Measure

the
Gain the
Risk
Advantage

Portfolio, Programme and Project

Risk Management

Peter Campbell
FAPM MIRM MBCS MIET
Society for Risk Analysis

Director: Risk Advantage

Limited Chairman: Risk
SIG

Risk Advantage Limited 1

 Measure
Biography the
Gain the
Risk
Advantage
Risk Management consultant in the Defence, Communication, Aviation,
Transportation, Construction, Local and Central Government and Nuclear
sectors.
Implementation of quantitative and qualitative risk management processes
and delivery of Risk Management training.

Working with NEC Engineering and Construction Contract (Thomas Telford)

to
provide guidance on implementing Risk Management in an NEC
environment.

Chairman of the APM Risk Management SIG and a British Standards Institution
Risk Management committee member.

Author for guides and books such as „Integrating Risk and Earned Value
Management‟, the „Project Risk Analysis and Management Guide‟, the APM
„Body of Knowledge‟, the Cabinet Office Management of Risk Guide and the
BS31100 Code of Practice. Additionally; author of papers on the application
and benefits of quantitative Risk Management.

Provide risk and estimating training, workshops and presentations for

academic, professional bodies and commercial clients.
Risk Advantage Limited
 Measure
What is Risk ? the
Gain the
Risk
Advantage

Objectives:
• To compete?
• Complete the course?
• Be the Best?
Success Criteria:
• Risk Controlled.
• Objectives Achieved.
• Deliver the agreed
Risk Advantage Limited 3 Scope.
 Measure
Why Portfolio, Programme Project the Risk
Gain the
Risk? Advantage

 BoK (V6) now includes Portfolio. Programme

and Project (P3) Risk Management.
 PRAM (Edition 3) will include P3
Risk Management.

I‟ve been on my „soap box‟ pushing the application

of Risk Management from concept to
termination/replacement (Whole Life Management) for
years.

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 Measure
Project Life Cycle the
Gain the
Risk
Advantage
Whole Life Cycle

Replacement
Project Life Cycle

Concept

Definition

Implementation
Handover and Closeout

Operation

Termination

Product Life Cycle

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 Measure
Life Cycle (The front end) the
Gain the
Risk
Advantage
Business/Sponsor
Requirements

 Budget set.

 Delivery time set.

 Performance
requirements defined.

Has risk been accounted for?

Programme/Project
Team

Risk Advantage Limited

 Measure
Set Targets the
Gain the
Risk
Advantage

Project
How do we
account
for this ??

+ Uncertainty
+ Risk

Risk Adjusted
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 Measure
Life Cycle (Tail end) the
Gain the
Risk
Advantage

The Mersey Tunnel

Risk Advantage Limited

 Measure
The Mersey Tunnel the
Gain the
Risk
Advantage

The government wanted the original Mersey Tunnel to be Toll free but it
agreed to pay half of the original estimated cost of £5 million providing
that any tolls would only be for a limited period (initially set as for a
maximum of 20 years). A large part of the building cost and the running
costs were supposed to come from rates in Liverpool and Birkenhead.
The two councils managed to claw most of this back and after 1947
were getting all their contributions refunded.
When a second crossing was needed, the consultants initially
recommended a 6 lane bridge. The authorities instead decided to build a
2 lane tunnel, and then 3 years later decided to add another 2 lane
tunnel. The actual construction costs turned out 50% higher than
estimated.
Due to the construction overspending, high interest rates and lower
than expected traffic, the Tunnels were now losing money at a
staggering rate.
Tolls were increased 500% in stages, but the losses continued. The
losses were just added to debt and had to be borrowed for
creating bigger losses.

Risk Advantage Limited

 Measure
Portfolio Risk the
Gain the
Risk
Analysis Advantage

Supported by the Risk Management Process

Business Strategy and Objectives

Investigate Analyse Define

situation needs requirements

Consider Evaluate
perspective options
Risk Advantage Limited 10
Project and Programme Measure
the
Gain the
Risk
Advantage

Project objectives focus on deliverables and outputs.

Programme objectives focus on benefits and outcomes.
For example:
Project:
Construction of a new building is an example of a Project and
provides an output, a facility to:
• Sell goods.
• Store items.
•Provide business accommodation.
Programme:
Once in use the building can deliver
benefit through revenue
stream.
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 Measure
Project Risk Management the
Risk
Gain the
Advantage
Process
Structure.
Initiate Ownership.
Estimate.
Evaluate. Response.
Risk Management
Identify
Action dates.
Plan.
Owners.
What is required from
the Risk Assess Effect the Plan.
Management Risk to
Process. Objectives. Monitor result.
(Threat and
Opportunity). Plan

Implement

Manage the Process

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 Measure
Programme Risk the
Risk
Gain the
Advantage
Management Process
Structure.
Initiate Ownership.
Estimate.
Evaluate. Response.
Risk Management
Identify
Action dates.
Plan.
Owners.
What is required from
the Risk Assess Effect the Plan.
Management Risk to
Process. Objectives. Monitor result.
(Threat and
Opportunity). Plan

Implement

Manage the Process

Risk Advantage Limited 13

 Measure
Portfolio Risk Managementthe Risk Gain the
Advantage
Process
Structure.
Initiate Ownership.
Estimate.
Evaluate. Response.
Risk Management
Identify
Action dates.
Plan.
Owners.
What is required from
the Risk Assess Effect the Plan.
Management Risk to
Process. Objectives. Monitor result.
(Threat and
Opportunity). Plan

Implement

Manage the Process

Risk Advantage Limited 14

 Measure
The „Real‟ the
Gain the
Risk
Risk Advantage

Risk Taxonomy
Because of <cause> a <risk> may occur, which would lead to <effect>.

Example:

Cause: Loss of specialist staff through Company budget constraints………

Risk: May lead to greatly reduced product output………

Effect: Many clients may not receive deliveries which could lead to loss of
contracts with significant financial and reputational damage to the Company.

Using “There is a risk…” could easily, and typically, turn this

into:
“There is a risk that clients may not receive deliveries”

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 Measure
Risk Management Process the
Gain the
Risk
Advantage

External
Influence

Portfolio

Programme

Project
Stakeholders Management

Board

Risk Advantage Limited 16

 Risk Management Process Measure
the
Gain the
Risk
Advantage

Portfolio

Escalation Process
Programme

Project

Risk Advantage Limited 17

Project Risk Management Measure
the
Gain the
Risk
Advantage

Project

Technical
Stakeholders

Requirements
Logistics

Delivery Supply Chain

Environmental

Risk Advantage Limited 18

 Measure
Programme Risk Management the Risk
Gain the
Advantage

Programme

Funding
Environmental Legislation

Technical Regulation
Reputation
Operational
Legal
Logistics
Delivery
Licensing
Business Socio-Economic
Stakeholders Supply
Chain
Supporting Projects

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 Measure
Portfolio Risk Management the Risk
Gain the
Advantage
Regulators

Public
Customers

Tactica Government
l
Owners

Production/ Supply
Strategic Chain
Operations
Political
Environment
Commercial/ Financial
International Financial Community
Community
Competitors

Pressure Groups
Risk Advantage Limited 20
 Measure
Project and Programme Risht ke Gain the
Risk Advantage

Portfolio

Programme

Project

Portfolio Risk: New Markets, Economic Conditions, Legal Requirements,

Number of Programmes to Deliver, Central and Local Government
requirements, Employment Regulations.
Programme Risk: Interdependencies of Projects, Public Inquiry, Supplier
Relationships, Resource Allocation, Infrastructure requirements.
Project Risk: Meeting User Requirements, Design, Environmental
conditions.

Risk Advantage Limited 21

 Measure
What can go Wrong? the
Risk
Gain the
Advantage

• Same Risk addressed by many:

• Environmental conditions appearing in 5 Project
Risk Registers all with control action funding.
This was on same site.
•Project trying to control a Risk not within their
authority.
• Risk of Regulation change funded in Project.
•Insufficient Management Reserve as full risk exposure
not known.
•Projects/Programmes sanctioned when Portfolio Risk
not considered.
• Risk identification limited to Project Risk.

Risk Advantage Limited 22

 Measure
Risk Exposure the
Gain the
Risk
Advantage

Unidentified/Uncontrolled Risk
Cost

Non-Specific Risk Reserve Budget

} OMvearns

Specific Risk Reserve apgeenmd

!e!nt
Baseline Budget
Reserve

Risk Control Cost

Risk Advantage Limited 23

Time
 Measure
the
Gain the
Risk
Advantage

“Only those who will risk

going too far can possibly find
out how far one can go”
TS Elliot

Risk Advantage Limited 24

 Measure
Questions the
Gain the
Risk
Advantage

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?? ? ??
? ?
?? ??
? ?

Peter Campbell
peter.campbell@riskadvantage.co.uk
Mobile: 07900 24 80 60
Risk Advantage Limited 25