Opportunity Management in the DoD Environment Will Broadus Defense Acquisition University Mid-Atlantic Region 20 March

1. Opportunity Management in the DoD Environment Will Broadus Defense Acquisition University Mid-Atlantic Region 20 March 2008

2. Topics Context of Opportunity Management What about Opportunity Management DoD Policy Opportunity Mngt�s relationship to Risk Mngt �Handling� Risks Summary References

3. Context of Opportunity Management � positive risks or opportunities (ones whose likelihood and benefits we actually seek to increase) will exist on every project or program�

4. What about Opportunity Management ? An evolving industry �Best Practice� Related to Risk Management Currently in use on at least 2 major NAVAIR programs MMA CH-53K

6. What is Opportunity Management�s relationship to risk?

7. Risk Severity

8. Sample Reporting Format

10. Uncertainty - Risk and Opportunity Look for �Uncertainty that Matters� �Risk� is Uncertainty that Threatens our Objectives �Opportunity� Is an Uncertainty With Positive Effects Accepting and Using in Practice -- Two Different Things Most Risk Plans are titled �Risk & Opportunity� Management with opportunity only listed on the title page and not dealt with in the process. This is a shame because every risk has an opportunity. Dr David Hilson, world renowned risk management expert, suggests that risk has a negative connotation and hinders the pursuit of opportunities.Most Risk Plans are titled �Risk & Opportunity� Management with opportunity only listed on the title page and not dealt with in the process. This is a shame because every risk has an opportunity. Dr David Hilson, world renowned risk management expert, suggests that risk has a negative connotation and hinders the pursuit of opportunities.

11. �Handling� Negative Risks Avoidance Remove or Change a Cause � Outsource or Partner Break the Cause-Risk Link � Rate Risk, Use Local Currency Transfer Involves Risk Itself - Risk Does Not Change Insurance Contract Terms Mitigation Targets Probability by Weakening Cause � Risk Link Minimize Impact by Weakening Risk � Effect Link Acceptance Focuses on Effect Set Aside Contingency Funds Against Negative Impacts Develop a Specific Fallback Plan

12. �Handling� Positive Risks (Opportunities) Exploit Opportunity by Leveraging its Cause Include and Optional Item in Project Scope Sharing an Opportunity Addresses Risk Element Risk � Sharing Partnership Incentivized Contracts Enhancing Strengthening the Cause � Risk Link to Increase Probability Reinforcing the Risk � Effect Link to Maximize Impacts Accepting � Focus On Effect Opportunity Cannot Be Influenced Proactively Contingency Funds Allocated to Advantage Positive Effects Fallback Plan to be Implemented if Opportunity Happens

13. Summary Negative risks = threats, Positive risks = opportunities, how we Handle them is key difference Industry is out in front working to develop �best practices� DoD is �playing� but doesn�t have policies or formal guidance on Opportunity Management in place

14. Further References on Opportunity Management Hillson, D.A. (2004). Effective Opportunity Management for Projects, Exploiting Positive Risk. New York: Taylor & Francis. Project Management Institute. (2003). A Guide to the Project Management Body of Knowledge (PMBoK�). 3rd Edition. Philadelphia: Project Management Institute. Broadus, W., Mallicoat, D., Littrell, P., Metcalf, I. (2007) Should Opportunity Management be Added to my Programs Acquisition Strategy?. Defense AT&L Magazine. May-June. Broadus, W., Mallicoat, D., Littrell, P., Metcalf, I. (2007) Opportunity Management, Deciding to Make it Part of Your Programs Acquisition Strategy. Defense AT&L Magazine. July-August.