Transcript
Risk Management in project
Prepared and presented by
Mads Hembre, discipline advisor
Risk Management
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Content
• Our Values
• Risk Picture StatoilHydro
• Risk Management in StatoilHydro
• Tools Risk Management
• Risk and Quality Management
• Risk Management Process
• Risk module
– Input
– Use
– Output
• Why Risk Managment
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- threats and opportunities !
We in StatoilHydro – Our Values
• Courageous
• Open
CourageousOur values:
• Hands-on
• Caring
• Be imaginative, ambitious and stimulate new ideas
• Use foresight, and identify opportunities and challenges
• Challenge accepted truths and enter unfamiliar territory
• Make clear demands on each other and push for constructive change
• Understand and manage risk
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Risk picture - StatoilHydro Market risk Described in:
o Strategic market risk FR08
o Tactical market risk FR08
o Credit risk FR08
Operational risk
o technical risk FR02, FR03, FR06
o project risk FR05
o reservoir risk FR01
o health, safety, security and the environment (HSE)
FR10
o administrative risks FR09, FR14, FR15, FR16.
o Country risk FR08
o Reputational risk FR08
o Code of conduct FR18
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Definitions
Risk:
Any uncertainty that, if it occurs, would affect one or more objectives. Risk is the product of probability and consequence.
Threat:
Any uncertainty that, if it occurs,
would affect one or more objectives negatively
Opportunity:
Any uncertainty that, if it occurs,
would affect one or more objectives positively
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Risk Management – CVP-Process
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Risk Management (ref.FR05)
• Risk Management shall be used actively throughout the project development:
• Prior to DG 1, management of risks shall be established and maintained as a continuous management process throughout the project development process.
• Risk management shall be an integrated part of the management of a project, where all project units shall contribute actively in the process.
• Requirements for Risk management shall be included in contracts and purchase orders.
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Risk Management
Risk Analysis
Probability simulation based on:
- UM Top 10 List
- Economic planning assumptions
• Cost estimate
• Schedule estimate
• Total value chain
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Risk Management
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1. Identification
2. Assessment
3. Response Action
4. Response Control
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Tools – Risk Management
Quality Management
Risk actions and quality control activities/PIMSWEB
Project Subprojects Contracts
Risk Identification Risk Action
Quality System
Audit
Contract/discipline
Examination
Assignment Notify Prepare Execute Report
Observations
Close-outFollow up
Risk Areas
Risk Assessment Risk Control
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2. Assessment
• Risk are ranked over dimensions: probability of occurrence, potential consequences, manageability of outcome
• Specify cash impact
• Project core teams review sub-groups main risks and define Project Top 10 List
• Raise Red flags when critical exposures identified
1. Identification
• Identify risks during functional brainstorming sessions
• Conduct analysis through total value chain for full project lifecycle
• Encourage and facilitate cross-learning trough similar projects
• Nominate RM coordinator to ensure QA and secure use of PIMS Web
4. Response Control
• Define and clearly communicate UM process so all projects are aligned with corporate requirements, regulations and integrate public expectations
• Reporting system allows leadership to be aware of main uncertainties and enable control of work quality
• Third party knowledge is leveraged to develop Statoil expertise
3. Response Action
• Define for each top 10 Risk mitigating actions & back-up plans
• Track response action in by responsible person or by action deadline
• RM coordinator reports progress to core team and ensure compliance with process
• Functional experts control quality of RA during CAR’s
Risk Management - Process
RM – Process
Risk areas
• Country / Politcal
• HSE, fraud and corruption
• Market / Contractual
• People / Organization
• Project execution / Operation
• Reserve base
• Strategic / Financial
• Technology / Technical
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Project
CostProject
SCHEDULE HSE SCOPE QUALITY Reputation
Minimal (C1) <5 MNOK < 1 week
Minor Injuries,
Minor Damages,
No Pollution None None
Small (C2)
5-25 MNOK 1-2 weeks
Injuries, Damages,
Minor Pollution
Minor effects on capacity/regularity
Local negative talk. Minor local
Serious (C3)
25-50 MNOK 2-4 weeks
Accidents, Damages, Pollutions
Effects on capacity/regularity
Minor negative media coverage, some drop in share price. Warning about
orders*) from the authorities. Major Local
Very serious
(C4) >50 MNOK >4 weeks
Serious Accidents,
Serious Damages,
Serious Pollution
Major effects on capacity/regularity
Serious negative media coverage, severe drop in share price. Orders from the
authorities. International
Consequences
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Probability
Probability
Unlikely (P1) < 5%
Less likely (P2) 5 - 20%
Likely (P3) 20 - 50%
Very likely (P4) > 50%
Reports
ActionsActions
Overview system
SQL-server
RiskActions
Online
update•Lists
•Combined
•Graphics
•Statistic•Excel
•HTML
Input
Output
Reminder
QM-module
My PIMS
Online update
• Record by record (risks-actions)
• List (risks)
• Action list (actions)
Record by record
List
Action list
Identification
Assessments
Actions
Action - dialog box
Links/Attachments
Reports
• Lists – record by record
• Combined – Risk and action records together
• Graphics – graphical elements in report
• Statistic – frequency of use
Report examples (all types)Risk List
My Pims
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Why Risk Management ?
Approach
Action The action aims to reduce:
1 Eliminate Underground cable
Build local power plant
Probability
2 Reduce risk, pursue opportunity
Increase gate
Plant small plants
Duplicate lines
Reduced growth
Probability
3 Transfer Insurance
Contract with other
Consequences
4 Accept and prepare Extra power supply
Indicator light
Consequences
5 Ignore No action
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CAPEX Risk analysis
Estimate
Technical allowance
Facts ”Scope of work”
Experience
Frame agreement prices
Market growth
PhaseUncertainty
Uncertainties execution
Concept
Identified elements managable
Identified elements not manageable
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• A value chain includes all the variables that affect the cash flow
• Each Risk in the value chain is described with a probabilitydistribution and linked to the economical model
• Dependencies between variables are taken into account
• Risk in project economy is calculated through Monte-Carlosimulations
Risk Analysis - RiskMS
Risk Analysis on the value chain
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Model based on SIAM
Monte Carlo Simulation
Assessment
Risk Assessment
Risk Analysis
Model development
Dependencies
Distributions
Project scope
NPV Range and distribution
P(10), P(E) and P(90)
Sensitivities
Analysis Output Report
Expected NPV
Cumulative Chart
Certainty is 80,00% from 555,23 to 1 191,03
Mean = 872,37,000
,250
,500
,750
1,000
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125,2
250,5
375,7
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381,94 661,26 940,59 1 219,91 1 499,24
501 Trials 495 Displayed
Forecast: NPV 8% (SIAM)
0,75
0,64
0,00
0,69
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0,83
0,00
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0
7,13
1,32
1,51
0,69
1,41
2,0
1,19
1,36
3,0
4,2
15,33
Downside
Upside
Higher Value Chain Focus
VALUE
CHAIN
ANALYS I S
Drilling Risk
Reservoir Risk
CAPEX Risk
OPEX Risk
Transportation Risk
Market Risk
Other Risk
Tax/fiscal Risk
IDENTIFIED
UNC. ELEMENTS
RISK
R E G I S T E R
Risk Analysis - RiskMS
Risk Analysis – RiskMS
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Remember…
“the essence of project management is risk management”
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