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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
For more information visit Noveco Systems on www.novecosystems.com
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