Refocusing risk and value management

A major UK utilities company had largely completed the development of its required asset base to enable it to fulfil its service requirements to its customers. Future investment decisions would be more strongly driven by an understanding of the strengths and weaknesses of that asset base and the associated operational risks. Two project management skill areas were seen as critical to this, risk and value management.

Despite the perceived importance of these processes the concern was that the company had lost focus on their application. We were asked to undertake a thorough review of their existing application with the twin objectives of
• achieving effective, practical and clear processes which reflected good practice
• determining what needed to be done to ensure that the redefined processes became ‘second nature’ within the company.

Our review confirmed the fundamental importance of risk and value processes. They enabled the company to understand failure scenarios and manage uncertainties, to understand scheme ‘value’ drivers and creatively open up options, and lastly to support delivery to time, cost and quality. However basic problems were inhibiting effectiveness. Variability of application needed to be decreased across the business and expertise needed to be increased.

We proposed a range of measures to enable and underpin the improvements required. Among the most important these included, first, a benchmarked understanding of capabilities across the company. This would enable the setting of improvement targets and measures, and the development of specific improvement plans for the individuals involved. Secondly a guide was needed to facilitate a reliable understanding of scheme complexity. Its purpose would be to enable the level of risk and value interventions to be targeted against the potential benefits in a consistent manner. Thirdly a ‘market led’ internal consultancy comprised of risk and value management specialists was needed to support the more generalist project managers. Lastly a risk and value learning process was required to ensure ongoing development of the company’s practices from the experiences of all of those involved.

We supported each recommendation with detailed proposals for how each should be operated and implemented and we went on to provide support to the implementation process.