Do you really know what your project s risks are?

(1)

Curtin University is a trademark of Curtin University of Technology CRICOS Provider Code 00301J

Fran Ackermann, Curtin Business School, Curtin University

Do you really know what

your project’s risks are?

Background



Extensive experience of mega projects 20+ years:

• Involved in 12

disruption and delay

projects totalling ~US$1.5

billion

• Covering railway, aerospace, civil engineering and

shipbuilding sectors

• Residing in US, Europe & Canada

• Involving well established and reputable companies

• Plus a wide range of projects requiring

proactive methods for

risk

management in;

• Energy (smart grids, renewables, oil and gas)

• Civil Engineering Construction

• Marine

(2)

Background



Developed a suite of tools to support risk

management

• Risk Filter

• Risk (and objectives) elicitation & structuring

workshops

•

CASCADE methodology combining directed graphs

(maps) and system dynamics – causality and quantum



Identified potential interacting significant limitations:

1. Lack of comprehensive risk coverage

2. Lack of involvement & consideration of

stakeholders

3. Lack of attention to systemicity

4. Lack of attention to the dynamics of risks

5. Inadequate understanding of project life cycle

(DBOM/DBFO)

Mastering Complex Projects:

Principles for success and reliable performance



Project leadership and collaboration

2.2.1: Engaging in project definition

“to avoid excessive changes and subsequent project failure,

the project leader must ensure that all stakeholders come to a consensus on the definition of project success

(goals)”

2.2.2: Aligning stakeholder expectations “

to be effective it requires ongoing negotiation,

communication and monitoring throughout project execution (dynamic and project life cycle)”



Risk management

3.2 Identifying and treating critical risks through workshopping risk

“an effective

approach is to provide a forum that encourages participants to combine creative and logical thinking” and

“confidence to offer views about the project and accept the views of others” (stakeholder engagement)

3.3. Managing ambiguity and uncertainty

“critical risks are often known to a project

stakeholder but not adequately communicated to project leaders” (comprehensiveness of risk capture)

3.4

Allocating risk

“once risks have been identified, analysed and evaluated they must be treated”

(systemicity for analysis)

(3)

Limitation 1:

Lack of comprehensive risk coverage



Tendency to focus on technical and financial risks



CASE: NINES

''Currently risk management has been commonly applied across

the construction sector, however it

very rarely includes the

effects of human factors”.

Thevendran, V., Mawdesley, M.J.

''a complete risk management analysis must include not only the

technical factors but also

a realistic assessment of

environmental and social risks

” de Lemos et al.



THUS consider wide range of factors

Limitation 2:

Lack of involvement and consideration of

Stakeholders



Omission of practical means for undertaking

stakeholder

analysis and management



CASE: JFK light rail

“

Conflicts

between project team and owner are often

neglected” Krane et al

‘Project managers do not have unlimited resources for

interacting with stakeholders. You must decide carefully

how to spend the time and resources

which you have

available for this task’ Eskerod and Jepsen



THUS involve wider range of stakeholders in

risk identification

(4)

Limitation 3

Lack of attention to systemicity



Risks don’t operate in isolation – risks impact risks



CASE: Canadian Paper Mill

'including developing project risk management

frameworks that

inform teams about likely

cross-impacts

' Williams



THUS capture relationships

Limitation 3

Lack of attention to systemicity cont.



Projects grow amoebic like - is not easy to pin down what

drove the total cost overrun



CASE Chunnel

''Project risks are not always independent, yet current risk management

practices

do not clearly manage dependencies

between risks.'‘ (Kwan

and Leung)



THUS: recognise interacting effect of triggers

A

C

B

D

(5)

work-around actions

work on designs in wrong order

pressure of increased

workload & schedule

slippage

NOTE: this situation only

occurs if managerial action is

taken to keep the project on

schedule i.e. compression

inability to instruct

vendors in a timely

manner

procurement delays

inability to freeze design

unnecessary

rework

Limitation 3

Lack of attention to systemicity

Limitation 4:

Lack of attention to the dynamic risks



Risks (and stakeholders) change over time – regular

reviews



CASE: NINES

“requires broad involvement and collaboration across all segments

of the project team and its environment, and sophisticated methods

for assessing feasibilities and usability

early and frequently

during

the project life cycle” Thamhain



THUS: revisit project risks and relationships regularly and

collaboratively

(6)

Limitation 5

Inadequate appreciation of project life cycle



Shift from D&B to DBOM and DBFO



CASE: PFI hospital project

reducing the design specification to meet construction cost goals was found to

have a multiplicative effect on the cost of attending to defects experienced during

the operating phase. … implication for practitioners is that project decisions should

be made in light of the

full suite of project goals

(for example design,

construction, operation goals). Alexander 2015



THUS: engineers consider maintenance in design &

project management teams recognise duration of contract

So what does this mean for me?!



Think

systemically

What causes/triggers this risk (links in)

What might result from this risk or be affected by this risk (links out)

Where are the ‘hot spots’ => priorities



Think

widely

Avoid top down only consideration

Go beyond finance/technical – PESTLE?!

Find out where possible

what others

think – identify & manage stakeholders

Consider all stages of the project life cycle



Think

regularly

Remember risks change in salience, new risks emerge, other risks fade

away

(7)

Some relevant papers



Ackermann, F. Howick, S. Quigley, J, Walls, L. and Houghton, T. (2014)

Systemic risk elicitation

: Using causal maps to

engage stakeholders and build a comprehensive view of risks.

European Journal of Operational Research



Ackermann, F., Eden, C., Williams, T. and Howick, S. (2007)

Systemic Risk Assessment

: A Case Study,

Journal of

Operational Research Society

, 58 (1), 39-51



Williams, T.M., Ackermann, F.R. and Eden, C.L. (1997)

Project risk: systemicity, cause mapping and a scenario

approach

. In, K.Kahkonen and K.A.Artto (Eds)

Managing Risks in Projects

. E&FN Spon, London. pp 343-352.



Howick, S., Ackermann, F., Andersen, D. (2006). Linking event thinking with structural thinking: methods to improve client

value in projects.

System Dynamics Review

. 22, 113-140



Howick, S., Eden, C., Ackermann, F., and Williams, T. (2008). Building Confidence in Models for Multiple Audiences the Modelling Cascade.

European Journal of Operational Research

,

186

, 1068-1083



Howick, S.; Ackermann, F.; Eden, C., and Williams, T. (2009) System dynamics and disruption and delay in complex projects. Meyers, R.,

Ed.

Encyclopaedia of Complexity & System Science

. New York: Springer; pp. 1845-1864



Ackermann, F. and Eden, C. (2010) The Role of Group Decision Support Systems: Negotiating Safe Energy. Eden, C. and Kilgour, D. M.,

(Eds).

The Handbook of Group Decision and Negotiation

. Dordrecht: Springer; pp. 285-299.



Williams, T., Ackermann, F. and Eden, C (2003) Structuring a delay and disruption claim: An application of cause-mapping and system

dynamics,

European Journal of Operational Research

,

148

, 192-204



Eden, C., Williams, T., Ackermann, F. and Howick, S. (2000). “On the nature of disruption and delay”, Journal

of Operational Research

.

51

,

291-300



Eden, C., Williams, T. and Ackermann, F. (1998) Dismantling the Learning Curve: the role of disruptions on the planning of development

projects.

International Journal of Project Management 16

(3), 131-138



Ackermann, F., Eden, C. and Williams, T.M. (1997) A persuasive approach to Delay and Disruption using "mixed methods

". Interfaces 27

,

48-65



Eden, C. Williams T Ackermann F. (2005) Analysing Project Cost Overruns: Comparing the Measured Mile Analysis and System Dynamics

Modelling.

International Journal of Project Management

.

23

(2), 135-139.

Thank you