Risk Management in Noveco Project Manager Workbench

Profit BasedBudget Based

Risk Management

Profit Based: Risk Management solutions in Noveco

The new Risk Management solutions are built on the basis of Noveco’s existing Variation Management functionality

Risks are divided into two categories:- Threats- Opportunities

- New Variations created with the new variation type: Risk – Threat- All Variations with status “Pending” (non-Approved) where profit is negative

Threats are:

Opportunities are:

- New Variations created with the new variation type: Risk – Opportunity- All Variations with status “Pending” (non-Approved) where profit is positive

New Configuration option

ActivateRiskAnalysisforProjectPlan.profile

Risk Management Configuration: Define Document Types

NewVariationClasses:• 3-Threat• 4-Opportunity

NewVariationCategory:• 3-Risk

Status Profile

Risk Management Configuration: Define Update Rules

In this Example:

- Status “CRTD – Created” is an initial status. No updates are made

- Status “ACTV – Active” is set as Non-Approvedand will update PS info system with the Risk value (Revenue and Costs) as Pending, similar to Pending Variations. These values will not appear in the Workbench as Pending Variation Cost or Revenue. The Risk values will be recorded against a special Cost Version and Cost Element (for revenue) specified in the previous configuration step.

- Status “NACT- Not-Active” is set as Not Active will clear any postings made in PS info-system when it was saved as an Active Risk.

- Status “OCCR – Occurred” is set as Approvedwill update project Budget, Forecast and Revenues. It is treated as an approved variation (Risk that turned out to be a variation that has happened)

- Status “DLTD– Deleted” is set as Rejected will withdraw any postings made in PS info-system when it was saved as an Active Risk

inNoveco configurationassignupdaterulestovariationstatuses

inSAPstandardconfigurationCreatenewstatusprofilelikethis

New Fields: available for Risks and Variations

RevenueExpected%(default100%)

Expectedvaluesinthetree

Probability,(default100%)

ExpectedValues

BudgetandForecastExpected%

(default100%)

Create a Risk Variation: Threat

EnterVariationRevenueandsetExpected%ofthetotalrevenuevalue

Create a Risk Variation: Threat

EnterCostItemsandsetExpected%oftheBudget

andForecastvalues

PeriodwhenRiskwillprobablyoccur

Create a Risk Variation: Opportunity

EnterVariationRevenueandsetExpected%ofthetotalrevenuevalue

Create a Risk Variation: Opportunity

EnterCostItemsandsetExpected%oftheBudget

andForecastvalues

PeriodwhenRiskwillprobablyoccur

Project Manager Workbench: Risk Analysis tab

Newtab:“RiskAnalysis”

Profit Based: Scenario AnalysisPessimistic

Optimistic

• Total Risk Cost (TRC): sum of Variation Costs from all threats

• Total Risk Revenue (TRR): sum of Variation Revenues from all threats

• Total Risk Cost (TRC): sum of Variation Costs from all opportunities

• Total Risk Revenue (TRR): sum of Variation Revenues from all opportunities

Weighted• Total Risk Cost (TRC): sum of Variation Costs from all

threats and opportunities multiplied by risk probability

• Total Risk Revenue (TRR): sum of Variation Revenues from all threats and opportunities multiplied by risk probability

Expected• Forecast Expected (FE): sum of Forecast Expected

values from from all threats and opportunities

• Revenue Expected (RE): sum of Revenue Expected values from from all threats and opportunities

Profit Based: Scenario Impact on KPI

all the identified threats occur

• EAC including Risk : EAC + Total Risk Costs (TRC) of all threats

• Revenue including Risk: Current Planned Revenue + Total Risk Revenue (TRR) of all threats

• Profit Margin (%) = ( Revenue including Risk – EAC including Risk) / Revenue

all the identified opportunities occur

• EAC including Risk : EAC + Total Risk Costs (TRC) of all opportunities

• Revenue including Risk : Current Planned Revenue + Total Risk Revenue (TRR) of all opportunities

• Profit Margin (%) = ( Revenue including Risk – EAC including Risk) / Revenue

Pessimistic

Optimistic

Key Figures for Profit Based Risk Analysis

all risks weighted by their probability

• EAC including Risk : EAC + [(P1 * TRC1) + (P2 * TRC2) + … + (Pn * TRCn)]

• Revenue including Risk : Current Planned Revenue + [(P1 * TRR1) + (P2 * TRR2) + … + (Pn * TRRn)]

• Profit Margin (%) = ( Revenue including Risk – EAC including Risk) / Revenue

Where Pn is Probability of the Risk

all risks by their expected values

• EAC including Risk: EAC + [ (Forecast Expected 1 ) + … + (Forecast Expected n)]

• Revenue including Risk : Current Planned Revenue + [(Revenue Expected 1) + … + (Revenue Expected n)]

• Profit Margin (%) = ( Revenue including Risk – EAC including Risk) / Revenue

Weighted

Expected

Current: Current EAC, Revenue and Profit without risks applied

Original: Original Estimate, Original Revenue and Profit without risks applied

Profit Based Risk Analysis: KPI Impact

Risk impact on project Time line

Risk impact on project Time line

Profit BasedBudget Based

Risk Management

Budget Based: Risk Management solutions in Noveco

- All Variations with status “Pending” (non-Approved) where Forecast Expected value > Budget Expected Value

Threats are:

Opportunities are:

- All Variations with status “Pending” (non-Approved) where Budget Expected Value > Forecast Expected value

The new Risk Management solutions are built on the basis of Noveco’s existing Variation Management functionality

Risks are divided into two categories:- Threats- Opportunities

Create a Variation: Threat

EnterVariationCostandExpected%forBudget

andForecast

ACostVariationwithStatus“Pending”is

consideredasaThreatifitsExpectedCostishigherthanExpectedBudget

Create Variation: Opportunity

EnterVariationCostandExpected%forBudget

andForecast

ACostVariationwithStatus“Pending”isconsideredasan

OpportunityifitsExpectedBudgetishigherthan

ExpectedCost

Risk Analysis: Budget Based

Budget Based: Scenario Analysis

Pessimistic

Optimistic

• Total Risk Cost (TRC): sum of Variation Costs from all threats

• Total Risk Cost (TRC): sum of Variation Costs from all opportunities

Weighted• Total Risk Cost (TRC): sum of Variation Costs from all

threats and opportunities multiplied by risk probability

Expected• Forecast Expected (FE): sum of Forecast Expected

values from from all threats and opportunities

• Budget Expected (BE): sum of Budget Expected values from from all threats and opportunities

Budget Based: Scenario Impact on KPI

all the identified threats occur

• EAC including Risk : EAC + Total Risk Costs (TRC) of all threats

• Budget including Risk: Current Budget + Total Risk Cost (TRC) of all threats

• Budget Deficit (%) = ( Budget including Risk – EAC including Risk) / Budget including Risk + 100 %

all the identified opportunities occur

• EAC including Risk : EAC + Total Risk Costs (TRC) of all opportunities

• Budget including Risk : Current Budget + Total Risk Cost (TRC) of all opportunities

• Budget Deficit (%) = ( Budget including Risk – EAC including Risk) / Budget including Risk + 100%

Pessimistic

Optimistic

Budget Based: Scenario Impact on KPI

all risks weighted by their probability

• EAC including Risk : EAC + [(P1 * TRC1) + (P2 * TRC2) + … + (Pn * TRCn)]

• Budget including Risk : Current Budget + [(P1 * TRC1) + (P2 * TRC2) + … + (Pn * TRCn)]

• Budget Deficit (%) = ( Budget including Risk – EAC including Risk) / Budget including Risk + 100 %

Where Pn is Probability of the Risk

all risks by their expected values

• EAC including Risk: EAC + [ (Forecast Expected 1 ) + … + (Forecast Expected n)]

• Budget including Risk : Current Budget + [(Budget Expected 1) + … + (Budget Expected n)]

• Budget Deficit (%) = ( Budget including Risk – EAC including Risk) / Budget including Risk + 100 %

Weighted

Expected

Current: Current EAC, Current Budget and Budget Deficit without risks applied

Original: EAC = Original Estimate, Budget Deficit = 0

Budget Based Risk Analysis: KPI Impact

Risk impact on project Time line

Risk impact on project Time line

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