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PROJECT RISK MANAGEMENT USING DEPENDENCY MODELLING BACKGROUND The application of Dependency Modelling (a more formal and structured, though simpler, application of Bayesian Belief Nets – (Slater, 2012)) as an aid to better project management, has been suggested previously ( (al, 2010); and to the way in which organisations report interdependent issues, has also been proposed in the literature ( (TNO, 2010)ref). This note sets out to apply the methodology to an actual, current project (the proposed construction of a tidal lagoon power station) as a test case.
THE PROJECT The Project is officially described (TLP, 2015) as “Tidal Lagoon (Swansea Bay) Plc was established in 2012 to develop, finance, build and operate a first-of-kind tidal range powered energy plant (the “Project” or “Lagoon”) comprising a 9.5km land-attached breakwater structure within Swansea Bay, at the western end of the Severn Estuary, within which a section of hydro turbines will be installed, specifically designed to generate electricity from the 8.5m tidal range. The Severn Estuary has the second highest tidal range in the world and Swansea Bay spring tides reach up to 12m, allowing for significant tidal head and thus power potential. Tidal range presents a long term 120 year opportunity far exceeding the typical design life for a wind farm, gas fired power station, or even a nuclear power plant”.
Figure 1 – The location and scope of the proposed lagoon power station (courtesy TLP)
Once operational, the Lagoon is expected to be capable of delivering over 500 GWh of the UK’s energy needs per annum in a predictable fashion.
THE APPROACH The sources of risk are numerous and will vary during the different phases of the project. Similarly there are a number of conventional risk studies being run which concentrate on different priorities from delay and contractual cost incurrence to health and safety concerns. All of these tend to result periodically in a variety of multicoloured spreadsheets, which attempt to give management and the Board responsible, a current “picture” of the health of the project. In a fast moving, dynamic and multifaceted situation, such as the current preconstruction phase, where constant upgrades and modifications to critical parameters(Time, Cost, Legal, environmental and safety constraints) are highly interactive, the need for decision makers to see the full, current, and interdependent implications of developing situations and to drill down to the underlying causes is paramount; but paradoxically is also very challenging using the current risk reporting systems and return/reporting periods (too little, too late?). This suggested approach, from the start takes an overview of what the project’s key objectives are and what they critically depend on; and what status information needs to be known by whom, from whom and when. The overall objective is then to deliver a viable project design package which meets all the requirements, from planning through fundability to plumbing. But to achieve this, it requires a number of functions to deliver individual objectives successfully. With such a complex project, it is difficult to keep track of all of these critical interdependencies and their expected performance. Currently this is achieved by developing an organisational structure with clear assignment of roles, responsibilities and reporting. This extends to the critical interfaces with external contractors, stakeholders and the public. Thus at each interface there is scope for misinterpretation, error and delay in the transmission of mission critical information needed for key actions and decisions in fast moving financial and political environments. This DM Open Group approach formalises these organisational functions and defines their interdependencies in a common information space. The philosophy behind it is similar and is complementary to the current push by Government and the ACE, for a formal BIM (Building Information Modelling- (ACE, 2015)) system for managing intercompany infrastructure design data and ensuring all concerned are dealing with the same design specifications with changes and updates strictly controlled,
THE FUNCTIONS So we start with the top level authority charged with overseeing the project - the Board
Figure 2 – The Top Objective in the Dependency Modelling scheme
For the Board to be satisfied all is on track, it needs satisfactory reports from the executive team, led by the Chief Executive, the Board committees and its secretariat. 2 Riskstatds0.33
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Figure 3 – The Board Sources of Project information
The Chief Executive then has his own team reports.
Figure 4 – Further development of the Board reporting lines
Similarly for each of the Executive Directors, there is a functional reporting line.
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THE CFO LINE
Figure 5 – The CFO’s direct reports
These can then be interrogated further, e.g. on Finances
Figure 6 – Going concern?
THE COO LINE The COO function has many sub functions reporting project status information. This function is responsible for the practicalities of the project – delivering. In the illustration below, these have been simplistically divided between delivering the technical and practical implementation of the project intent, on time, on budget, with no contractual, commercial or health, safety and environmental issues, as below. 4 Riskstatds0.33
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Figure 7 – The COO direct reports
The Project Delivery Function then has to cover the individual projects
Figure 8 – And the crucial Project Delivery Function
Then the project delivery function must be aware of the detailed status and issues with each of the contracts and contractors, e.g. for C131, that means among other things, the interface between the marine contractor and the overall projec management, as shown below. This reporting trail then drills down to individual items and concerns that need monitoring and managing.
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Figure 9 – Typical C131 project Manager’s issues (illustrative)
Similarly, the Commercial risks and the HSE risk monitoring and management functions which are currently separate chimneys need dveloping as interdependent functions. e.g. HSE
Figure 10 – The Health, Safety and Environmental reporting line
But there is an established Safety Management System which requires a sequence of audits and performance monitoring tasksto be reported on regularly, down to contractor level
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Figure 11 – Typical HSE Manager’s issues
THE (FULL) CEO LINE So in this way we can build an automatically updated , full organisation reporting tree which cam be viewed in total or in reporting lines. So for example, the CEO, has a full set of functional reports of which he needs to be aware.
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Figure 12 – The CEO can drill down to individual managers to ascertain “root” causes of issues
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Now individual managers (e.g.the HSE Manager example above) can estimate the probability that their objectives (e.g satisfactory HSE performance) are going to be successfully delivered. This performance update can then be immediately transmitted up the chain,throughout the organisaion.So that a traffic light display – reed/green bars can instantly alert the whole mangement chain. Say for example the Marine works manager has a problem with the breakwater design, the CEO is instantly updated.
Figure 13 – The “Traffic Light” watrning (probability) of a (hypothetical) Marine issue
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REPORTING Each of the managers has a set of deliverables and targets. This approach requires him to update the central management information “Pool”, with his specific probabilities of successfully delivering his assigned responsibilities (as per normal). What is new and not normal is that any change in status can be instantly transmitted to relevant managers wherever they sit (in whatever silo!). Managers have enough to do without having to learn new ways of recording, marshalling and presenting risk information. Similarly, they need to know a lot about the particular aspect of the project they are responsible for and what they are depending on to deliver their individual objectives, but don’t really need to be overloaded with information from other activities unless they are relevant and necessary for their well being. It is this interactive and interdependent aspect of organisational structures and the need to be responsive to selective interrogation that makes possible this approach: i.e. BBN Dependency modelling accessing the common pooled data storage in BIM, to respond to interactive “apps” customised for each contributing manager. Each of the individual managers will have a customised model template and an “app” to report the status of his particular model “Leaves”. These are the critical dependencies he has control of - e.g. for the HSE manager this will look very much, as normal, like a standard performance pack. The dialogue box would then ask for an estimated probability of successful performance and an estimated cost of not delivering it. These inputs can be entered using calibrated slider bars of probability as 0-1, and costs in £’s (0-100M?). These status reports are then sent to and stored in the main BIM system. Conventional 1-5 or 1-10 Guidance zones can be provided above the sliders, but the output will be a number not a quantum range.
Figure 14 – A typical Manager’s App Input Screen 10 Riskstatds0.33
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This puts pairs of likelihood and consequence estimates, as numbers, not levels, as Date/time labelled sets of values into the BIM. The BBN software has been developed as a Software as a (web based) Service (SaaS), which can access these values as the “Leaf” entities in the complete system linking all the dependency models built for the project. It will then return an updated set of values for all the entities needed to calculate the conditional probabilities for that time and date. So for example, the HSE manger’s inputted values will update the “Top Model” as the top objective (HSE Risks OK) is a leaf entity in the top model (Appendix 1) So any of the managers can query or update his sub model and the software will immediately update all the values in the BIM. As these BBN’s are time sliced (individual sets of values), it is then possible to review historically the patterns of behaviours and sensitivities. It may also be possible to arrange an offline “what if “intervention testing facility for managers.
THE OUTPUTS The app can then call for a number of customised reports, carefully tailored to meet the needs of the different component activities and levels of management in the project/ organisation. The derivation of a variety of tailored reports with tailored screens from dashboards to Plots can now be done automatically created using current data from the BIM. All the manager needs to do is ask/query. These reports can be –
Overall (confidence Traffic Light red/green probability display) that targets will be met (which is probably needed as an entity on his line managers’ template.)
Current worst case cost exposure
Current expected probability of mitigations working, and
Resultant reduction in cost exposure.
A 3 point sensitivity plot to help focus on the most effective improvements or countermeasures
Figure 15– “Thin” Client Reporting Facilities 11 Riskstatds0.33
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CONCLUSION The automated quantitative risk reporting and recording approach, made available by this methodology means that the project managers and teams have to do little more than at present, to obtain much more timely information on their deliverables and risks. This means that they and the whole organisation can track issues and alerts as they develop and are now able to react, intervene and support in a timely fashion, not just hold post mortems. It only requires an initial workshop and team dialogue to determine reporting needs (which currently happens in the various silos anyway). Development and customisation of the apps would then be done by in-house or consultant teams as a support service. These apps can then be used by the teams to talk directly to the BIM as normal. The risk software and detailed models are normally invisible and are hence not unnecessary distractions for the managers, but always available (SaaS )to the in-house risk experts to modify, update and respond to changes as needed.( In practice this is very simple rather like using mind mapping tools).So for very little perceptible change, for most of the organisation, we can make the identification, recording, reporting, monitoring and management of project risks both more accessible and useful to decision makers, in a more timely fashion. David Slater -9 August 2015
Figure 16 – A schematic of the overall system 12 Riskstatds0.33
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BIBLIOGRAPHY ACE. (2015). al, S. e. (2010). Dependency Modelliing - Open Group Standard C133. The Open Group. Slater, D. (2012). Risk Assessment - from the top. The Chemical Engineer . TLP. (2015). TSB Annual Report. TNO. (2010). El Metodo.
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