product
Development
Life Cycle
Begin
Closeout
Validate
Deliverable
No
No
Proceed
?
Yes
Time/Cost
Baselines
Issue/Risk
Response
Assess
Risks
Status
OK?
Verify
Scope
Yes
User
Accept
?
Yes
Manage
“Product”
No
Project
Charter
No
No
Charter
OK?
Cancel
Phase 1
Approval
Yes
Pla
Phase 2
n
Approval
OK
?
Yes
Cancel
Phase 2
Approval
© 2007 Heuristic Management Systems Inc.
No
Change
Control
Lessons &
Archive
Improve &
Measure
Project
Closeout
Upgrade
?
Yes
User
Satisfied
?
Yes
Phase 3
Approval
Yes
Phase 4
Approval
Go to
”Initiating”
www.hmssoftware.ca
Risk Insurance: A Project Recovery Plan
Intervention Approved
Recommendations Approval
Recovery Completed
Return to Normal Ops
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Visualizing Scope, Time and Cost
• Scope: Work variance is greater
than 20% of baseline work
• Time: Finish variance is greater
than 20% of current duration
• Cost: Cost variance is greater
than 20% of baseline cost
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Visualizing Scope, Time and Cost
Multiple baselines can
also be tracked (see
above), and the timescaled data can be
imported directly into
Excel for analysis.
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Greater Visibility to Your Project Risks
Risk Probability and Severity:
Quickly identify potential threats… even
without using an automated Risk system
© 2007 Heuristic Management Systems Inc.
Project Issues:
Simple indicators can also be used to
highlight serious, unresolved issues
www.hmssoftware.ca
Standard Risk Management Process
Sr. Mgmt
Example of Risk Management Process
1.14
1.7
PMO Role
Management
Review of Risks
1.22
1.15
Plan
Approved
?
Contingency
Plan Review
1.6
1.13
Tracking &
Trend Analysis
Review &
Recommendations
Notify of
Contingency
Plan Action
No
1.21
Notify of
Contingency
Plan Action
Yes
Project Sponsors
1.12
1.5
Review Risks in
Status Reports
Yes
1.11
No
1.1
1.4
1.2
Log Risk
Project Manager & Team
Plan
Approved
?
Risk
Accepted
?
Yes
Risk
Prioritization &
Assessment
Identify
Project Risk
1.3
1.8
Update
Risk Log &
Communicate
Develop
Risk Mitigation
Strategy
1.10
1.18
Develop
Contingency
Plan
1.19
Launch Contingency Plan, If
Threat Occurs
Mitigate
Risk
Yes
1.16
1.9
Require
Contingency
Plan?
This process can be triggered when a High
Probability and High Severity risk is
identified that could lead to potential project
Yes
failure.
© 2007 Heuristic Management Systems Inc.
Notify of
Contingency
Plan Action
Yes
No
1.0
1.20
Contingency
Plan Review
No
Monitor
Risk
1.17
1.23
Time to
Mitigate
?
Within
Scope
?
No
No
1.24
Retire
Risk
?
No
Yes
Implement
Change Control
www.hmssoftware.ca
A Consistent PM Methodology
This is just one example of how organizations can implement a standard
PM Methodology that can be applied across all projects. The ultimate
goal is repeatable project success, and improving overall PM Maturity.
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
PERT Analysis sheet
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Multi-Bar PERT Gantt
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Summary

The primary goal of managing risk is to keep from
being blind-sided by unexpected events… and to
enable better decision-making with timely, accurate
data

Virtually all project risks can be identified, but the list,
priorities and actions should be updated regularly

For key decision-makers, less is usually more…
as long as it’s kept action-oriented

If risks are overlooked, then shame on the project
manager… if management refuses to act on welldefined, prioritized risks, then shame on
management!
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Some of our clients
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Take action!
Take a free online tour of Project 2007 on us:
http://www.epmconnect.com/PB_Registration.asp?PartnerID=1318&LDT=Tour
To find out more about HMS Software:
www.hmssoftware.ca
For more information from HMS:
[email protected]
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca
Thank You!
© 2007 Heuristic Management Systems Inc.
www.hmssoftware.ca