Original Date: 08/07/1995
Revision Date: 01/18/2007
Best Practice : Risk Management
Lockheed Martin Tactical Aircraft Systems (LMTAS) has developed a risk management process to help program managers in such programs as the F-16 aircraft. This risk management process helps identify, quantify, evaluate, analyze, and manage in-house and contractor risks that, if unattended, could cause major program delays and higher costs.
LMTAS orients risk assessment around the product work breakdown structure (WBS). Risk consists of two components – the probability of failing to achieve a particular outcome and the consequence of failing to achieve that outcome. Each component is assigned a five-tiered risk rating (low, minor, moderate, significant, and high), and a Risk Scoring Matrix is developed (Figure 2-2) from the two risk components and the rating criteria. Risk assessment templates are prepared for each element of the WBS by identifying the risk drivers such as design maturity, producibility, process metrics, plans, resources, manpower, and funding. Each risk driver for each element of the WBS is plotted on the Risk Scoring Matrix. From this matrix, abatement (or risk prevention) activities are planned for high, moderate, and low risks, as required. A risk plan (a graph of risks versus time line) is made as a management tool to ensure that risks are being addressed in a timely manner.
This risk analysis process helps to clearly identify the best contractor, ensure the contractors are treated fairly, and provide substantial source selection justification in the event of a protest. A schedule risk analysis can also be plotted for each task relationship in the program to show sensitivity between program schedules and tasks. For highly interrelated task networks or a WBS with several elements, this method allows metrics to be used for decision making. Because of this decision-making process program, cost and schedule savings can be realized.
(Figure 2-2) Risk Scoring Matrix
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