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Internal Information Services
Risk Management Working Group
Gay InfantiNorthrop Grumman
15 August 2006
2
Agenda
• Review charter• Summarize recent activities and
accomplishments• Summarize recommended changes to EVMS
Application Guide to incorporate RM/EVM integration
• Summarize next steps and future plans• Discussion
3
Charter
• Develop and recommend policy, process guidance, and training to support the integration of risk management with earned value management. Work with the risk management community to achieve process integration.
4
Recent Activities
• PMI-CPM Spring Conference• Working Group meetings with primary focus
on insertion of RM/EVM integrating guidance into NDIA EVMS Application Guide• Telecon on 5/12• Several rounds of document edits/comments via
email• Meeting on 8/4
5
8/4 Meeting Participants
• Wayne Abba• Dick Coleman• John Driessnack• Gay Infanti• Meredith Murphy
• Susan Meyer• Craig Peterson• Susan Reed• Gary Robinson• Dennis White
Legend:
EVM Experts
RM Experts
6
8/4 Meeting Results• Completed review of proposed changes to EVMS
Application Guide; submitted to EVMS Application Guide authors on 8/9
• Agreed to sponsor practice symposia at fall IPM Conference; submitted abstract/bios on 8/8 to reserve two, back-to-back PS slots
• Briefly discussed expected date for receipt of APM working group’s RM/EVM Interface Guide for review in September timeframe
• Discussed and, again, decided against developing a separate NDIA guide for RM/EVM Integration but still want to provide contract-level process guidance, share techniques and best practices for process integration
• Discussed potential next steps
7
Major Change Recommendations – 1 of 3(EVMS Application Guide)
• Modify MR definition to include reserve for anticipated cost & schedule impacts based on overall risk assessment
• Insert new definitions associated with RM process (used PMI Risk SIG terminology)
• Add two new sub-sections to Sec 3, Acquisition Process and EVM (consider new section title)• Risk Management Process (brief explanation of process objectives
and figure 3-1 to illustrate the process)
• Risk Management and Earned Value Management Integration (brief overview of process integration and figure 3-2 to illustrate)
• Identify and reference risk to WBS elements in the planning phase to ensure adequate budget and schedule for risk handling (risk adjusted baselines)
• Assign responsibility for RM to the PM with support from a risk manager; list responsibilities
8
Major Change Recommendations – 2 of 3
• Establish MR at appropriate levels based on risk tolerance
• Allocate budgets to PMB based on confidence levels that provide challenging but achievable targets and provide resources for risk handling activities
• Use EVM to monitor risk handling plans, uncover new risks/opportunities, identify adjustments to risk handling plans, i.e., corrective actions, and trigger updates to EAC
• Conduct program reviews where both EV and RM data are reviewed, variances discussed, and corrective actions are agreed upon to achieve program objectives
9
Major Change Recommendations – 3 of 3
• Monitor and update the risk register throughout the program life cycle to provide a forecast of risks/opportunities and their potential cost/schedule impacts after risk handling plans are complete• Allocate MR for planning a risk handling activity resulting
from the identification of a new risk or risk whose consequence or impact has become elevated
• When issuing MR to plan new risk handling activities, use the EVM system’s formal change control process to ensure baseline integrity
• Reflect impacts in EAC when it becomes known that risk impacts will be realized
• Replan future work to recover excess budget resulting from opportunity capture; replenish MR
10
Figure 3-1
CustomerRequirements & Concerns
(including Technical,Schedule, & Cost
Program Plan(including Schedule)
Risk ManagementTools & Methods
Define / PlanRisk
ManagementApproach
Identify Risks
Develop andImplement
Risk Handling Approaches
Assess &Prioritize
Risks
Track and ReportRisks
RiskManagement
Plan
Program PlanAdjustments
(including Schedule)
Risk Status Reports
RisksClosed
MitigatedRisks
Risk List /Register
INITIAL PHASEINITIAL PHASE ONGOING CYCLEONGOING CYCLE
Scope ChangeNew Risk
Risk Change
WatchlIst
Risk Mitigation/Contingency Plans
& Metrics
CustomerRequirements & Concerns
(including Technical,Schedule, & Cost
Program Plan(including Schedule)
Risk ManagementTools & Methods
Define / PlanRisk
ManagementApproach
Identify Risks
Develop andImplement
Risk Handling Approaches
Assess &Prioritize
Risks
Track and ReportRisks
RiskManagement
Plan
Program PlanAdjustments
(including Schedule)
Risk Status Reports
RisksClosed
MitigatedRisks
Risk List /Register
Risk List /Register
INITIAL PHASEINITIAL PHASE ONGOING CYCLEONGOING CYCLE
Scope ChangeNew Risk
Risk Change
WatchlIst
Risk Mitigation/Contingency Plans
& Metrics
Risk Mitigation/Contingency Plans
& Metrics
11
Figure 3-2
Earned Value Management:
Risk Management:
Integrating Guidance:
DEFINE & ORGANIZE WORK
· PLAN PROGRAM· SCHEDULE · ESTABLISH PMB
· AUTHORIZE WORK· STATUS SCHEDULES· MEASURE PERFORMANCE· COMPUTE VARIANCES
· ANALYZE RESULTS· PLAN CORRECTIVE
ACTION· UPDATE EAC
· ESTABLISH MR· ISSUE TARGET
BUDGETS· AUTHORIZE
PLANNING
REVISIONS & CHANGE CONTROL
ASSIGNRESPONSIBILITY
EXECUTE RISKHANDLING PLANS
MONITOR &COMMUNICATE RISKS &
OPPORTUNITIES
PLAN RISKMANAGEMENTACTIVITIES
PERFORM RISKASSESSMENT
ID & ANALYZE RISK DETERMINE RISK
EXPOSURE
UPDATE RISK REGISTER
DEVELOP RISK HANDLING or RESPONSE PLANS
USE RISKS TO ESTABLISHSUITABLE MR
ENSURE MR SUFFICIENTTO HANDLE IMPACTS OF HIGH-PROBABILITY RISKS
USE EV TO MONITORPERFORMANCE OF RISKMITIGATION PLANS
ID NEWLY-DEVELOPING RISKS& OPPORTUNITIES
INCORPORATE RISKHANDLING PLANSINTO PROGRAMSCHEDULES &BUDGETS
INCORPORATEQUANTIFIED RISKIMPACTS INTO EAC
12
Next Steps
• Based on John Driessnack’s suggestion, we’re making a request to DAU to dedicate an issue of Acquisition Review Quarterly to our topic
• Working group will contribute an overview, lead-in article
• Solicit contribution of a series of 7-8 other articles from individuals with integrating methods and best practices to share
• This effort would take approximately a year to complete
• We may also consider articles in other publications, e.g., the NDIA publication, the Risk SIG’s publication, and the Measurable News
• Will review OSD Risk Management Guide, which is reported to be pending release
13
Future Plans
• Determine training approach for RM/EVM integration and develop action plan
• Continue IPM advocacy role• Foster established working relationships with
APM, RM SIG, and others• Continue to provide a forum for discussion
and discovery of new ideas• Promote new ideas that further or improve
IPM to NDIA PMSC to obtain action or sponsorship