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Risk Management Between Projects and Systems

Baqer AlaliOld Dominion UniversityINCOSE-HRANovember 17-18, 2009

Co-AuthersDr. Ariel PintoDr. R. LandaetaDr. A. TolkDr. C. Colburn

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

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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.

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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

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Paper Domains

Projects Management Systems Management Risk Management

Project Risk SystemsProject Risk Systems

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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)

Quality/Performance Quality/Performance Quality/Performance

Cost Emphasis Time Emphasis Quality Emphasis

Quality/Performance Quality/Performance Quality/Performance

Cost Emphasis Time Emphasis Quality Emphasis

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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)

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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

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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).

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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).

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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)

PlanTrack

Analyze

Identify

Con

trol

communication

PlanPlanTrack

Track

Analyze

Identify

Con

trol

Con

trol

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Systems Life Cycle

DOD NeedDetermination

Concept and tech. Development

Sys. Development & demonstration

Production & Development

Operations & Support

ISO Concept Development Production Utilization Support

NSPE Conceptual TechnicalFeasibility

Development Production Preparation

Full-scaleProduction

Productsupport

Sys.Engg.Stages

ConceptDevelopment

Engineering Development

Post development

Sys.Engg.Phases

Need

AnalysisConcept

Explore

Concept

Definition

Advanced

Development

Engg.

Design

Integration &

Evaluation

Production Operation

& support

Source: Kossiakoff & Sweet 2003

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Project and Systems Life-Cycles

InitiationPlanning

&Design

Execution Monitor&

Control

CompletionIntegration

Concept Development Production Utilization Support.

CompletionIntegrationCompletionIntegration

Disposal

Closing

Project Life Cycle

Systems Life Cycle

Need&

Requirement

Source: Kossiakoff & Sweet 2003

Source: (Kolmetz 2005) and (PMI 2004)

Project and Systems Life-Cycles

System lifecyclePI

PD

PI

PMPE

Project timeframe

System timeframe

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Systems and Project

S.S

Sub-system

S.SS.S

S.S

S.S

System

ImprovementProject

p

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Risk in Project and Systems (initiating nodes?)

Project phase Integration Systems Operations

Project lifecycleIntegration lifecycle

Systems Lifecycle Project Initiating Nodes (IN)

Undesirable event (E)

Time line of events

Systems Initiating nodes (IN)

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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)

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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, ………

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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.

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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

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Framework suggestion

Current Risk Management Frameworks

Conrow (2005) Perera (2004)

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Framework suggestion

Haimes (2004)

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Suggested Framework

RiskIdentification

RiskAssessment

RiskPlanning

RiskHandling

ProjectObjectives

&ProjectMangt.

&Project

RiskMangt.

SystemStrategy

& objective

SystemRisk

Mangt.

Project Management

Systems Management

Pro

ject M

on

itor a

nd

con

trol

Sys

tem

s M

on

itor

an

d c

on

tro

l

Project andProject management

Systems andSystems Management

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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.

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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.

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Questions

?????