Internal Information Services

1. Risk Management Working Group Gay Infanti Northrop Grumman15 August 2006 Internal Information Services

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

11. Figure 3-2

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