What Is Risk, Why It Matters and How To Master It - Webinar Support

February 28, 2017
DMP Webinar Series #2: Risk Management
What is a project risk, why it matters, how to master it?
Bertrand Le Bris, PMP® Duration: 1h

DMP Paris
blebris@systra.com
Webinar
Purpose: clarify what is a risk in the context of a contract

Target Audience: project directors
Why? risk management is a project director job
Your Benefits: win bids + manage your contract with calculated risks & less stress
Promise: deliver useful
Speaker
Bertrand Le Bris is the risk manager in the Project Management Directory (DMP). Facilitator
on risk management, trainer, speaker.
Page 2 What is a project risk, why it matters, how to master it? DMP Webinar Series #2: Risk Management
Webinar
Outline
Introduction
What is a project risk?
Why it matters?
How to master it?
Conclusion
Q&A
This webinar is not a risk management training programme
Speaker
Bertrand Le Bris is the risk manager in the Project Management Directory

(DMP). Facilitator on risk management, trainer, speaker.
Webinar : 4 practical rules
• This webinar will be recorded, including:

• ppt presentation
• speech of the speaker
• questions and comments
• 1 hour duration:
• 40 minutes for the speaker
• 20 minutes at the end to answer to 5 selected questions
• All questions will be addressed individually and via the SharePoint Community after
the webinar
• Cut off your microphone, only ask your question, make comments via the Lync Chat
1.
What is a project risk?

Risk Definition
temporary endeavour undertaken to

A project risk is a risk in a project create a unique product or service
PMBOK Guide from Project Management Institute
Performance
unique uncertainties
Cost Time
Time - Cost - Performance: ‘classic’ P R O J E C T O B J E C T I V E S
other objectives may be added by contract : Safety, Security, Image, Environment…

(Qatar Rail…)
Page 6 What is a project risk, why it matters, how to master it? DMP Webinar Series #2
Risk Definition
A project risk is a
…means many things to many different people often overlooked...
‘black box’ ‘run into danger’
An uncertain event or condition that, if it occurs, has a positive or

negative effect on the project objectives.
Risk Definition
ISO 31000: 2009 – Risk management - Principles and guidelines
Ef fe c t o f u n c e r ta i nt y o n p ro j e c t o b j e c t i ve s
consequence
threat opportunity
lack of knowledge
about an event that
reduces confidence
in conclusions
drawn from data
Risk Definition
#1 To manage project risk: Document Track and Report project objectives!
Risk Definition
Ef fe c t o f u n c e r ta i nt y o n p ro j e c t ’ s o b j e c t i ve s
Not all uncertainties qualify as risk
Identifiable & Measurable
Probability x Impact = Criticality
Risk Definition
#2 A risk is Identifiable & Measurable
Risk Definition
A risk can have one or many cause(s) and one or many impact(s)
Cause 1
Impact A
Cause 2
Cause 3
Impact B
12 What is a project risk, why it matters, how to master it? DMP Webinar Series #2
Risk Definition example
• Potential loss of bid

Uncertainty on SYSTRA • Safety tasks not funded
decision not to include • Legal responsibility
Safety management in the • Penal consequences
offer • Image issue
Threat
* Safety
requirements
not included
in the RFP
Opportunity
Chance to promote
• Opportunity to win bid
safety management
• Trust & Confidence
expertise in SYSTRA
• Positive image
Offer
• Lower legal threats
13What is a project risk, why it matters, how to master it? DMP Webinar Series #2
Risk Definition example
There is an opportunity in each threat and a threat in each opportunity!
Threat
Opportunity
A Risk is NOT…
Cause
Impact
Problem Vs Issue
Problem recognized threat
necessarily a Hazard
poorly written
Question of risk
Question of risk
* Demolition of Oil pollution * Potential oil pollution. Rail

3 service stations platform cannot be built on
polluted soil
Potential oil
* Demolition of pollution * Rail platform cannot be built
3 service stations on polluted soil
Uncertainty on
* Rail platform complete soil * Project delay + additional cost
cannot be built on decontamination *Client dissatisfaction
polluted soil * Potential claim by one party
Eliminate the cause ‘Demolition…’ by hiring company expert on soil decontamination

Mitigate the ‘Potential oil pollution’ by strengthening demolition process & control
A Risk and the Project Director…
“If a man begins with certainties, he will end in doubt; but if he

begins in doubt, he will end with certainties.”
Francis Bacon, The Advancement of Learning
A Risk is…
• Attitude
• Te a m e f f o r t
• put everybody on board
• risk manager is your ambassador (not your butler)
• Specific and Iterative process…
• Investment that requires action not procrastination
Risk Definition Take Aways
2.
Why it matters?
A1
Why it matters?
SYSTRA
in the business of reaching
Client & Stakeholder

Satisfaction
by handling threats
and
enhancing opportunities
22
Diapositive 22
A1 raison d'être + gras plus typo différente !

Auteur; 11/12/2014
Why it matters?
Risk is not an option
Your contract stipulates your risk breakdown
Risk allows you:
o to identify who are the risk holders
o to increase the chance of positive outcomes - when you are the risk holder
Why it matters?
Top ‘ P r o j e c t M a n a g e m e n t ’ c u l t u r e
o L e a d e r s h i p t o o l - C o n f i d e n c e & Tr u s t B u i l d e r
o a project can be piloted only through risks
o bid pricing
o decision making
o monthly reporting
o contract profitability
Why it matters?
Opportunity Risk Threat
WINNING EXECUTING POST

CONTRACT CONTRACT CONTRACT
Why it matters?
BID = What + When + How Much?
Why it matters?
WBS
= MARGIN
+ Hidden
Contingencies
Budgeted
COST
Why it matters?
WBS
= MARGIN
+ Contingencies
VOR
Budgeted
COST
Why it matters?
= MARGIN
+ Contingencies
Budgeted
COST
Why it matters?
#3 Uncover your risk contingencies to build your price offer
Why it matters?
Profit
MARGIN MARGIN MARGIN
Contingencies Contingencies Contingencies
Actual
COST
Actual
Budgeted
COST
COST
Good contingency Poor risk management

management
Why it matters?
+ +
Warranty
Why it matters?
WINNING EXECUTING POST

CONTRACT CONTRACT CONTRACT
#4 Risk is contract driven
Why it matters? Take Aways
3.
How to master it?

How to master it? Know your scope
Client project SYSTRA contract SYSTRA internal risks

(External risks)
1 2 3
Duty to inform SYSTRA objectives
#5 Client has a project. SYSTRA has a contract
How to master it?
#6 All contractual documents MUST BE read and analysed
#7 To handle your contract risk: Document, Track and Report contract objectives!
How to master it?
Manage stakeholders:
Identify stakeholders
Communicate and consult
Map and Update - Power/Interest Matrix
#8 Document, Track and Report stakeholders requirements!
How to master it?
Comment Piloter les Risques? (1/2)

Build a robust integrated baseline with planned Time Cost Performance
Anticipate potential challenges to contain unwanted deviation from planned Time Cost
Performance
Time Cost Performance
Completed Estimate at Completion
Task A Task B Task C
Duty to alert
How to master it?
Build supportive risk culture

• attitude
• team effort
• specific and iterative process
Take decisions - avoid groupthink
• Self-censorship
• Illusion of unanimity
• Direct pressure on dissenters
• Experts excluded from decision briefs & meetings
How to master it? Methodology & Tools
Risk management includes the application

of logical and systematic methods to
• communicate and consult
• establish the context for identifying, analysing,

evaluating, treating risk associated with any
activity, process, function product or service
• monitor and review risks
• report and record the results appropriately
How to master it?
Causes and Consequences are Context dependent
How to master it?
Establish Context:
• What laws are applicable?

• What budget is available?
• How the client project is funded?
• Who are the main stakeholders?
• Who dominate the local politics?
• Are they other concomitant projects?
• What are the transport regulation?
• …
Risk Assessment provides input to decisions

• whether an activity should be undertaken
• how to maximize opportunities
• whether risks need to be treated
• choosing between options with different risks
• prioritizing risk treatment options
• the most appropriate selection of risk
treatment strategies that will bring adverse risks
to a tolerable level.
How to master it?
Risk assessment techniques

Brainstorming Event tree analysis
Structured or semi-structured Cause and consequence
interviews analysis
Delphi Cause-and-effect analysis
Check-lists Decision tree
Primary hazard analysis Bow tie analysis
Structure « What if? » (SWIFT) Monte Carlo simulation
Root cause analysis Fault tree analysis
Failure mode effect analysis Event tree analysis
Fault tree analysis
How to master it?
Write to be read
Use 3-column technique
Cause(s) Risk description Effect(s)

…because Uncertainty/Potential then…
Page 46
What is a project risk, why it matters, how to master it? DMP Webinar Series #2
Risk Treatment involves selecting, agreeing to
• one or more relevant options for changing the

probability of occurrence, the effect of risks, or
both and implementing these options.
• followed by a process of reassessing the new

level of risk, with a view to determine its
tolerability against the criteria previously set, in
order to decide whether
further treatment is required
Lessons learnt
How to master it? Take Aways
#8 Document, Track and Report stakeholders requirements!
4
Conclusion
Conclusion
• Not an option
• risk management required on all SYSTRA contracts
• risk management critical to successful contract outcomes and profitability
• risk management builds Trust & Confidence between parties
risk management is part of the Project Director job.

YOU ARE…. ACCOUNTABLE.
It takes time but it is worth the effort
Your Take Aways
#8 To handle your contract risk: Document, Track and Report stakeholders requirements!
Conclusion
‘An ounce of prevention is worth a pound of cure’
Benjamin Franklin
Conclusion - Take-away
Project Management Directory (DMP) assists project directors to assess SYSTRA scope
and identify deliverables due by production centres.
Contribute to our Project Risk Data Base

Lessons learnt
Money Back Guarantee
Follow us on Sharepoint PM Community
systra.com

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February 28, 2017

DMP Webinar Series #2: Risk Management

What is a project risk, why it matters, how to master it?

Bertrand Le Bris, PMP® Duration: 1h

Purpose: clarify what is a risk in the context of a contract

Promise: deliver useful

What is a project risk?

How to master it?

This webinar is not a risk management training programme

Bertrand Le Bris is the risk manager in the Project Management Directory

• This webinar will be recorded, including:

What is a project risk?

temporary endeavour undertaken to

Time - Cost - Performance: ‘classic’ P R O J E C T O B J E C T I V E S

other objectives may be added by contract : Safety, Security, Image, Environment…

…means many things to many different people often overlooked...

‘black box’ ‘run into danger’

An uncertain event or condition that, if it occurs, has a positive or

ISO 31000: 2009 – Risk management - Principles and guidelines

about an event that

drawn from data

#1 To manage project risk: Document Track and Report project objectives!

Not all uncertainties qualify as risk

Identifiable & Measurable

Probability x Impact = Criticality

#2 A risk is Identifiable & Measurable

• Potential loss of bid

There is an opportunity in each threat and a threat in each opportunity!

Problem recognized threat

* Demolition of Oil pollution * Potential oil pollution. Rail

Eliminate the cause ‘Demolition…’ by hiring company expert on soil decontamination

“If a man begins with certainties, he will end in doubt; but if he

Francis Bacon, The Advancement of Learning

• Specific and Iterative process…

• Investment that requires action not procrastination

#1 To manage project risk: Document Track and Report project objectives!

#2 A risk is Identifiable & Measurable

Client & Stakeholder

A1 raison d'être + gras plus typo différente !

Risk is not an option

Your contract stipulates your risk breakdown

Risk allows you:

o to identify who are the risk holders

o a project can be piloted only through risks

Opportunity Risk Threat

WINNING EXECUTING POST

BID = What + When + How Much?

#3 Uncover your risk contingencies to build your price offer

MARGIN MARGIN MARGIN

Contingencies Contingencies Contingencies

Good contingency Poor risk management

WINNING EXECUTING POST

#4 Risk is contract driven

#3 Uncover your risk contingencies to build your price offer

#4 Risk is contract driven

How to master it?

Client project SYSTRA contract SYSTRA internal risks

Duty to inform SYSTRA objectives

#5 Client has a project. SYSTRA has a contract

#6 All contractual documents MUST BE read and analysed

Map and Update - Power/Interest Matrix

#8 Document, Track and Report stakeholders requirements!

Comment Piloter les Risques? (1/2)