Risk Management Between Projects and Systems

1. Baqer Alali Old Dominion University INCOSE-HRA November 17-18, 2009 Risk Management Between Projects and Systems Co-Authers Dr. Ariel Pinto Dr. R. Landaeta Dr. A. Tolk Dr. C. Colburn

2. Agenda • What is the Issue? • Observations • Paper domains • Project and project management • Systems and systems management • Risk and risk management • Project and systems relations • Risk in projects and systems • Suggested Framework • Effective Factors • Future work

3. What is the Issue addressed? The main purpose of this paper is to investigate if risk initiating events during the project lifecycle could propagate to the system after the project is completed and integrated into the system. 3

4. Observations • Risk scenarios’ initiating events within the system can be traced back to the project after its integration into the system • Risks are perceived in different ways during project lifecycle, its integration with the larger system, and the eventual systems operation • Current PM/PRM practices do not support managing system risks [before and] after integration of project into the larger system

5. Paper Domains Projects Management Systems Management Risk Management

6. Project and Project Management PM Project: “A project is a temporary endeavor undertaken to create a unique product, services, or result” (PMI 2004) “Projects generally involve large, expensive, unique or high risk undertakings which have to be completed by a certain date, for a certain amount of money, within some expected level of performance" (Williams 1995) PM: “application of a collection of tools and techniques to direct the use of diverse resources toward the accomplishment of a unique, complex, one-time task within time, cost and quality constraints” (Atkinson 1999)

7. Systems & Systems Management Systems – “an organized or complex whole: an assemblage of things or parts forming a complex or unitary whole”(Kast and Rosenzweig 1972) “A set of interrelated components working together towards some common objective” (Kossiakoff 2003) Systems features: Complex Emergent Interaction between components (sub-systems) The sum of outputs of sub-systems does not represent the output of the whole system (Keating, 2005)

8. Systems & Systems Management • Systems Management: the planning and allocation of resources to coordinate, control, communicate, and organize the operation of the components to achieve the systems’ objectives within the desired performance and quality

9. Systems of Systems (SoS) • “meta-systems are themselves comprised of multiple embedded and interrelated autonomous complex subsystems that can be diverse in technology, context, operation, geography, and conceptual frame. These complex subsystems must function as an integrated meta-system to produce desirable results in performance to achieve a higher-level mission subject to constraints” (Keating 2004).

10. Risk Risk: negative results from bad or unexpected events (Perminova 2008) Quantitative Risk: What can go wrong? How likely is that? What are the consequences? What are the alternatives to manage risks? What are the trade-offs? What are the future impacts? (Kaplan 1997). 10

11. Identify Identify Analyze Analyze Control Control Control communication Plan Plan Plan Track Track Track Risk Management RM • Risk management RM is mostly defined as identifying, assessing and responding to risk. • Risk Management process Adopted from (Perera 2004) and (Chapman, 1997)

12. Systems Life Cycle Source: Kossiakoff & Sweet 2003

13. Project and Systems Life-Cycles Need & Requirement Initiation Planning & Design Execution Monitor & Control Completion Integration Completion Integration Completion Integration Closing Project Life Cycle Source: (Kolmetz 2005) and (PMI 2004) Concept Development Production Utilization Support. Disposal Systems Life Cycle Source: Kossiakoff & Sweet 2003

14. Project timeframe System timeframe Project and Systems Life-Cycles PE PM PD PI PI System lifecycle

15. Improvement Systems and Project System S.S Sub-system S.S S.S S.S S.S p Project

16. Project phase Integration Systems Operations Time line of events Project lifecycle Integration lifecycle Systems Lifecycle Project Initiating Nodes (IN) Undesirable event (E) Systems Initiating nodes (IN) Risk in Project and Systems (initiating nodes?)

17. PRM vs. SRM PRM: Risk Planning Risk Identification Risk Analysis Risk Response Risk Monitoring and Control (PMI 2004) SRM: • Risk Planning • Risk Assessment • Identification • Analysis • Risk Handling • Risk Monitoring • (Conrow 2005) SRM • Risk Identification • Risk Analysis • Risk Planning • Risk Tracking • Risk Monitoring • (Perera 2004) 17

18. Systems and Projects Objectives • Project: complete the project within time, cost and quality constraints. • Systems: sustain systems operation and its competitive advantage through maximizing profit, minimize operation cost, ………

19. Risk Between Project and Systems • Identification, assessment, plan and mitigation • Risk Management processes will be affected by the objectives of each. • Systems’ Objective to initiate a project will change over the timeframe of project execution.

20. Affective Factors Size and number of projects Interaction between projects Size and type of system Interactions between systems components Projects that are large enough to affect systems operations 20

21. Framework suggestion Perera (2004) Conrow (2005) Current Risk Management Frameworks

22. Framework suggestion Haimes (2004)

23. Systems Management Project Management Risk Identification System Strategy & objective System Risk Mangt. Project Objectives & Project Mangt. & Project Risk Mangt. Risk Assessment Risk Planning Project Monitor and control Systems Monitor and control Risk Handling Systems and Systems Management Project and Project management Suggested Framework

24. Significance of the Research Identification of key issues in integrating project risk management to systems risk management concepts and approaches. Explore the notion and effects of risk initiating events that occur in the project and propagates to the system after the project is integrated. Addresses from the SoSE-perspective the issue of risk event emerging from risk initiating event during a project lifecycle. Suggestion of a framework to adopt systems approaches to project risk management towards a holistic approach of ultimately being part of whole system that peruses systems objectives.

25. Potential Future Research Further study of the suggested framework for application in a real case studies from different industry such as auto, oil and construction industries. Develop quantitative and qualitative SoS tools based on established and generally accepted methods, e.g. those developed by Kaplan (1997), Haimes (2004), and others.

26. Questions • ?????