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FUNDAMENTAL ENABLERS FOR WIDE-SCOPE RISK AND OPPORTUNITY MANAGEMENT

FUNDAMENTAL ENABLERS FOR WIDE-SCOPE RISK AND OPPORTUNITY MANAGEMENT. Kalle Kähkönen VTT Technical Research Centre of Finland. Presenation content. Projects in society and companies Risks in projects and their management What is risk knowledge?

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FUNDAMENTAL ENABLERS FOR WIDE-SCOPE RISK AND OPPORTUNITY MANAGEMENT

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  1. FUNDAMENTAL ENABLERS FOR WIDE-SCOPE RISK AND OPPORTUNITY MANAGEMENT • Kalle Kähkönen • VTT Technical Research Centre of Finland

  2. Presenation content • Projects in society and companies • Risks in projects and their management • What is risk knowledge? • Strategies for implementing widely used risk management practices • Way onward

  3. Projects and their management • Significant part of work is nowadays organised as projects • Project management and relating paradigms are amongst the most important management approaches Project and Network Society Project Oriented Business Project Management 1960 1970 1980 1990 2000

  4. Performance pyramid Project risk management in company context Vision Market Financial Customer Satisfaction Flexibility Productivity Cycle Time Quality Delivery Waste Operations

  5. Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Corporate organization Project risk management in company context Business Units Business Operating Systems / Units Departmental Organization Units Operations/ Individual Projects Project Processes as Extensions to Organization Units, Projects Owned by Units

  6. Performance pyramid Corporate organization Vision Market Financial Customer Satisfaction Flexibility Productivity Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Cycle Time Quality Delivery Waste Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Operations Project risk management in company context

  7. Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Bid Execution Commis- After Scree- Contract Prepara- Bid Start-up (planning + sioning Sales ning ( Order) tion manufact. Closeout + Guarant Performance pyramid Corporate organization Project risk management in company context Vision Business Units Market Financial Business Operating Systems / Units Customer Satisfaction Flexibility Productivity Departmental Organization Units Cycle Time Quality Delivery Waste Operations/ Individual Projects Operations Project Processes as Extensions to Organization Units, Projects Owned by Units

  8. Management of project risks or Management of uncertainty • It is widely acknowledged that project risk management is one of the key processes of project management RISKS OPPORTUNITIES

  9. IDENTIFICATION IDENTIFICATION IDENTIFICATION IDENTIFICATION RESPONSE RESPONSE RESPONSE RESPONSE DEVELOPMENT ESTIMATION ESTIMATION ESTIMATION ESTIMATION Accessory processes TIME Core processes The content of systematic project risk and opportunity management PLANNING OWNERSHIP DEVELOPMENT CONTROL COMMUNICATION STRATEGY DEFINITION

  10. Conceptual foundation of risk and opportunity • Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective, such as time, cost, scope or quality. (PMI PMBOK 2004) • Project risk is an uncertain event or set of circumstances which, should it occur, will have an effect on achievement of one or more objectives’. (APM PRAM Guide, 2004) • Universal definitions

  11. Need for localised risk and opportunity definitions • Localised risk and opportunity definitions have often proved to be essential for making risk management procedures effective • Example: Issues requiring attention or plan adjustements or that are otherwise outside standard management procedures

  12. Role of knowledge in project risk management UNDERSTANDING OVER PROJECT RISKS AND OPPORTUNITIES UP-TO-DATE RISK & OPPORTUNITY KNOWLEDGE PROJECT DATA SCANNING • Project • Company • Business environment • Technology • Money • People

  13. High Focused solutions for management processes Extensive solutions for management processes Business Value For specialist Overshoot Low High Technical Complexity Strategies for implementing widely used risk management practices

  14. It is a journey occupied with learning

  15. For further information • "Commercial Management of Projects - Defining the Discipline", David Lowe (ed.), Blackwell Publishing Ltd, 2006 February, 1-4051-2450-4, 480 pages

  16. Conclusions • We are still too often facing conceptual and terminological problems with the management of risks. • The universal concepts and terms seem to be a main source for various troubles with risk management. • The wide variability of appearances or risk management is reality  Do not be afraid to go for situation specific solutions. • If this accepted as a factual starting point the result can be a well-balanced set of principles, solutions and tools.

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