good risk software and why a spreadsheet will not do it!

Robust Risk Management is Essential in ALL Business

Endeavours

“Why a spreadsheet will not cut it…”

Andrew Ferguson, FIE Aust, CPEng, CPL, MBA,

BEngRisk Decisions Pty Ltd4 Oct 2015

Phone: 0408 466 [email protected]

© Risk Decisions, 2015

Introduction Risk and management

Manage risk to “create, maintain and add value” from key projects, ventures, operations, enterprises

Why Spreadsheets WILL NOT do the job required

Features of well designed risk software

What good risk software should do

Examples of good software Representative screen shots only

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Risk Management Failures? ALL business endeavours AND projects run into cost, schedule and

performance problems (see the examples below – add your own!) robust enterprise risk management helps!

COTS hardware obsolete before system SW delivered ~$3m Understanding of brownfield project risks

misunderstood complexity ~ $25m x n Changed life cycle environment risks

~ $100m… x n Complex IT project abandoned ~$20m

accounts still using DOS system!!! Company insolvencies….x nn WHS events, product failures,… Systems fail to meet expectations...

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Proactive Risk Manager’s “Left Shift”4

Lifec

ycle

Cos

ts

Apply to all phases of Asset Life Cycle


Proactive Risk Management Essentials Establish context for “venture” and risk management;

Determine risk appetite, culture and tolerance risk hierarchy and structure to record risks

flexible and adaptable risk management process… applying analysis to risks, actions, processes

risk reporting: risks and actions visible across the enterprise

risk monitoring, consulting and communicating

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Why spreadsheets will NOT cut it… #1 No version control – There will be no “single point of

truth” as spreadsheets encourage independent working.

No process workflow - Without process or workflow control there is no audit trail of who changed what and when and why

No history inherently retained – no reasons for change kept, qualitative and quantitative data lost.

People Break “good” spreadsheets - invariably…

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Why spreadsheets will NOT cut it… #2 No deadline tracking – Without tracking of deadlines

for risk assessments; risk actions and mitigation achievements are seldom visible

Limited ability to roll up risks into management view of whole enterprise / venture / projects / divisions

Limited security and access control as once the spreadsheet is open all users will see all risks and actions, even sensitive ones – commercial, financial, staff in confidence etc…(single user at a time…)

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Why spreadsheets will NOT cut it… #3

Easy to corrupt information or use out of date information

Limited ability to measure risk treatment and effectiveness

No easy link to corporate reporting tools for review by selected levels of enterprise / management

No linking of project schedule and risks to view effect of risks and uncertainty – what is CRUCIAL?

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Benefits of Good Risk Software #1 Standardisation across organisation / divisions

User Configurable to suit level of user Smaller projects need less functions but same power

Web Based – easy multi user access across time zones, clients, stakeholders

Multiple Simultaneous Access – no overwriting, ability to selectively lock parts of project / enterprise structure

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Benefits of Good Risk Software #2 Data Security - visibility and access can be controlled

Integrated Schedule / Costs risk assessment Import directly from key Project schedule tools (MS

Project, Primavera…)

Enterprise Risk Management Scalable to manage risk, opportunities and issues

across enterprise functions, projects, operations, divisions, subcontractors – link to key objectives


Smaller projects gain access to world class tool through concurrent licencing – trains people for large projects – common tool / process use

Executive reporting Wide range of flexible reports - standard, ad hoc, Charts, tables, dashboards, pdf, MS Office outputs… Integration into enterprise reporting tools

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Benefits of Good Risk Software #3


Speed and efficiency! Excel based systems soak up time on data consolidation,

manipulation, reformatting, quality and error checking (~84% have errors)

A robust and mature Risk Management SW Tool enables this time to be spent on adding value to the risk based decision making process that is essential to good management

Out of the box usability – low cost implementation and maintenance over life cycle

Good Support - Technical / Business and Training

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Benefits of Good Risk Software #4


The Following slides show some examples of what good risk software can do

We agree that in some cases a spreadsheet can do the same or a similar function

• But not without careful design and ongoing effort• And someone can break or change the settings unknowingly• Only one person can use it at a time• You will have difficulty in saving the history and trends• And so on• View and Enjoy

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Example Graphics from Good Risk Software


Cumulative Risk Burndown Reporting14

All / Grouped RisksAll / Grouped Risks Single RiskSingle Risk


Reporting Flexibility – Export to pdf, MS Office…Graphical / Tabular

Geo mapping views


Filter data in flexible charts / dashboards

~Key ~Key data of data of interestinterest1 x Data 1 x Data

item item removeremovedd

Full ReportFull Report Risks by owner & statusRisks by owner & status2 x Data 2 x Data items items removeremovedd

Create DashboardsCreate Dashboards


Heat Mapping of Risks / Opportunities17


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End date: End date: ~Apr 17~Apr 17

MS Project Gantt view – critical path


19 Good SW Gantt View - Cruciality

End date: End date: ~Jan 2018~Jan 2018@ 90% confidence@ 90% confidence


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End Date Monte Carlo modelling


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WBS Cost / Risk Analysis – Monte Carlo


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Schedule, Risk, & Cost Sensitivity Analyses – tornado charts (or table % format)


Visual capture of current and planned risk assessment levels 23

Configurable n x n Risk

Matrices / thresholds

Current Current

RiskRisk Residual Residual

RiskRisk


Risk Structure & “Risks for Attention” promptPlus email alerting of actions required to participants


Risk Identification, Categorisation screens

Risk linked to

Risk linked to

Key Key

Objectives

ObjectivesKey Risk

Key Risk

ID DataID Data


Standard Reports Menu


Example “out of the box reports” - #1


Example “out of the box reports” - #2


Additional Features of Good Risk Software Portfolio Risk Analysis / Risk Correlation

Linked parent / child risks and actions / trend analysis

Explorer style WBS structure / filters / clusters

Risk / Action Escalation and Delegation

Linking to Corporate Reporting tools /

Email prompts for overdue actions Import / export to MS Excel - If you really must!

And can produce a tabular risk register view for Excel addicts!

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Geo

Geo

MappingMapping


Conclusions “…if a company is using a spreadsheet for their risk management; it

suggests that their risk management process is superficial and probably ineffective…”

Source: Senior Manager (with Government and Industry experience)

Sound asset management and project management NEEDS proactive risk management over the full asset life cycle

A spreadsheet will NOT do the job.

Good risk management culture and software WILL!

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MS Excel

Import schedule or create structure

0% 5% 10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

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90%

95%

Lag before Building Regs Fit Windows

All permissions in Place Cast Floor

Mortgage Application Fit Doors

Fit Door Frames Review and Award Contract

Procure Double Glazing Tender Construction Contract

Detailed Design Match & Procure Bricks

Construc t Roof Paint

Plaster Walls and Ceilings 1st Fix Serv ices

2nd Fix Services Build Walls to DPC level

Preliminary Des ign / Cost Estimate Procure Plumbing /Sanitary Ware

Build Walls to Roof Level Mobilise to site

Construc t Foundations Building Regulations

Construct ion Planning Approval Design & approvals

Tornado Chart for AmberGold Project

Predict! Risk Analyser

Predict! Risk Controller Lite.XLS import export

Predict! Risk Controller

Cost and Schedule Risk and Uncertainty AnalysisPredict! Risk Intelligence

ADHOC REPORTING

Predict! Connect

Predict! Software Suite


Predict! Risk ControllerPredict! Risk AnalyserPredict! Risk IntelligencePredict! ConnectPredict! Risk Controller Lite

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Predict! Software Suite


QuestionsQuestions

Are there rocks in Are there rocks in clouds?clouds?