Integrated Project Risk Management (IPRM)

Integrated Project Risk Management (IPRM)

Southern Cross Station in Melbourne - a recent example of project overrun, being $200M over-budget and behind schedule. A reminder of the importance of managing project risk.

John Utzon’s Sydney Opera House – one of the most famous examples of project overrun, 1360% over cost and 9 years late. How much of the risks and issues that caused this infamous overrun, could have been identified and treated by SPRM at the start of the project?

A Need For Change Has Arisen… Over the past decade or so, risk management has moved from simply being an obscure part of Project Management to become a stand-alone discipline. This development was recognised by PMI in its PMBOK 2000 edition, which expanded the importance and detail of the risk management chapter, delineating it as a separate project management process. This was further developed in the PMBOK 2004 Guide. This change occurred alongside the major attitudinal shift in finance and banking, establishing risk management as a legal and moral obligation after such disasters as Barings Bank, WorldCom and Enron. It is easy to see, with the immense amounts of money being put at risk in projects, why the industry trend is being reinforced and driven by regulatory responses to those financial market excesses.

Developing The Remedy Crescent has recognised a strong need for end-to-end risk management and has put together a team to assist clients systematically to develop and implement robust, purposeful risk management plans and processes and integrate them effectively into their overall project management processes. This gives clients positive risk management outcomes while minimising demands on their scarce time and resources. The over-arching goal is to assist clients in creating the optimum amount of return for the level of risk they choose to accept. This recognises the difference in risk tolerance of various clients as well as the inherent risks in various projects due to new technologies, political or regulatory risks. To achieve this objective – Crescent will engage in the following steps: Discuss the overall background and company culture, reason for the project and the main risk factors in the project and the various stakeholders and their requirement. From these discussions, a Risk Management Plan which outlines the precise processes and techniques will be prepared that best suits the client’s culture, project, people and main risk factors. Depending on the level of inherent risk in the project and the organisational culture, Crescent will use one or more risk identification techniques to tease out uncertainties. Assessment of the risks is done via various qualitative and quantitative techniques including probability-impact matrices, risk ranking and Monte Carlo simulation. Crescent is a Pertmaster Solutions Partner and has significant experience in doing schedule and cost quantitative risk analysis using this tool.

The Valuable Outcomes For Our Clients… Better informed and more believable plans, schedules and budgets Lowering of cost by reducing re-work and reducing the likelihood of the chaos of “fire-fighting” unexpected events A project management team that has the best possible chance of making the right decisions in a timely manner, meeting its targets and keeping the whole project team motivated

To discuss your requirements contact us on 03 9544 2900 or email us at info@crescent-pss.com

Fundamental Steps of IPRM
Crescent ’s IPRM is aligned with the Australian Risk Management standard AS4360:2004. The main steps of the IPRM are:

Risk identification – determining which risks might affect the project and documenting their characteristics.
Qualitative risk analysis – prioritising risks for subsequent further analysis or action by assessing and combining their probability of occurrence and impact.
Quantitative risk analysis – use of simulation or other techniques to analyse the effect on overall project objectives of identified risks.
Risk response planning – developing options and actions to enhance opportunities and to reduce threats to project objectives (includes Treating Risks).
Risk monitoring and control – tracking identified risks, monitoring residual risks, identifying new risks, executing risk response plans and evaluating their effectiveness throughout the project life cycle.
Risk auditing – to ensure there are appropriate procedures in place to manage the project risk exposure and that the projects total risk exposure is within the acceptable thresholds.

AS4630 Risk Management Process

The Tools and Technology

For Risk Identification – which is often the most difficult step due to “group think”, organisation politics and lack of “out of the box” thinking, we use a range of techniques depending on the people involved and the type of culture and project. This includes brainstorming, Delphi techniques, risk interviewing, use of checklists and key words. This part of the process and the facilitation skill required is often under-estimated as this is where we have the best chance of identifying “unknown unknowns” (those risks that we have not yet perceived). Facilitation needs to be effective and insightful and interviewing is done sensitively with the particular members of our team who have good negotiation and interviewing skills

Qualitative/Quantitative Analyses – our team uses our proprietary risk management database and linking software known as Enhanced Risk Integrator. This facilitates the management of the risks identified, including qualitative ranking of risks and development and management of treatment plans. Where appropriate, it also enables the mapping of the risks to the project schedule or estimate using Pertmaster, to quantify the impact of the risks and treatments upon the cost and duration of the project and determine which treatments are the most cost-effective. Pertmaster also enables the identification of the riskiest activities or estimate line items, to focus efforts and decrease the risk of the project not meeting its budget and schedule limits.

Schematic of Crescent’s IPRM

Our Team

Colin Cropley (Director Project Controls and Risk Management Group) Colin has over 30 year experience in project engineering, management and planning and over 15 years experience in project management software consulting, training and lecturing. Some examples of his work include: 5 years as Senior Cost and Planning Engineer with BHP Engineering, including coordinating a BHPP Iran Pakistan Pipeline Project Concept Study; Planning Manager leading a team of BHP and contract planners on the $2.5Bn Hot Briquetted Iron Project to help rescue the project. Colin also has extensive experience in using Pertmaster and conducts software training in the use of this package and Primavera planning packages.

Julie Roberts (Principal Consultant, Project Controls and Risk Analysis) Julie has over 15 years experience in project services in engineering, construction, IT and finance. She has extensive knowledge of and experience in designing and implementing enterprise project management systems, project planning and cost and resource management on large and complex mining and construction projects in Australia and Indonesia . She has developed training courses in project management knowledge areas and processes and in project controls and risk analysis. She has also provided cost and schedule risk analysis consulting services using Pertmaster and trained Pertmaster users. Julie is a Certified Project Management Professional.

To discuss your requirements, contact us on 03 95442900 or email us at info@crescent-pss.com