1. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only From Protective to Offensive Project Management Asbjorn Rolstadas Norwegian University of Science and Technology Agnar Johansen SINTEF Technology and Society Session RSC02

2. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Conclusions We need a new mindset for managing risk –Strategic risk – conflict of interest owner/PM –Contextual risk – allow holistic perspective Mange risk in an integrated life-cycle perspective Increased focus on front-end loading is not the ultimate solution

3. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only The Newspaper Story Headline focus –Large public projects suffer cost overruns –They have significant delays –Quality standards are not fully met –The planned effect has not been reached Not published –Technical achievement

4. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only All Projects Carry Risk Scope creep Hope creep Effort creep Feature creep From Wysocki

5. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Project Risk Management Theory (1) Traditional focus: –Identifying, evaluating and managing risks –Iterative process Ward & Chapman: –Uncertainty = risks + opportunities –Project uncertainty areas: Uncertainty about the basis of estimates Uncertainty about design and logistics Variability associated with estimates Uncertainty about objectives and priorities Uncertainty about fundamental relationships between project parties (Simister, 2004)

6. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Ward, Chapman and Hillson (et al.): –Projects should utilize opportunities as well as managing risks Hillson: –No need for a separate opportunity management process. –The standard risk management process offers a framework within which both risk and opportunity management can be handled effectively together alongside each other. –Projects fail to proceed from analysis to action. (Simister, 2004) Project Risk Management Theory (2)

7. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Traditional Risk Management 1 Identify uncertainty - find potential incidents, causes and consequences 2 Quantify uncertainty - Gather data on uncertainty, modeling and analyzing, prioritize 3 Develop responses - find remedies to exploit possibilities and counteract risk - Signals to control and manage the project 4 Follow up on responses - update goals - include in project plan - implement counteracts - Follow up - register and learn. GET TO KNOW UNCERTAINTY DO SOMETHING ABOUT IT

8. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only PMI Risk Management Processes Project Risk Management  Risk Management Planning  Risk Identification  Qualitative Risk Analysis  Quantitative Risk Analysis  Risk Response Planning  Risk Monitoring and Control Describes the processes concerned with conducting risk management on a project

9. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only The Protective Approach Focus on front-end loading Predict everything as accurately as possible Minimize financial risk Avoid surprises during project execution Keep fighting in the red ocean Accept black swans

10. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only The Offensive Approach Live with risk throughout the project Postpone decision as long as possible Capitalize on emerging opportunities (risks) Stimulate agility – empower the PM Move into the blue ocean

11. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Shift in Mindset (1) From projects as deliveries - to means to enhance project business value From viewing uncertainties as “evil” - to acknowledge the project nature being unique and uncertain, hence requiring dynamic strategies From Hetland

12. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Shift in Mindset (2) From projects as known tasks to be accomplished – to embrace a continuum of known-unknown tasks to be executed From viewing deviations from project baselines as inaccurate planning or inappropriate control – to acknowledgement of deviations being the rule and not the exception From Hetland

13. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Risk and Complexity From Hartman

14. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Definitions Uncertainty –A state of having limited knowledge where it is impossible to exactly describe existing state or future outcome (Wickipedia) Risk –An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives (PMI) Positive and negative risk –Opportunity –Threat

15. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Types of Risk Operational –Within control of the PM Strategic –Within control of the owner Contextual –External or interlinked with other projects

16. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only The Three Dimensions of Risk

17. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Risk Development Over Time

18. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Six Dilemmas (1) 1.Some risk can be perceived as a threat by the PM and as an opportunity by the owner 2.Line organization push for flexibility, while the project normally uses a close-out strategy. 3.Tangible project uncertainty is prone to underestimation From Langlo

19. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Six Dilemmas (2) 4.A project tend to actively widen its financial and execution time frames during start-up. 5.To maximise benefit in a life cycle perspective, one need to understand the project and its complexity in total and detail 6.When intervening in risk management, there is a potential danger for an owner to take over the responsibility from the PM From Langlo

20. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Case 1

21. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Case 2

22. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Seven Challenges (1) 1.Include all the three types of risk 2.Manage risk throughout the project life 3.Go beyond the project perspective 4.Use risk management to capitalise on opportunities From Langlo

23. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Seven Challenges (2) 5.Avoid risk aversive strategies from the project organisation 6.Place decision points as late as possible 7.Develop project risk maturity in the organisation From Langlo

24. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Discussion of Cases

25. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Conclusions We need a new mindset for managing risk –Strategic risk – conflict of interest owner/PM –Contextual risk – allow holistic perspective Mange risk in an integrated life-cycle perspective Increased focus on front-end loading is not the ultimate solution

26. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only Contact Information Asbjorn Rolstadas/NTNU +47-90793707 asbjorn.rolstadas@ntnu.no Agnar Johansen +47-93058741 agnar.johansen@sintef.no Session RSC02