Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor
-
Upload
association-for-project-management -
Category
Business
-
view
1.244 -
download
0
description
Transcript of Applying Risk Factors in the Strategic Selection of Portfolio Projects Case Study, John MacGregor
© 2013 Rolls-Royce plc
The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any
purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc.
This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given
concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or
any of its subsidiary or associated companies.
Applying Risk Factors in the Strategic Selection of Portfolio Projects - Case Study
Date: July 2013
JT MacGregor BSc(Hons), MSc, CEng, MAPM, MIMMM
Programme Executive – Customer Business & Services
© 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of Portfolio Projects
Session will be in two parts
1. Brief overview of Portfolio Project
Risk Factors and in particular the
use of CIFTER analysis tool
2. Worked example using a CIFTER risk
analysis on the decanting and
demolition of a building
© 2013 Rolls-Royce plc
Doing the “Right” Projects
Doing
the
“Right”
Project
Doing
the
Project
well
© 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of Portfolio Projects
Net Project Priority
Gross
Project
Priority
Project
Cost*
Key element of Project cost is the Complexity or Risk Factors associated with doing the Project
© 2013 Rolls-Royce plc
Project Complexity ≡ Risk One of the most well-known means of measuring
Project complexity is to use a CIFTER (Crawford – Ishikura) analysis
Identifies seven risk factors that affect the management complexity of projects
Each factor is rated from very low to very high based on a qualitative assessment of that factor
Tool was developed as part of an international team
- The Global Alliance for Project Performance Standards (GAPPS) as part of a framework for Competency based standards in Project managers
- Can be used in conjunction with APM Body of Knowledge (BoK) skills and experience assessments
© 2013 Rolls-Royce plc
Project Risk Factors
Cifter Risk factors 1. Stability of the overall project context.
2. Number of distinct disciplines, methods, or approaches
involved in performing the project
3. Magnitude of legal, social, or environmental implications from
performing the project
4. Overall expected financial impact (positive or negative) on the
project's stakeholders.
5. Strategic importance of the project to the organisation or
organisations involved
6. Stakeholder cohesion regarding the characteristics of the
project.
7. Number and variety of interfaces between project and other
organisational entities
© 2013 Rolls-Royce plc
Project Risk Factors - Example
Standard Output from Cifter Analysis
© 2013 Rolls-Royce plc
Project Complexity
Standard Output from Cifter Analysis
© 2013 Rolls-Royce plc
Project Risk Factors
Basic CIFTER Limitations
Information generated from traditional CIFTER Risk /
Complexity model is limited to PM Competency
One dimension
Dominated from a supply chain perspective rather than
customer
If however Risk / Complexity information is linked to
(a) the Project benefits
(b) Cost Elements of doing the Project in the Portfolio
Then a much more comprehensive decision can be
made with respect to which project to launch in which
order (Multiple dimensions)
- Can be applied to Programmes / Portfolios
© 2013 Rolls-Royce plc
Risk Based Project Prioritisation
8 9 10 11 12 13 14 15 16 17
Cifter Assessment
$ S
avin
g p
er
An
nu
m
Project A Project E
Project B Project F
Project C Project G
Project D Project H
Low Complexity High Complexity
Hig
h B
en
efi
t L
ow
Ben
efi
t
2
1
3
4/5
4/5
6
© 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of Portfolio Projects
Summary
Conducting a CIFTER risk analysis at the beginning of Portfolio
Project selection process provides a quick, easy to use method
of assessing different projects dimensions before the project
starts.
Tool can be used by non-experts
but should be checked by experienced Project Manager to
ensure consistency
Provides key decision making information when agreeing
scope and launch criteria with Sponsor and major stakeholders
Provides clear communication to Project Team and all
of the stakeholders of the risks that must be
addressed if project is launched
© 2013 Rolls-Royce plc
References GAPPS (2006) A Framework for Performance Based Competency
Standards for Global Level 1 and 2 Project Managers Sydney: Global Alliance for Project Performance Standards
Crawford, a.l., “Crawford-Ishikura Factor table for Evaluating roles” 2005
Crawford, L.,”Global Body of Project Management Knowledge and Standards” in The Wiley Guide to Managing Projects, P.W.G. Morris, Pinto, Jeffrey K.,,Editor. 2004, John Wiley and Sons. P1150 –1196.
Crawford, L., “Senior Management Perceptions of Project Management Competence”., in IRNOP V.(2004a): Rotterdam, Netherlands.
Aitken, A.C., Dr Lynn,”A study of Project Categorisation based on Project Management Complexity” in IRNOP VIII, 2007: Brighton, United Kingdom, 2007
MacGregor, JT, Identification of key factors in the development of TotalCare® Aftermarket Services” MSc Dissertation: University of Manchester, School of Mechanical, Aerospace & Civil Engineering, 2008
Applying Risk Factors in the Strategic Selection
of Portfolio Projects
© 2013 Rolls-Royce plc
Part 2 Worked example using a CIFTER analysis on the decanting and demolition of a building
© 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of Portfolio Projects
Workshop Project scenario
The decanting and demolition of a multi-storey building built in the 1960’s
Building occupied by approximately 330 people
-
Timescale for project - 6 months
Project cost £0.5m, Cost Saving £0.75m
© 2013 Rolls-Royce plc
Risk Assessment Sheet CIFTER Risk Project Complexity Assessment Tool
Project APM Joint Risk and Portfolio Management event
Overall CIFTER Risk Complexity Score:
Recommended PM Role to Lead Project :
CIFTER Factor 1 2 3 4 Comments
1 Stability of the overall project context.
Very
high High Moderate Low
2
Number of distinct methods and
approaches involved in performing the
project Low Moderate High
Very
high
3
Magnitude of legal, social, or
environmental implications from
performing the project. Low Moderate High
Very
high
4
Overall expected financial impact
(positive or negative) on the project's
stakeholders. Low Moderate High
Very
high
5
Strategic importance of the project to the
organisation or organisations involved.
Very
low Low Moderate High
6
Stakeholder cohesion regarding the
characteristics of the product of the
project. High Moderate Low Very low
7
Number and variety of interfaces between
project and other organisational entities.
Very
low Low Moderate High
Project APM Joint Risk and Portfolio Management event
Project Manager
Date 4th July 2013
Rating
7
14
21
28
LevelD
LevelC
LevelB
LevelA
CIF
TE
R R
atin
g
PM Role recommended to lead Project
Project APM Joint Risk and Portfolio Management event
© 2013 Rolls-Royce plc
© 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of Portfolio Projects
Workshop Project scenario
The decanting and demolition of a multi-storey building built in the 1960’s
- Building is nearing end of useful life, is known to have asbestos and is located next to main road
Building occupied by approximately 330 people
- To create enough decanting space will require nearly 600 other people moving
Timescale for project - 6 months
Project cost £0.5m, Cost Saving £0.75m