Risk and Response

Brenda Crist, Managing DirectorLohfeld Consulting Group

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Agenda

1. Recognize Risks2. Be Aware of Risk Standards and

Frameworks3. Use Risk Management Processes

and Best Practices4. Use Risk Management Tools5. Address Risks Throughout the Bid Lifecycle6. Establish a Risk Management Policy

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Learning Objectives

• This presentation covers multiple topics required for accreditation training including:– Risk definition and recognition– How to establish and implement a proposal risk

management policy – How to escalate or own proposal risks

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Recognize Risks• Risks to your proposal management

(schedule, resources, equipment, process, communications, cost)

• Risks to your proposed solution (price, technical solution, past performance, management, past performance, personnel)

Both types of risks impact the win probability

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Not Addressing Risks……

Is like a snow ball rolling down the hill, it keeps getting bigger and bigger

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Group Discussion of Common Risks

• Little executive focus and dilution of resources away from business targets

• Lack of teamwork between operations, business development, capture, and proposals

• Inadequate proposal-related Knowledge Management (KM) processes and tools

• “Incumbentitis," "We Know Best," "We Know This Customer"

• Limited knowledge of the customer and competitors

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Leading Risk Standards and Frameworks• Project Management Institute • National Institute of Science

and Technology• International Organization for

Standardization (risk management ISO 31000)

• Other Resources

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Use Risk Management Process and Best Practices

Identify the Risk Document the Risk

Categorize and Prioritize the

Risk

Determine the Risk Cause

Solve or Escalate the Risk

Develop Plan A and Plan B for

Solving the Risk

Implement Solution

Monitor the Impact of the

Change

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Communications and Escalation

• Have a single Risk Register to document and manage risks

• Assign risk communications roles and responsibilities

• Identify and communication risks in the standup meeting

• Have a defined and efficient risk mitigation path leading to executives

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Quantitative Risk Assessment SampleRisk Title & Description

Resp Due Date

Cat. Rating Prob. Im-pact

Total Score

Mitigation Actions

Contingency Plan

Cost Risk

Insufficient funds to support the bid

ABC 5/31 Cost High .80 4 3.20 Find a partner to help share costs

Borrow money from the bank or an investor to fund the effort

Schedule Risk

Insufficient resources to complete work on time

BMC 6/1 Sched. Low .55 4 2.20 Borrow additional proposal staff from another division

Hire additional proposal staff or consultants

Risk score = Probability * ImpactRisk Score values are between 1-4 with 4 being the highest risk ) or red, yellow, green, blue Risk Probability values are between 0.1 (Remote Chance) -1.0 (Certain)Risk Impact values are between 1 (Insignificant) – 4 (Unable to meet objectives)

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Evaluate Your Pursuit Risk QUALITATIVE DECISION MODEL

Pursuit Decision Factors Color Scale Assessment

1. Strategic Fit Yellow2. Understand the Requirement Green 3. Right Solution Blue 4. Customer Advocacy Green5. Competition favorable Yellow6. Financial Objectives Yellow7. Pursuit Investment Red

Overall Assessment Yellow

Consider creating scorecards to monitor risks status

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Use Risk Management Tools• Risk management tools embedded with an

enterprise database products• Ticket management systems• Risk registers installed on

automated collaboration tools enabled with automated workflow

• Open source risk management tools• Risk management mobile apps

The tools will help record, track, and analyze risks

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Use Risk Symptom ChecklistsPursuit

Identification Phase

Solution Development

(Blue Team)

Competitive Analysis

(Black Hat Team)

Planning Phase(at Kick-Off)

Proposal strategy (Pink Team)

Final Document Development

(Red Team)

Business Case Review

(Gold Team)Production

Delivery Lessons Learned (White Team)

The Checklists Should Cover the Entire Business Development, Capture, and Proposal Life Cycle

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Conduct Testing and Contingency Planning

• Routinely test all production equipment and tools to verify they are in good working condition

• A good rule is to always have a primary risk mitigation plan (Plan A) and a contingency plan (Plan B) for all risks

Plan A

Plan BCONTINGENC

Y

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Address Risks Throughout the Bid Lifecycle

Pursuit Identification

Solution Development (Blue Team)

Competitive Analysis (Black Hat Team)

Planning Phase (at Kick-Off)

Proposal Strategy (Pink Team)

Final Document Development (Red Team)

Business CaseReview (Gold Team)

Production

Delivery

Lessons Learned (White Team)

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Pursuit Identification Phase RisksStrategic fit: • Program focuses outside of core

competencies • Limited past performance,

experience, processes, tools

Understanding of Customer Requirements and Objectives:• Lack of understanding about

customer requirements, objectives, budgets, and preferences

• Misaligned RFP requirements and customer objectives

Competition:• Unknown competition

Solution:• Technical solution ”wrong fit” for client• Limited experience in related work• Teaming partners unavailable• Lack of key personnel

Customer advocacy:• You don’t know customer; they don’t’

know you

Financial objectives:• Limited start-up investment, • Can’t wait for expected revenue and profits

Cost of pursuit affordability:• Unable to fund bid capture or proposal

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What Can You Do?

Avoid

• No strategic fit

• Cannot afford the bid

• No foreseeable solution for meeting the customer’s needs

Transfer• Obtain a

partner

• Establish a relationship with vendors

• Get a financial backer

• Hire proposal resources

Mitigate• Increase

understanding

• Obtain needed resources

• Improve solution

• Increase customer advocacy

Accept

• Your risk exposure after you have done everything to mitigate risks

• For example, accept knowledge of competitors and solution risk

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Solution Development (Blue Team) Risks• By the time the RFP arrives you should have:

– Ability to transition without impacting operations

– Identified your past performance and obtained the customer’s approval

– Clearly documented your understanding of the requirements

– Created a technical/mgt solution w/customer buy-in

– Identified labor categories/personnel – Drafted an executive summary and compelling win themes– Completed a realistic price to win

Early identification of risks mitigates issues and reduces costs during proposal development

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What Can You Do?

Avoid• No foreseeable

solution for meeting the customer’s needs

• Avoid CM issues during this phase by keeping all information under CM control

Transfer

• Obtain a partner

• Establish a relationship with vendors

• Hire subject matter experts

Mitigate• Increase

understanding

• Obtain needed resources

• Improve solution

• Reduce transition risks

• Find key personnel

Accept• The limitations

of your technical and management resources

• Skills and experience of key personnel

• Past performance relevance

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Competitive Analysis (Black Hat Team) Risks

1. Misunderstanding your strengths, weakness, opportunities and threats

2. Misunderstanding of the competition’s strengths, weakness, opportunities and threats

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What Can You Do?

Avoid• Pull the bid if

your competitor’s advantage is overwhelming

Transfer• Continue

conducting research to increase SWOT knowledge; hire help if needed

• Partner to minimize competitor advantages

Mitigate• Identify

counter-measures to mitigate weaknesses

• Use traditional competitor advantages like lower price and innovations to help unseat an incumbent

Accept• Accept your

limitations and ghost the competition ‘s vulnerabilities whenever possible

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Proposal Strategy (Pink Team) Risks• Solution Risks– Limited executive support for

proposal strategy– Unconvincing proposal strategy– Critical information is missing

• Proposal Risks– Roles and responsibilities are not clearly defined – Cumbersome strategy development process– Insufficient resources for writing and reviewing– Proposal strategy not effectively communicated

vertically and horizontally across the organization

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What Can You Do?

•Mitigate solution (Blue Team) risks early•Obtain sufficient resources, tools, and supportAvoid•Escalate strategy risks to early to the appropriate sources•Ensure executive support for early resolutionTransfer•Verify the proposal strategy flows horizontally/vertically•Determine how to close information/strategy gapsMitigate•Accept strategy limitations that do not significantly impact the win probability or proposal management Accept

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Final Document Development/Review (Red Team)

• Final Document Solution Risk– Insufficient understanding – Incomplete tech/mgt solution– Missing information/resumes

• Final Document Proposal Management Risks– Non-compliance w/RFP requirements/instructions– Insufficient review time– Intelligible comments from review team

This is where the snow ball-size risks become an avalanche if not been addressed previously

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What Can You Do?Avoid

• Ensure all risks identified in the Pink Team are mitigated• Ensure sufficient time for review and recovery

Transfer

• Transfer risks identified during the proposal review to the appropriate source and ensure executive support

Mitigate

• Fill solution, past performance, personnel, and management deficiencies quickly• Obtain sufficient resources for final document recovery; do not impact the production and delivery schedule

Accept

• By the end of the Red Team , time is limited for making substantive changes• Implement agile proposal /risk management solutions to facilitate risk mitigation

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Production and Delivery Risks• Inadequate production and

delivery planning resulting in errors or a late proposal

• Insufficient time for production and delivery resulting in quality or compliance errors

• Single points of failure• Configuration control problems resulting in the wrong

proposal/sections being delivered• Security risks resulting in virus-infected files or inadvertent

release of the proposal

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What Can You Do?

Avoid• Plan production and delivery early (after

kick-off)• Acquire sufficient resources and backups

Transfer• Notify executives of risks early and obtain

mitigation solution • Hire help if needed (printers, couriers, etc.)

Mitigate •Prepare primary and backup contingency plans •Eliminate single points of failure and test equipment

Accept •Comply with all production and delivery instructions from the customer

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Lessons Learned (White Team) Risks• Not supported or scheduled

by executives• No method for using findings to

improve processes, tools or resources

• Insufficient access to lessonslearned

Always conduct a lessons learned review session it is one of the best methods of ensuring risks do not happen twice

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Create a Risk Management Policy

• Define risk mitigation and escalation procedures

• Promote accountability by assigning roles and responsibilities

• Raise the visibility of risks through defined escalation procedures

• Increase the likelihood schedules are met through specific risk mitigation actions

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Risk Management Policy Contents

• Risk Policy Elements– Roles and responsibilities– Communications– Risk identification– Risk impact assessment– Escalation process– Recommendations process– Approval process– Risk monitoring and testing– Lessons Learned

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Questions?

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Brenda CristPrincipal Consultant, Lohfeld Consulting Group, Inc.Creating Winning Proposals for Government Contractors

301-466-9566 (m)

bcrist@lohfeldconsulting.com

www.LohfeldConsulting.com

@Lohfeld

facebook.com/LohfeldConsulting

Contact Information

Copyright 2011 Lohfeld Consulting Group, Inc. All rights reserved.32