Presentation at Communicating risk across the project portfolio, 4th July 2013

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Applying Risk Factors in the
Strategic Selection of Portfolio
Projects - Case Study
Date: July 2013
JT MacGregor BSc(Hons), MSc, CEng, MAPM, MIMMM
Programme Executive – Customer Business & Services

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Applying Risk Factors in the Strategic
Selection of Portfolio Projects
 Session will be in two parts
1. Brief overview of Portfolio Project
Risk Factors and in particular the
use of CIFTER analysis tool
2. Worked example using a CIFTER risk
analysis on the decanting and
demolition of a building

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Doing the “Right” Projects
Doing
the
“Right”
Project
Doing
the
Project
well

4. © 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of
Portfolio Projects
Net Project Priority
Gross
Project
Priority
Project
Cost*
Key element of Project cost is the Complexity or Risk Factors associated with doing the Project

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Project Complexity ≡ Risk
 One of the most well-known means of measuring
Project complexity is to use a CIFTER (Crawford –
Ishikura) analysis
 Identifies seven risk factors that affect the
management complexity of projects
 Each factor is rated from very low to very high based
on a qualitative assessment of that factor
 Tool was developed as part of an international team
- The Global Alliance for Project Performance
Standards (GAPPS) as part of a framework for
Competency based standards in Project managers
- Can be used in conjunction with APM Body of
Knowledge (BoK) skills and experience assessments

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Project Risk Factors
 Cifter Risk factors
1. Stability of the overall project context.
2. Number of distinct disciplines, methods, or approaches
involved in performing the project
3. Magnitude of legal, social, or environmental implications from
performing the project
4. Overall expected financial impact (positive or negative) on the
project's stakeholders.
5. Strategic importance of the project to the organisation or
organisations involved
6. Stakeholder cohesion regarding the characteristics of the
project.
7. Number and variety of interfaces between project and other
organisational entities

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Project Risk Factors - Example
Standard Output from Cifter Analysis

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Project Complexity
Standard Output from Cifter Analysis

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Project Risk Factors
 Basic CIFTER Limitations
 Information generated from traditional CIFTER Risk /
Complexity model is limited to PM Competency
 One dimension
 Dominated from a supply chain perspective rather than
customer
 If however Risk / Complexity information is linked to
 (a) the Project benefits
 (b) Cost Elements of doing the Project in the Portfolio
 Then a much more comprehensive decision can be
made with respect to which project to launch in which
order (Multiple dimensions)
- Can be applied to Programmes / Portfolios

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Risk Based Project Prioritisation
8 9 10 11 12 13 14 15 16 17
Cifter Assessment
$SavingperAnnum
Project A Project E
Project B Project F
Project C Project G
Project D Project H
Low Complexity High Complexity
HighBenefitLowBenefit
2
1
3
4/5
4/5
6

11. © 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection
of Portfolio Projects
 Summary
 Conducting a CIFTER risk analysis at the beginning of Portfolio
Project selection process provides a quick, easy to use method
of assessing different projects dimensions before the project
starts.
 Tool can be used by non-experts
 but should be checked by experienced Project Manager to
ensure consistency
 Provides key decision making information when agreeing
scope and launch criteria with Sponsor and major stakeholders
 Provides clear communication to Project Team and all
of the stakeholders of the risks that must be
addressed if project is launched

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 References
 GAPPS (2006) A Framework for Performance Based Competency
Standards for Global Level 1 and 2 Project Managers Sydney: Global
Alliance for Project Performance Standards
 Crawford, a.l., “Crawford-Ishikura Factor table for Evaluating roles” 2005
 Crawford, L.,”Global Body of Project Management Knowledge and
Standards” in The Wiley Guide to Managing Projects, P.W.G. Morris, Pinto,
Jeffrey K.,,Editor. 2004, John Wiley and Sons. P1150 –1196.
 Crawford, L., “Senior Management Perceptions of Project Management
Competence”., in IRNOP V.(2004a): Rotterdam, Netherlands.
 Aitken, A.C., Dr Lynn,”A study of Project Categorisation based on Project
Management Complexity” in IRNOP VIII, 2007: Brighton, United Kingdom,
2007
 MacGregor, JT, Identification of key factors in the development of
TotalCare® Aftermarket Services” MSc Dissertation: University of
Manchester, School of Mechanical, Aerospace & Civil Engineering, 2008
Applying Risk Factors in the Strategic Selection
of Portfolio Projects

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Part 2
Worked example using a CIFTER analysis
on the decanting and demolition of a
building

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Applying Risk Factors in the Strategic Selection of
Portfolio Projects
 Workshop Project scenario
 The decanting and demolition of a multi-storey
building built in the 1960’s
 Building occupied by approximately 330
people
-
 Timescale for project - 6 months
 Project cost £0.5m, Cost Saving £0.75m

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Risk Assessment Sheet
CIFTER Risk Project Complexity Assessment Tool
Project APM Joint Risk and Portfolio Management event
Overall CIFTER Risk Complexity Score:
Recommended PM Role to Lead Project :
CIFTER Factor 1 2 3 4 Comments
1 Stability of the overall project context.
Very
high High Moderate Low
2
Number of distinct methods and
approaches involved in performing the
project Low Moderate High
Very
high
3
Magnitude of legal, social, or
environmental implications from
performing the project. Low Moderate High
Very
high
4
Overall expected financial impact
(positive or negative) on the project's
stakeholders. Low Moderate High
Very
high
5
Strategic importance of the project to the
organisation or organisations involved.
Very
low Low Moderate High
6
Stakeholder cohesion regarding the
characteristics of the product of the
project. High Moderate Low Very low
7
Number and variety of interfaces between
project and other organisational entities.
Very
low Low Moderate High
Project APM Joint Risk and Portfolio Management event
Project Manager
Date 4th July 2013
Rating
7
14
21
28
Level
D
Level
C
Level
B
Level
A
CIFTERRating
PM Role recommended to lead Project
Project APM Joint Risk and Portfolio Management event
© 2013 Rolls-Royce plc

16. © 2013 Rolls-Royce plc
Applying Risk Factors in the Strategic Selection of
Portfolio Projects
 Workshop Project scenario
 The decanting and demolition of a multi-storey
building built in the 1960’s
- Building is nearing end of useful life, is
known to have asbestos and is located next
to main road
 Building occupied by approximately 330
people
- To create enough decanting space will
require nearly 600 other people moving
 Timescale for project - 6 months
 Project cost £0.5m, Cost Saving £0.75m