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– Second level
• Third level
– Fourth level
» Fifth level
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to
edit
Master
title
style
Managing Risk in B2B
Contracting
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Breakout
Session
– Second
level#A01
Third level
Holly K.• Walker,
CPCM Corporate Learning
Solutions – Fourth level
» Fifth level
Date: Monday July 27, 2015
Time: 11:15am - 12:30pm
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Click to edit
Effective
Risk
Master
Management
title style
• Describe the steps of the risk
• Click
to edit Master
management
process text styles
– Second level
• Understand
the elements that constitute
Third
level
risk• in
projects
•
– Fourth level
Examine »typical
risk
Fifth level
categories and types
of risk in each category
• Describe probability and consequences of
risk
• Evaluate the use of risk mitigation
strategies
2
ClickManagement
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title style
Risk
Implementation
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– Second level
• Third level
– Fourth level
» Fifth level
Not this
3
ClickManagement
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Risk
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• Risk
identification
– Second
level
• Third level
• Risk –assessment
Fourth level
» Fifth level
• Risk mitigation
• Risk monitoring
4
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title style
Effective
RiskMaster
Management
IDENTIFY
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ANALYSE
– Second
RISKS
UNCERTAINTIES
level
• Third level
MEASURE &
CONTROL
– Fourth level
ASSESS
» Fifth level
CONTROL
PLAN FOR
EMERGENCIES
PRIORITIZE
RISKS
MITIGATE RISKS
5
Click to edit
Effective
Risk
Master
Management
title style
IDENTIFY UNCERTAINTIES
Explore the contract and
relationship for areas of
– Second level
Uncertainty.
MITIGATE RISKS
Take advance action to
reduce effect. It is better to
spend on mitigation than to
include contingency.
• Click to edit Master text styles
• Third
ANALYSE
RISKSlevel
Fourth
level
Specify how –each
uncertainty
» Fifth -level
can impact performance
duration, cost, meeting
Requirements.
PRIORITIZE RISKS
Establish risks to be eliminated
(too severe), requiring
committed management
attention, minor in effect.
PLAN FOR EMERGENCIES
For all significant risks, have
an emergency plan in place.
MEASURE AND CONTROL
Track the effects of the risks
identified and manage to a
successful conclusion.
6
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Effective
Identification
Master title style
Identify
risksMaster
that could
•• Click
to edit
textimpact
styles
performance
– Second level
• Brainstorming
• Third level
•
– Fourth level
Review of
past projects
» Fifth level
• Industry risk templates
• Personal experience
• Fishbone diagrams
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What to
Click
Constitutes
edit Master
Risk
title style
in Projects
•
New technology
• Uncommon
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editor methods
Master text styles
systems
•
– Second level
•
Uncertain funding
•
Unusual financing arrangements
•
Controversial functions are provided by the project
• Third level
•
– Fourth level
Unrealistic completion dates and/or budgets
» Fifth level
•
Changing customer ownership/control
•
Unusual contracting arrangements
•
Project scope is not clearly defined
•
Project need and alternatives have not been rigorously evaluated
•
Large number of approvals are required
•
Conflict among project participants
•
Relationship between parent organization's role and the project is not
clear
8
Click to Risk
Typical
edit Master
Categories
title style
Technical
Feasibility
•• Click
to edit
Master text styles
Secondand
levelExternal Market
• –
Political
• Third level
• Financial
and Economic
– Fourth level
» Fifth
level
• Legal and
Contractual
• Human Behavior
• Scope and Schedule
• Project Organization
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Technical/Feasibility
Risks
style
Organizational
of familiarity
the technology
•• Click
to editlack
Master
textwith
styles
• Relative level of technical complexity
– Second level
• Maturity
of the
technology (new vs. tried and tested)
• Third
level
– Fourth level
• Interconnectivity
of technology with existing systems
» Fifth level
• Existing assets are underutilized in this project
• Obsolete approach for program delivery
• Customer demand projections incorrect
• Uncertainty over customer ownership and control
10
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Political/External
Risks
title style
• Marketplace Positioning/competition
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• Regulatory Environment unfavorable
– Second level
• Customer
Corporate/Organizational
changes in
• Third
level
priorities– Fourth level
» Fifth level
• Customer Commitment/viability of project
• Changes in decision makers
• Natural Hazards
• Political changes (new laws, tax policies etc.)
11
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Financial/Economic
Risks
style
• Project costs can exceed budget
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• High
inflation level
or cost increases
– Second
• Customer
bankruptcy
• Third
level
– Fourth
• Cash flow
profilelevel
unfavorable
» Fifth level
• Funding not approved by customer
• Excessive price fluctuation on imported
components
• Required investment too high for return
12
Click to
Legal
and
edit
Contractual
Master titleRisks
style
• Breach of contract/termination's
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• Penalty clauses
– Second level
• Excessive
• Thirdwarranties
level
Fourth level
• Contract– claims/failure
to perform
» Fifth level
• Contract disputes escalation procedure inadequate
• Excessive liability
• Patent/copyright infringement
• Team unfamiliar with procurement method
13
Click to Behavior
Human
edit Master
Risks
title style
• Unavailability of Internal technical expertise
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• Unavailability
of External technical expertise
– Second level
Third
• Lack• of
stafflevel
support for project
•
– Fourth level
Delays in customer
approvals
» Fifth level
• Delays in documentation
• Actions by labor unions
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Click toand
Scope
editSchedule
Master title
Risks
style
•• Unreality
statedMaster
deadlines
Click toof edit
text
styles
• Inadequate
– Secondproject
level definition
• Thirdincompatible
level
• Standards
with requirements
– Fourth level
• Design incorporates high maintenance materials
» Fifth level
• Lack of resource availability
• Lack of product availability
• Poor coordination of resources
• Requirement inflexibility
15
Click to Organizational
Project
edit Master titleRisks
style
• Unavailability of key project personnel
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• Change of key customer personnel
– Second level
• Unsatisfactory
choice of subcontractors
• Third level
– Fourth
level not kept to schedule
• Engineering
design
» Fifth level
• Inadequate coordination of partners and
subcontractors
• Staff not trained in time
• Inadequate contract documentation
• Inadequate security of site during installation
16
ClickAssessment
Risk
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•• Click
to edit Master
text styles
Likelihood
of occurrence
– Second level
• Impact
occurrence
• Third of
level
– Fourth level
» Fifth level
• Brainstorming
• History
• Personal experience
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Probability
Click
to editofMaster
Likelihood
title style
of
Occurrence
Consequence
•Rating
ClickProbability
to
edit
Master
text
styles
Description
Rating
Description
Almost
certain
Will occur in most
instances
– Second level
Likely
Could occur in most
• Third
level
instances
Moderate
Unlikely
Rare
occur
at
–Should
Fourth
level
some time
Might»occur
Fifth level
occasionally
Will only occur in
exceptional
circumstances
Catastrophic
Major
Moderate
Minor
Insignificant
Will cause
cancellation of the
project
Significant time or
cost overruns
Some time or cost
overruns
Some
inconvenience
No noticeable
effect
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Probability
Click
to editofMaster
Likelihood
title style
of
Occurrence
Impacttext styles
Likelihood
Mitigation
• Risk
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Master
80%
– Second
level
Inability
to
hire IT
• Third level
specialists.
OT costs of
$50k.
– Fourth level
Permits not
50%level Two-week
» Fifth
received.
Fail to
receive
customer
property on
time.
schedule
delay.
75%
One-week
schedule
delay.
Hire subs or
temps.
Use agency.
Apply for
permit early.
ID alternate
facility.
Identify
alternate
sources for
purchase of
item.
19
ClickAnalysis
Risk
to edit Master
and Mitigation
title style
• Click to edit Master text styles
– Second level
Identify
Uncertainties
Analyze the risks
• Third level
Prioritize the risks
Mitigate Risks
– Fourth level
» Fifth level
Plan for
Emergencies
Measure and
Control
20
ClickMitigation/Handling
Risk
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• Now that you have assessed the risks
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toyou
editdeal
Master
text styles
how do
with them?
•– Second
Avoid level
• Third level
• Control
– Fourth level
» Fifth level
• Transfer
• Assume
• Know the costs of the options !
21
ClickMitigation
Risk
to edit Master title style
Mitigation Option
Reduce the probability.
Examples
• Implement quality assurance.
• Review contract conditions.
• Conduct further project analysis.
• Increase supervision requirements.
• Regularly analyze the project
environment.
• Partnering/teaming agreements.
• Contingency planning.
• Provide greater cost and time
contingencies.
• Increase charge for project
• Sub Contract some of the risky parts of
the project
• Risk sharing agreements with customer,
other companies or Government
Agencies.
• Umbrella Insurance.
• Management of the risk using existing
procedures.
• Cease the activity affected by the risk.
• Click to edit Master text styles
– Second level
• Third level
Reduce the consequence.
– Fourth level
» Fifth level
Transfer the risk.
Accept the risk.
Avoid the risk.
22
ClickMitigation
Risk
to edit Master title style
• Price adjustments
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• Terms and conditions
– Second level
• Redundancy
• Third level
– Fourth level
• Subcontract
delegation
» Fifth level
• Performance modification
• Schedule adjustment
• Insurance
• Inspection
23
ClickMonitoring
Risk
to edit Master title style
•• Click
to edit
Master text styles
Program
reviews
– Second level
• Earned
• Third value
level reporting
•
– Fourth level
Critical path
assessments
» Fifth level
• Risk monitoring assignments
• Feedback loop
24
Click toResponsible
Who’s
edit Master title style
• •Click
to edit
Master text styles
Program
Manager
– Second level
• Contracts
• Third level
– Fourth level and purchasing
• Subcontracts
» Fifth level
• Legal
• Senior management
• (All of the above)
25
Whento
Click
should
edit Master
Risk Management
title style
be Performed
• Program
Click to edit
Master text styles
planning
– Second level
• During
solicitation
• Third level
•
– Fourth level
During performance
» Fifth level
• After performance
• A continuous process - risks evolve
• Communication is key!
26
Click to edit
Effective
Risk
Master
Management
title style
• Click to edit Master text styles
– Second level
• Third level
– Fourth level
» Fifth level
27
Click to edit
Contact
Information
Master title style
•• Holly
K. edit
Walker,
CPCM
Click to
Master
text styles
–
Learning Solutions
– Corporate
Second level
• Third level
– Email:
[email protected]
–
– Fourth level
Cell/Text:
727-218-3604
» Fifth
level
28