ECRI Sponsors Meeting London, England

Risk Management Maturity Modeling

Wednesday 8th December 2010 WWW.ECRIONLINE.ORG

© 2010 KBR, Inc.

Be careful what you ask for….you just might get it.

Image source bnet.com

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Agenda  Introductions.  Intent & Methodology.  Summary Results.  Key Findings.

© 2010 KBR, Inc.

 Next Steps.

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Intent & Methodology Intent: • Assess our maturity assumptions across the organization from the leadership level perspective. • Develop a survey to enable long term trending of PRM maturity. • Solicit open comments. • Identify potential areas of concern for further study.

© 2010 KBR, Inc.

• Identify potential areas of strength for further expansion.

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Intent & Methodology Methodology: • Adapted from an early work by HVR & Dr. Hillson. • Survey questions align to KBR PRM five step process. • Intranet survey distributed via link embedded in e-mail.

• Participant’s inputs were tracked by HR job levels & location. • Four available responses provided in random sequence, plus open comment field. • Results reported against the four risk management maturity model attributes: • Culture © 2010 KBR, Inc.

• Process • Experience • Application 5

Overview of Risk Management Attributes Culture: • Top-down commitment. • Level of policy acceptance. Process: • Nature of process applied to all projects and departments. Experience: • Level of understanding &/or training. • Learning from experience (Lessons Learned). Application:

• Availability of dedicated resources. • State or capability of available Risk Management tools / software. 6

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• Consistency of application.

Intent & Methodology Methodology for a Risk Management Maturity Model:

Culture Process Experience Application Subjective Survey

Objective Key Success Factors

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KBR PRM Five Steps

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Overview of Maturity Levels

Risk-based decision making at all levels using state-of-the-art tools. Risk Management part of routine business.

Unaware of the need for Risk Management.

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© 2010 KBR, Inc.

Experimenting with Risk Management.

Contributors by Location Count by Location 400

362 350

7,000+ surveys solicited 943 surveys returned 668 surveys fully completed

300

250 200 Count

150

(668 Total)

100

74 33

50

3

2

13

42

31 9

1

5

24 8

2

3

4

1

11

11

9

21

© 2010 KBR, Inc.

0

9

Contributors by Business Unit Count by Business Unit 79

76

80

67

70

75 66

60 50 40 30

44

41 33

32 27

28

27

24

19 20 10

9 10

4

6

2

Count (668 Total)

© 2010 KBR, Inc.

0

10

Contributors by Career Level Count by Career Level 400

367

350

300

250 195 200

Count (668 Total)

150

100

68

4

2

1

0 Manager

Sr. Manager

Director

Sr. Director

Vice President

11

Sr. Vice President

President

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50

Q10 Re: Underlying Attitude toward RMM 10. Prior to starting the questionnaire, what is your initial assessment of KBR’s Risk Management Maturity? The majority believe we are currently working within levels 2-3 with VPs being a slight exception.

60%

50%

40%

All 30%

VP Dir Mgr

20%

(% by Career Level) Where ALL is a Weighted Average.

0% Immature.

Somewhat Mature.

Promote and support concept.

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Best in Class.

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10%

RMM Survey Results 2010 - all Locations, all BUs, all Lvls 85.0%

80.0%

75.0%

70.0%

70.0%

70.0% 67.5%

65.0%

67.5%

Level

62.5%

60.0%

2.7

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

APPLICATION

Percentage Score by ATTRIBUTES

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OVERALL SCORE TOTALS

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50.0%

KBR Overall Maturity Level Assessment

2.7 Risk Management part of routine business.

© 2010 KBR, Inc.

Experimenting with Risk Management.

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RMM Survey Results 2010 all Locations, Hydrocarbons, all Lvls 85.0%

80.0%

75.0%

70.0%

70.0% 67.5%

65.0%

67.5%

66.9%

APPLICATION

OVERALL SCORE TOTALS

62.5%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

Percentage Score by ATTRIBUTES

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50.0%

RMM Survey Results 2010 all Locations, IGP, all Lvls 85.0%

80.0%

75.0%

70.0%

70.0%

70.0% 67.5%

65.0%

67.5%

62.5%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

APPLICATION

Percentage Score by ATTRIBUTES

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OVERALL SCORE TOTALS

© 2010 KBR, Inc.

50.0%

RMM Survey Results 2010 all Locations, Services, all Lvls 85.0%

80.0%

75.0%

70.0%

70.0%

70.0%

70.0%

69.4%

APPLICATION

OVERALL SCORE TOTALS

67.5%

65.0%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

Percentage Score by ATTRIBUTES

17

© 2010 KBR, Inc.

50.0%

RMM Survey Results 2010 all Locations, Commercial, all Lvls 85.0%

80.0%

75.0%

70.0%

72.5%

72.5%

72.5%

71.9%

APPLICATION

OVERALL SCORE TOTALS

70.0%

65.0%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

Percentage Score by ATTRIBUTES

18

© 2010 KBR, Inc.

50.0%

RMM Survey Results 2010 all Locations, Legal, all Lvls 85.0%

82.5%

80.0%

75.0%

75.0%

76.3%

75.0% 72.5%

70.0%

65.0%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

APPLICATION

Percentage Score by ATTRIBUTES

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OVERALL SCORE TOTALS

© 2010 KBR, Inc.

50.0%

RMM Survey Results 2010 all Locations, Administration, all Lvls 85.0%

80.0%

75.0%

70.0%

72.5% 70.0% 67.5%

65.0%

68.8%

65.0%

60.0%

55.0%

CULTURE

Indicative mark for all locations & all Bus.

PROCESS

EXPERIENCE

APPLICATION

Percentage Score by ATTRIBUTES

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OVERALL SCORE TOTALS

© 2010 KBR, Inc.

50.0%

Career Level Analysis Areas of concern: • Q11 Re: Underlying Attitude of Middle Management. • Q21 Re: Communication of Risk Strategy. • Q24 Re: Project Risk Management (PRM) Process Effectiveness. • Q33 Re: Interpretation of Monte Carlo results. • Q34 Re: Corporate Resource Allocation.

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• Q42 Re: Sharing of Project Risk Management Knowledge.

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Q11 Re: Underlying Attitude of Middle Management 11. Middle Management's Attitude to the Risk Management Process? 70%

60%

50%

40%

All VP

30%

Dir

(% by Career Level)

Mgr 20%

0% Immature.

Somewhat Mature.

Promote and support concept.

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Best in Class.

© 2010 KBR, Inc.

10%

Q21 Re: Communication of Risk Strategy. 21. Communication of Risk Strategy? 70% 60% 50%

All VP

40%

Dir Mgr

30%

(% by Career Level)

20% 10%

Little or ad hoc communication.

Communicated between departments occasionally

Communicated Communincate between whole individuals,proj., organization with dept. and org. feedback

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0%

Q24 Re: Project Risk Management Process Effectiveness. 24. Project Risk Management (PRM) Process Effectiveness? 70%

60%

50% All VP

40%

Dir Mgr

30%

(% by Career Level)

20%

0% Not effective.

Partially effective (Works in specific areas).

Consistently all levels of organization.

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Consistently all levels adapts proactively

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10%

Q33 Re: Interpretation of Monte Carlo results. 33. Ability to interpret Monte Carlo simulation results: 70

60

50

40

All VP

30

Dir

(% by Career Level)

Mgr

20

0 No ability.

Few partially understand.

Understands nature and implication of results.

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Understands with awareness of Risk Drivers.

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Q34 Re: Corporate Resource Allocation. 34. Corporate Resource Allocation: 50

45 40

35 30 All 25

VP

(% by Career Level)

Dir

20

Mgr

15 10

0 No planning or forecasting.

Limited resources and planning.

Consistent planning by dedicated resources.

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Dedicated resources avail at any time.

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Q42 Re: Sharing of Project Risk Management Knowledge 42. Sharing of Project Risk Management (PRM) Knowledge for the benefit of Future Projects? 70%

60% All

50%

VP Dir

40%

Mgr

(% by Career Level)

30%

20%

0% None.

Limited sharing of knowledge

Knowledge captured and shared

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Enterprise implementation shared learning.

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10%

Career Level Analysis Widest differences in opinion: • Q25 Re: Underlying Attitude toward the Level of Effort for PRM. • Q30 Re: Access to PRM resources.

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• Q41 Re: Quality of Reporting.

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Q25 Re: Underlying Attitude of Lvl of Effort for PRM 25. Time spent by the organization assessing risk from Operations, to PRC, to ERC, and to the Board. 60%

50%

40%

All 30%

VP

(% by Career Level)

Dir Mgr

20%

0% No time spent.

Too much or inconsistent.

Appropriate and consistent.

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Consistent and flexible or optimal.

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10%

Q30 Re: Access to PRM resources 30. Access to Qualified Staff in Organization.

80%

70% 60% 50% All 40%

VP

(% by Career Level)

Dir

30%

Mgr 20%

0% No access.

Inconsistent access.

Consistent access.

30

Academic / industry experts on call.

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10%

Q41 Re: Quality of Reporting 41. Quality of Reporting to Stakeholders. 60%

50%

40% All 30%

VP Dir

20%

(% by Career Level)

Mgr

0% None.

Not effective.

Stakeholders are made aware.

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Stakeholders access interactive risk reports.

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10%

Career Level Analysis Areas of strength: • Q13 Re: Underlying Attitude of Executive Management. • Q15 Re: Belief in the Value of Risk Management.

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• Q26 Re: Project Risk Management (PRM) Process, Durability.

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Q13 Re: Underlying Attitude of Executive Management 13. Executive Management's Attitude to the Risk Management Process? 70%

11. Middle Management's Attitude to the Risk Management 70% Process?

60%

50%

60%

40%

All VP

50%

30%

Dir Mgr

20%

40%

All VP

0% Immature.

Somewhat Mature.

30%

Promote and support concept.

Best in Class.

Dir

(% by Career Level)

Mgr 20%

10%

0% Unsupportive or hostile.

Passive support.

Promote and support concept.

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Actively champion.

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10%

Q15 Re: Belief in the Value of Risk Management. 15. Belief in the Value of Risk Management? 70%

60%

50% All 40%

VP Dir

30%

Mgr

(% by Career Level)

20%

0% Distraction

Limited

Adding value

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Primary to improve business

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10%

Q26 Re: Project Risk Management (PRM) Process, Durability. 26. Project Risk Management (PRM) Process, Durability? 70%

60%

50% All 40%

VP Dir

30%

Mgr

(% by Career Level)

20%

10%

Fails often.

Tried and tested.

Relevant to current Evolves to meet needs. changing needs of business.

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0%

Summary of key findings • Our initial Level 2-3 capability assumption is well founded. • Areas of concern:

1. Reporting to stakeholders. 2. Communication of project risk knowledge. 3. Ability to interpret Monte Carlo results. 4. Availability of resources and adequacy of planning to forecast risk. 5. Underlying attitude toward level of effort.

• Risk Management Process is durable & evolves.

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• Perception that executive management is a major champion is clear.

Next Steps? • PRM dept to further drill-down and understand results by Location, BU and contributor. (subjective) • PRM dept to conduct face to face interviews with selected respondents in order to:  Identify areas for process improvement.  Enhance stakeholder reporting needs. • Project level PRM process review will begin Q1 2011 against 20 Key Success Factor Risk Management Metrics. (objective)

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• Results of objective metrics are to be mapped against the 4 Risk Management Maturity Model Attributes for cross validation.

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Final Thoughts

What is the shortest word in the English language that contains the letters: abcdef?

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Answer: feedback.

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