Management of UncertaintyWomen in Project Management

Bronwyn Friday, Group GM Risk Management

September, 2016

Bronwyn Friday• Builder (degree in Construction Management)• Over 15 years as Risk Manager across a range

of industries– Fast consumables – Foster’s

– Utilities – Powercor / CitiPower

– Consultant – Marsh

• 7 years in Construction Industry with John Holland – Enterprise / Strategic Risk Management

– Project Risk Management, including time & cost modelling

“Risk Management should drive better decision making”

Who is John Holland

Who we are

3,0000+ people on 80+ projectsdelivering contracting, engineering and services solutions

Regions•Australia•New Zealand•South East Asia

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Why is Managing Uncertainty so important

• We live in uncertain times – nothing new about this• Change seems to be coming faster at us• Threats (risks) appear to be more challenging than we have seen

before*

• Business generates value from Risk taking• Business is inherently risky• Success is driven by how well risks are managed#

Our Business’ future value is embedded in the Uncertainty we are facing NOW!!

* The psychology of risk, TMS Consulting P/L# Risk Intelligence, David Apgar

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Project SuccessNorth, McKinnon and Centre Roads Level Crossing project in Melbourne

Major Occupation that removed three level crossings simultaneously.•Completed six months early (June / July 2016)•Conducted over 37 days (24 hour work front)•Built three new railway stations (one fully open at end of 37 days)

•250K cubic metres of soil•33K cubic metres of concrete•Three new rail tracks

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Successful Uncertainty Management Team consisted of:•380 White Collar workers – engineers, etc.•1500 Blue Collar workers – tradies, etc.•2 Million man hours completed across the teams by the end of the 37 days

How do you use risk management to manage this level of uncertainty?

By embedding the principles of Risk Management across the whole project and understanding how uncertainty can effect how we think!

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Your brain is in love with CertaintyOur brain is focused on finding ‘certainty’ in the world*

* Your brain at Work, David Rock

Our brain is a prediction machine:•It aims to predict what will happen next•It stores patterns from the past•It takes new situations and contrasts them with old patterns

When the outcomes are uncertain, our amygdale areas of our brain lights up•Driving anxiety and stress hormones through our body •Placing us in a “flight” (away) response

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What your Brain needs to make complex decisions

Your brain has basic limitations:•Limitation of space within the brain to capture, assess and store new data•Energy required to make complex decisions, which is affected by

• Amount of energy available – sleep, food and fitness• How complex or new the problem is to your brain

•Difficulty in doing two things at once• Routine or known decisions can be done while working on other things• Inability to make complex decisions if working on other things

* Your brain at Work, David Rock

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Goldilocks of the BrainPrefrontal Cortex is the area of the brain that makes complex decisions

*This area sets goals, makes plans, controls impulses and solves problems

* Your brain at Work, David Rock

*It is the Goldilocks of the Brain as it needs everything to be just right or it doesn’t function well

•Best quality thinking only lasts for a limited time•This area of the brain is energy hungry

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Risk Management vs. UncertaintyRisk = Uncertainty that Matters*

Risk = Both the opportunities and threats related to the stated objectives of the business / project

• To achieve a stated objective there must be “Risk Taking”

“Process of engaging in behaviour or activities that gain positives while potential losing something of value#”

* The Risk Doctor’s Cures for Common Risk Ailments, David Hillson# The psychology of risk, TMS Consulting P/L% AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines

• To capture the value from the stated objectives there must be “Risk Management”

“Coordinated activities to direct and control a business with regards to risk%”

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Build the Structure and the Value will follow!

• Within the midst of Uncertainty, clear decisions can’t be made

• Risk Management can give a structure that allows uncertainty to be assessed

• Allows the mind to focus on complex decisions and compare competing issues

The Risk Management process can seem “Boring”,

but

the decisions and outcomes from the process can be “Exciting”

Benefits of Project Risk Management Focus the team on the objectives of the project

80/20 rule, focus on top 20% to deliver 80% of your

success

Early identification and understanding of Key Risks

Alignment on the Key Risks

Pro-active management of risks

Resources are focused on these risks Having a clear understanding of the Risk Appetite of

your business or project

Risk Management Key Elements

13* The Risk Doctor’s Cures for Common Risk Ailments, David Hillson

Risk Management Process› The key steps to compare risks

› Process to best manage risks

Risk Appetite › Tendency of an individual or organisation to take on a risk in a given situation*

› Comes from past, background and experiences

Risk Attitude› Chosen response to a given risky situation*

› Externally shown

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What is risk appetite – business, project, personal

• Risk appetite is thrown around as the new buzz word but it is rarely defined* • It is determined when you have defined what is ‘OK’ and ‘not OK’, but

there is always the unclear areas in between*

Risk AppetiteRisk Tolerance

Risk Tolerance

Outside Capacity

Outside Capacity

Risk Capacity

• What is your personal risk appetite?• Your / family safety• Reputation• Finances / Investment

• Hobbies• Gambling

* Big Future 2014, PricewaterhouseCooper

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Risk Management done on a Successful Project Risk Management was embedded in the following processes:

Weekly senior team meeting Daily issue reporting Rail Occupation planning and gateway sign off Supply Chain Assessment Community Management Safety and Environment Management

Scheduling Reporting Time risk modelling & Weather Modelling

Cost Reporting Cost risk modelling

My Risk Appetite Journey

Working in the Construction industry› I took on role in a male dominated industry because my history was from a

farming background – didn’t seem high risk

Travelled the world working and living by myself› Grew up with a Mother that had worked and travelled the world (behind the

Iron Curtain) in the 60’s – seemed the normal thing to do

Having to question and challenge senior management on key risks and their responses› Risk management process has given me the confidence to deeply

understand key risks, and clarify the management of these risks with my senior managers

How my risk appetite has affected my career

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How can you use this information

* The psychology of risk, TMS Consulting P/L# Risk Intelligence, David Apgar

How well you manage risks will affect your career, professional and personal growth#

Understand both your Risk Appetite and Attitude to different risks*

› Your gender will affect them

› They will change over time and stages of career progression

› New experiences and results will alter them

› Understand if you are inherently Optimistic or Pessimistic

Best Practice› Best Practices in Managing Risk

› International Standard 31000:2009

› Best Practices in Project Management› PMBOK› PRINCE2

› Best Practices in Project Risk Management› Practice Standard for Project Risk Management

[PMBOK]› M_o_R® (Management of Risk) [Prince2]› P3O [Prince2] - effective portfolio, programme and

project management.