One of the good things about being a consultant is being able to find (or build!) more opportunities across a wide range of projects and clients and one of the good things about being part of a leading consultancy firm like Aquenta -http://www.aquenta.com.au/- [1] (a little bit of marketing of course here! :)) is to get those opportunities with exciting major projects and high profile clients.
When we talk about Primavera P6, most clients think about it as an enterprise scheduling platform. Some know about its capabilities in resource management including cash flow, resource loading / levelling, EPS/OBS/WBS and portfolio management capabilities. But not many clients are aware of its qualitative and quantitative risk assessment features.
This article is a short introduction to those risk assessment capabilities.
Risks are possible events or conditions that have the potential to negatively (or positively) impact on project objectives. Primavera P6 EPPM R15.2 includes an integrated Risk Management feature that enables us to identify, categorize and prioritize risks, assign a responsible person for managing the risk, assign risks to one or more activities that may be impacted by the risk, and conduct qualitative and quantitative analysis on each risk. Additionally, we have the ability to record a risk treatment.
Context Establishment
I usually say, the context is the playground of the game of risk management. Like any other game, we need to make everyone aware of rules, boundaries, thresholds and escalation directions even before we start playing. In P6, we can set our risk context by using “Risks Enterprise Data” to setup categories, risk scoring matrices, and thresholds that are standard across the organisation.
From the Risk Thresholds page, we can then create risk thresholds for use in risk scoring matrices. Risk thresholds necessary for a risk scoring matrix are:
- Likelihood / probability of a risk occurring
- Tolerance, the acceptability or manageability of the risk
- Schedule impact by % or value, defined as either a % of the project’s planned duration (by %) or as a duration figure (by value)
- Cost Impact by % or value, defined as either a % of the project's planned cost (by %) or as a monetary value
After we have configured Enterprise Risk Data, we should send that data to Oracle Primavera Prime to perform quantitative risk analysis. We will then update P6 with the results of that analysis from Oracle Primavera Prime and see the results in the pre and post response pessimistic dates fields and pre and post response bars in the Activities view.
To share Enterprise risk data with Prime, the key steps are:
- Configuring Risk Enterprise Data
- Linking P6 and Oracle Primavera Prime Applications
- Sending Data to Oracle Primavera Prime
- Updating Projects With Risk Data From Oracle Primavera Prime
The risk register on the Risks page is the main area of the application where we manage risks for a project. Additionally, we can add risks to a project from the EPS page, and add risks to a project and assign the risks to activities from the Activities page.
Once we add a risk to the project risk register, we can perform further analysis on the risk and create one or more risk treatment actions which include activities to reduce the negative consequence of the risk.
The risks can be documented in P6 and then we perform quantitative analysis of the risk data in the P6 risk register in Oracle Primavera Prime. Once that analysis is complete, we can see the results in the Activities view in P6.
The Response Plans detail window is the area in the risk register where we can create treatment actions for managing the identified risks. Once we identified which project risks need further action, we create a response plan and assign response plan action items for each risk to reduce the negative impact on the project.
Response planning allows us to identify and document methods we might use to manage project risks. When we identify an area with a risk, we create a risk response plan to determine what actions could be taken to promote the most favorable outcome.
If you are using Primavera Risk Analysis (PRA) for schedule risk analysis (SRA), the risks and some initial data can be captured within P6 and then be shared with PRA for SRA assessment.
For further information about contingency management (including cost and schedule contingencies), you can also refer to the RES Contingency Guideline (https://www.engineersaustralia.org.au/risk-engineering-society/links-resources [2]).
It’s great to see more and more alternative solutions being available to planning / cost / risk teams but the tools are only one of the most critical factors on how to increase the effectiveness of risk management procedures. I think the other key factors include commitment and support from executives, transparent and multi-dimensional communication, culture, organisation structure and its decision making process, training and trust. Yes, it’s interesting but ‘trust’ is also important because it permits the organization’s teams to focus upon its objectives and allow them to feel confident and comfortable enough to give their true opinions and ideas of risks and their potential impacts as well as most effective treatment actions.
Maybe I should cover this topic in another article. Let’s imagine that a good risk assessment tool is the only success factor (just for now!). :)