Prokonsult AS have had an ongoing working relationship for more than ten years. This contract will require facilitation of analysis’ all over Norway and possibly include help from our Swedish collagues.

Elements:

• The Qualitative Analysis Modules are an integrated suite of tools which enable issues to be captured, grouped into various categories and then analysed for Base Case assumptions and the related opportunities and risks.
• The Budget Module enables risk/uncertainty analyses of costs, budgets, profitability forecasts and the like.
• The Schedule Module enables risk/uncertainty analyses of logically-linked networks. Results are calculated using Monte Carlo simulation.
• The Risk Management Modules are an integrated set of tools/process for agreeing actions in response to the Analysis phase, developing plans (including completion dates, responsibilities, etc.), and then tracking progress.
• The Reports function enables the user to generate a complete output report, including the management graphics and bar-charts. The report is created in Word 2000 (or later). An HTML version can also be created for use in a project intranet site.
• The software includes comprehensive on-screen help, covering use of the tool as well as process methodology.

Thursday 10 May 2007 Erling Hjallen, leader of the Futura team in Norway, welcomed nearly 40 attendees from the Scandinavia and the UK to the Ingeniørenes Hus in downtown Oslo.

Petter Eiken, Executive Vice President at Skanska International held the keynote address

Keynote Address by Petter Eiken

Executive Vice President, Skanska International

Petter Eiken began by saying that his talk was based on 25 years of making mistakes and learning from them. He introduced Skanska, which is now the second largest construction contractor in the world. He described the serious problems that the business encountered in the late 1990′s, and what has been done since then to improve performance and business practices in every area of the business. Skanska’s business is now based upon ‘Four Zeros’ no ‘loser’ projects, no breaches in business ethics, no accidents, and no environmental breaches.

A key part of Skanska business planning is the Operational Risk Assessment Process (ORA), a fairly simple but practical approach which is applied to all projects. The amount of work involved depends on project size, geographical location, contracting arrangements and so on, but the outcome is always a listing of the top five risks, assessed by probability and potential impact. A comprehensive risk scan is undertaken, covering resource availability, technical risk, client and contractual risk, cost escalation risk, project financing, environmental risks and external social/stakeholder issues. A traffic light diagram is used to summarise the results (green, amber, red). Use of the ORA process has resulted in greatly improved financial performance since it was introduced in 2003.

Another key area inside Skanska has been safety performance, and although improvement is still necessary, he said that the number of fatalities had reduced significantly down by more than 80% since 1992. Skanska has learned a great deal from customer safety requirements, especially from the oil industry. He quoted one incident where an uncontrolled blast forced the shutdown of a site for a week he said that a 2000-strong workforce doing nothing for that amount of time certainly focused the mind!

As for environmental risk, Skanska is moving from ‘avoiding environmental accidents’ to ‘doing operations in an environmentally-friendly way’. Ethical business practice is also a key target. Skanska has left a number of regions and country markets since it has proved impossible to work there in a corruption-free way. He noted that incidents of bad practice during the 1990s were still affecting the business today.

Remedying defects has been a considerable problem in the past, especially in the house building sector. ‘Zero defects’ is to become the fifth Skanska ‘Zero’ from 2008.

Petter then discussed the management culture change that underlies the progress that has been made ‘a great boss is passionate about people’. The new management style at Skanska is all about setting clear expectations, communication, teamwork, coaching rather than directing, listening and meeting with subordinates.

Receives his thank you gift

Use of Futura from Start to Finish Experience

RGA Project Per Øystein Funderud (RGA) and Geir Frones (Futura)

Per Øystein Funderud from RGA Project

The first Lichtenberg Method analysis indicated that the original completion date was very optimistic. The pipeline route was the major uncertainty, and this was actually correct – a year later, the Board decided to change the route.

Although the schedule became six months longer as a result, about 1.9 million was saved by this change.

The first cost analysis showed that the original budget had a 60% chance of being exceeded. The plans were therefore revised, and as a result the Project is now being delivered about 12% (about 7 million) below the initial budget. To sum up – these uncertainty analyses have really helped to steer the project towards a successful
conclusion.

Per Funderud also said that regular use of the Method helped to ensure that all the project participants were aligned and moving in the same direction.

Using Futura in the Oil & Gas industry a Personal Perspective

Peter Adlington (Futura)

Peter Adlington has been using the Method on a wide range of oil and gas projects for about 15 years. He explained where the Method is used and why it fits so well, before going on to illustrate some of the very significant ‘overall influences’ which currently make cost and schedule prediction so difficult. He illustrated this with examples taken from projects in Canada and the Russian Federation. He said that the situation was worst for very large projects, where many factors come into play. Among these are the very high level of technical and system-wide complexity; pressure to achieve ‘first oil’ as early as possible due to the huge level of investment; hostile, remote environments with limited infrastructure; the likelihood of political interference; considerable interest from environmental groups and other NGOs; stringent lender requirements; complex partnering and contracting approaches; and the international nature of the work (exchange rates, multi-national workforces, etc). He noted that very large projects often appear to overwhelm the abilities of even the best qualified organisations.

He went on to share some keys for getting the best outcomes from an Uncertainty Analysis (proper preparation, active client sponsorship, quality of the analysis group) and some of his worst experiences, especially having to work with very large groups.

He concluded that even with massive oil and gas projects, there is a place for a top-down approach which captures and highlights the key uncertainties. This does not replace the huge amount of detailed cost and planning work that has to be carried out, but it often gives a clearer picture of the overall situation. Given the current state of the market, previous cost and schedule data can be very unreliable guides, so there is an even greater need to carry out uncertainty analyses the Method is excellent for this since much of the current levels of uncertainty is due to
‘overall influences’.

Preview of the 2007 Futura Nova Maintenance Release

Pekka Pajuoja and Peter Adlington, Futura

The 2007 maintenance release will be available in early June 2007. A number of minor improvements have been made throughout the program, as well as the addition of two error-prevention checks in the schedule modelling module. There are two challenges relating to operating systems which will addressed in a major software release later in the year. These relate to the use of Futura Nova without Administrator rights in the latest versions of Windows XP Service Release 2, and the need to make the software fully compatible with Windows Vista and Office 2007.

Visit to the Nobel Peace Centre and Conference Dinner

At the end of Thursday afternoon’s proceedings, the Conference delegates were given a guided tour of the nearby Nobel Peace Centre, before enjoying an evening meal in the delightful surroundings of the Christiania Restaurant, a stone’s throw from the Norwegian Parliament. See pictures at the end of this article.

Friday 11 May 2007

The second day of the Conference was more interactive in nature, but it began with a brief talk by Halvor Stormoen about the increasing requirements for companies to identify and manage risk.

He noted that Senior Management can use the Method for the practical elimination of unpleasant surprises (e.g., overruns or delays); risk-assessed corporate budgeting and planning; greater certainty that key issues are being identified and actioned; support for corporate contingency and risk management; and for cancelling
loss-making projects in due time.

For Sales and Marketing, the approach can be used for sales budgeting and planning; consideration of opportunities as well as risks in competitive situations; and for bid preparation and development. Finally, for Project Managers, the approach can be used for project start-ups; development of realistic plans and budgets; reduction of cost or project duration during project implementation; and for creative problem solving and team building.

Halvor noted that in the move to more decentralised organisations, the approach can also be used to communicate between different parts of the organisation. There is also a trend towards analysing companies and public sector organisations rather than simply concentrating on projects. He has successfully applied the Method to company valuations. In general, use of the Method can be a key way for managements to demonstrate that they truly are addressing and managing risk.

This mirrors the Basel II requirements for the banking sector, where their clients now have to assessed for credit risk.

Friday Workshop Sessions

Workshop 1 about ‘How to become a good Facilitator’ was led by Thomas Lillskogen of Futura. Thomas gave a comprehensive presentation about how he prepares for and facilitates Uncertainty Analysis workshops using the Method, with particular reference to schedule analyses. He noted that a good workshop introduction is particularly essential for newcomers to the Method, and that it is very important that people fully understand the concept of ‘overall influences’ on the Base Case result when building the quantitative models.

Workshop 2 was led by Patric Östring from Saab Aero Systems on ‘How to keep the Method alive’. Saab uses the Method and Futura Nova software internally, but the organisation has struggled to keep its use going since 2000, both in terms of the demand for analyses and the loss of facilitator competence after a number of trained individuals had moved on. Workshop participants discussed the reasons for this, using the why?…why?… approach to identify the root causes. Solutions were then discussed using how?…how?…

Talks by Steen Lichtenberg

Before lunch, Steen Lichtenberg and Anker Schrøder spoke about their ongoing work for the Danish Roads Directorate, where they have facilitated 72 cost analyses over a period of four years. (Their work was described in more detail at the 2005 conference in Cambridge.)

Projects which have had more than one analysis were plotted on a graphic which showed the variance in mean cost over time. Although the sample was currently fairly small (around 12 projects), they were satisfied to see that the majority of the results lay within +/- one standard deviation of the original prognosis. Major changes to project scopes were not included in these results.

A fast-track process has been developed which enables each analysis to be carried out in just one day. The uncertainties are assessed via overall influences on the estimated base cost, which is not assessed in detail. Instead, a base cost accuracy range is included in the model. Two results for each project are given to senior management one without the major exclusions, and second one with them included.

After lunch, Steen shared his thoughts about the future use of the Method. He was concerned that alternative approaches which were too simplistic/primitive could come to dominate the risk assessment ‘market’ at the expense of the Method. He was very keen to see a more proactive approach to marketing the Method at conferences and similar events.

Ten Minute Case Studies

Case Study 1 – Banverket
Ove Bucht from Svenska Banverket gave a short presentation about use of the Method at the his organisation, which runs the railway infrastructure in Sweden. With an investment budget of 11.7 billion Euros to be spent between 2004 and 2015, there is considerable risk to understand and manage. In the past, Banverket has been publicly criticised for producing unreliable cost estimates, and use of the Method is aimed to address this problem.

In a wide-ranging assessment of use of the Method over the last two years, Ove Bucht highlighted some interesting points:

a light version is used to review cost estimates for all projects in the Future Plan. There have been positive reactions from participants; it is seen as a valuable opportunity to discuss and to synchronise the overall picture of the project, to discuss the overall conditions, etc.

However, costs have generally gone up approximately 20% from 2004, partly due to market factors benefits have included the generation of a unified picture of a project and a good overview of the costs. It gives a common understanding of the effects of overall influences and their effect on cost, and a good picture of where the greatest uncertainties lie. It is also a good basis for discussion and creation of action plans concerns have been expressed about the reliability of an estimate where workshop participants have limited or no knowledge of costs. There is a concern that risks are being ‘double-counted’ once overall influences have been added. It has been found that the Method tends to increase the forecasted costs, and there have also been difficulties in getting good estimates of minimum and maximum values the facilitator must therefore give a good introduction to the Method as well as having a good knowledge of the type of business involved. The selection of participants is also very important, of course. Ove Bucht went on to say that computer-based supporting software is a necessity outstanding issues include the use 1/99 versus 10/90 for the minimum and maximum values in the triple estimates; the potential use of a checklist for overall conditions; use of the Method in project economic forecasts; use of the Method for schedule risk analysis and the potential effect of costs; and the pros and cons of using internal vs external facilitators

Case Study 2

Mats Persson from Futura (Sweden) gave some warnings about the misuse of the Method. He said that the Method enables the user to see and understand a situation as a whole, and that it is a mistake to extract particular details from the model and to view them as ‘accurate’. This is because the overall results are valid, not individual line items, activities or sub-sections inside the model. He has seen detailed parts of a Futura model extracted, transferred to a spreadsheet and then misused no account was taken of the Base Case assumptions, nor of the wider overall influences which related to them.

Case Study 3 – Insurance Risk Assessment Study

Peter Adlington gave a short presentation about the use of the Method for an Insurance Risk Assessment Study for a geothermal power plant in Iceland. The three day event involved a site visit and briefing for Workshop participants on the first day, followed by a two day workshop in which the qualitative analysis stage of the Method was used, followed by an Excel-based assessment of the 35 key risks arising from the Scenario Analysis. The assessment involved discussing mitigating strategies, the maximum level of financial exposure, the insurability of each risk, and then what the lead insurance category might be if a risk is potentially insurable.

Hot Tips, Predictions vs Outcomes, and ‘Ask the Experts’

Towards the end of the Conference, participants spent 30 minutes sharing their ‘hot tips’ about the use of the Method and the Futura Nova software tool. This was followed by some sharing about how the actual outcomes of analyses had matched the original prognoses.

The final plenary session was ‘Ask the Experts’. Two topics were discussed. The first concerned the presentation of different analysis results for a project over time, and the second was a question to Steen Lichtenberg regarding the correct modelling of overall influences in schedule models (the so-called ‘shadow effect’ of time being added in series from the different overall influences).

The combination of an enjoyable Conference and a satisfying Friday lunch at the Ingeniørenes Hus brought smiles to everyone’s faces.

Some pictures:

Keynote Address – ‘Tipping Risk over the Edge’

Johann Meeke (Willis)

Johann Meeke from Willis

He went on to say that risk is a practical thing. Life is always reminding us that events can progress in an unanticipated manner. We can theorise – yet ultimately the clock ticks and things happen. It was John Lennon who said “Life is what happens to you when you are busy doing other things”. Chaos often seems to describe how events unfold. Yet even in chaos we must manage events. A business has to consider the risk continuum stretching to the future – not just to a finite point in time. The most common view of risk is probabilistic. What is the likelihood of the event happening? I f it is very likely, we need to keep it in mind. If very unlikely, then we can maybe put it to one side. But how does the CEO of a major company determine which event, out of the millions that could happen, will cause the greatest threat to its survival?

Johann said that the Lichtenberg Method really helps to identify the key areas of concern, and the multi-disciplinary approach helps to connect people into the risk debate. The key thing is make risk management ‘live’ inside an organisation, to make it ingrained rather than peripheral to everyday management.

Use of the Futura Approach to improve Project Development Processes in an Oil Company

Tom Harding (OMV)

Tom Harding from OMV

Tom described the project development process that is used by OMV, especially the key role that Futura uncertainty analysis plays in the phases up to sanction (when the Board decides to fund the project through to completion). With illustrations taken from projects in Austria, Tunisia, Venezuela, Austria, Libya and New Zealand, he illustrated how the Futura approach has been used in a variety of different ways. One of the Futura workshops only used the qualitative approach to assess the risks at a certain decision gate. This was then followed by prioritisation of the risks that were identified using a Boston Grid.

Another workshop related to operational safety, and yet another was used to identify and discuss lessons learned after a project had been completed. Other Futura workshops which were required as part of the mandatory decision gate process involved quantitative modelling of schedules and costs as well as the usual qualitative analysis stage. In one such case where OMV had a minority shareholding in the project, Tom’s Futura workshop so impressed the oil company which was operating the project that it purchase a Futura Nova software licence!

Conference Dinner

Futura
Conference Dinner 2005

Delegates enjoyed a candlelit dinner in the ancient dining hall of Magdalene College after a brief tour of the historic centre of Cambridge aboard an open-top bus.

Friday 15 April 2005

Futura Nova – What’s New for 2005?

The Friday sessions began with a talk by Peter Adlington and Pekka Pajuoja about the new features in the upcoming maintenance release of Futura Nova. These included:

• full installation compatibility with Windows XP
• much easier specification of budget items and factors
• resizable cells in the Scenario Analysis window
• ability to export Scenario Analysis risk and opportunity data for use in Third Party or spreadsheet-based risk and opportunity registers
• text files automatically created for S-curve and Uncertainty Profile data which enables the data to be used to create the equivalent graphs in, for example, Excel. These files are located in the relevant project directory.

A number of minor bugs fixes were also outlined.

Workshop – Getting the Best out of an Analysis Group

Workshop Futura conference 2005

• Meredith Belbin – team roles, management teams
• Ichac Adizes – personal styles (PAEI), corporate lifecycles, decision making in groups
• James Surowiecki – his book ‘The Wisdom of Crowds’

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Use of Futura Schedule Uncertainty Analysis at EuroControl

David Marten, Reynir Sigurdsson and Peter Adlington

David Marten (EuroControl)

David Marten began by explaining what Eurocontrol is, and that air traffic safety is crucial due to the rapid increase in the number of flights over Europe. There have been some wake-up calls in the recent past, including the aircraft collision at Linate airport in I taly in 2001 and a mid-air collision over Überlingen (Germany) in 2002. These events had resulted in the formation of an Action Group for ATM Safety (AGAS) in July 2002, comprising all the European States’ Air Traffic Management Regulators, Air Navigation Service Providers, Eurocontrol, Aircraft Operators ATC, and Airport & Airline Associations.

The subsequent report revealed that ATM Safety regulation & management frameworks were unevenly developed across Europe, and that leadership and commitment was lacking in some areas. Eight high priority areas had been identified, including safety-related human resources in ATM, Incident reporting and data sharing, runway safety, and the need to improve awareness of safety matters.

Use of Futura Schedule Uncertainty Analysis at EuroControl

The Strategy Safety Action Plan listed about 350 actions, and the Futura schedule analysis workshop aimed to get an understanding as to when the SSAP was likely to be completed, compared with the target date of 31 January 2006. The results from the three day workshop indicated that the P50 completion date was more like late 2009 that early 2006. David Marten then explained that the workshop had been a real help in developing a more realistic strategy. The SSAP had been rescheduled to make all timescales in the Work Breakdown Structure achievable, dependencies had been included, and some Work Packages had been moved into a follow-up programme.

David said that the main benefits of the Uncertainty Analysis were that an unbiased review of a complex programme had been carried out; the methodology gave results in a short timeframe; it provided an independent assessment of the SSAP Implementation Programme’s chance of success; it had allowed early corrective action to be taken where unrealistic timescales were identified, it had provided an independent risk assessment framework that drew on the expertise of stakeholders; and finally, it had given confidence to Stakeholders that their concerns were being addressed.

Development of a ‘Fast-Track’ Futura Cost Uncertainty Analysis process at
the Danish Roads Directorate

Steen Lichtenberg and Anker Schrøder (Futura)

Steen Lichtenberg and Anker Schrøder

The Qualitative Analysis is based on nine categories of issues: weather; politics and legislation; market trends and prices; local/environmental factors; DRD and consultants; design and project development; tenders and execution; background data and miscellaneous factors; analysis-related uncertainty (evaluation biases, statistical dependencies).

The cost modelling is based around the uncertainties relating to the nine overall influence categories plus a single factor to reflect the uncertainty associated with the base cost itself. In order to save time at the calculation stage, the participants are asked to fill in a composite form which sets out all the individual assessments for each overall influence.

Thorough preparations are required prior to each analysis. Drafts of material for the analysis are given to participants ahead of time, any previous analyses are reviewed, and a complete set of forms to be used in the analysis is prepared. The calculation model in Futura Nova is also populated before the session with the numerical values of the base estimates.

The response to these risk analyses has been generally positive. The DRD participants overcame diary problems and faithfully attended the workshops, notwithstanding journeys of 3-4 hours both ways in many cases.

At this point in time it is hard to tell how successful this approach has been, but none of the results of ten updating analyses has exceeded the original mean value +/- one standard deviation.

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Futura conference participants 2005

The Conference received a high level of positive feedback, both for the conference
content and for the excellent facilities offered at the Möller Centre.

Download this report as PDF

Thursday 25 September 2003

Lorens Borg, practice leader for Futura’s work in Sweden, welcomed about 40 participants to the 2003 User Meeting. His advice to the conference was to discuss the challenging topics, not just the usual advantages of Futura method that most people are already familiar with.

One of the hosts, Carl Mellander, presented an introductory overview of Saab and SaabTech, a corporation with a 16 000 workforce which is responsible for well-known projects like the JAS Gripen fighter aircraft, the NH90 helicopter and Cetris.

Pekka Pere from Finland then gave a short welcome address on behalf of the Futura One mother company, Proha.

Peter Adlington, MD of Futura International, reviewed our 10 years. He began by describing the early years and illustrated how the Futura Group has grown since then. Today, the Futura software is used in many countries around the world, including Malaysia, Australia, the USA and India. He also announced the release of
the latest version the Futura Nova software (v2.0). New features include improvements to the schedule analysis program, storing the graph setup information, and the addition of a security key. As for the next 10 years, Futura will be active in adding new consultants and organisations to the Group, as well as establishing
representation in more countries. Customer-centred software development will continue. Peter ended his presentation by thanking everybody, especially the customers, for the first 10 years.

Keynote Address: ‘Does the CEO want to know the truth?’

Roger Sprimont, former Executive VP of Celsius

‘Does a CEO want to know the truth?’ The question is a very challenging one and has many sides to it. The answer is not simple – the question in fact consists of many aspects: what is the truth, who possesses the truth, can the truth be hidden, who wants to hide the truth, who wants to know the truth, who is responsible for the truth, when is the moment of truth?

One of the conclusions was that in the end the CEO definitely is responsible for the truth, but that not all CEO’s really want to know it. Roger claimed that Lichtenberg Method always reveals more truth since it provides
better understanding of the project and encourages people to speak out who would normally remain silent. However, it can sometimes be difficult to communicate the outcome of an analysis to people who have not participated the session. There is therefore a heavy responsibility on senior management who have participated in the analysis to see the action plans carried through.

According to Roger, the worst enemy of all is the problem of positive and negative prestige. It can often be best if the customer and the contractor work together in a joint analysis if both sides are prepared to do so. Roger ended his address with some comments about the actions plans that result from an analysis. He noted that ‘most companies have many more unsuccessful action plans that they have successful ones. In my opinion, the reason is that most action plans are either too ambitious or totally unrealistic’. This is because if you quantify resources, time and costs for each action in the plan, the sum of it all is very often an unpleasant surprise. Realism is essential.

Futura conference participants 2003

Conference Dinner

The Conference Dinner took place at the famous Wallmans Salonger in downtown Stockholm, where we enjoyed good food, good company and four hours of excellent entertainment.

Friday 26 September 2003

The second conference day was a very interactive one, and it included two workshops for small groups with plenary feedback sessions.

The first workshop looked at different aspects of the Key Note address given by Roger Sprimont.

Carl-Johan Koivisto

Users have to understand the data they are being given and be able to use it. Simulation is therefore very important. Connections between different national systems have to be possible for international operations like NATO and the UN. Within such a very complex system, major risk areas include:

• Date security
• Complexity (nobody can understand the whole system)
• Validation and certification
• Integration
• Transmission

One of the main conclusions was that the network society is here, and network solutions will dominate future defence designs. Operational and technical integrations present major challenges.

Erling Hjallen from Futura then shared some ‘New Ideas about the Process for a Successive Analysis’. His talk was based on the outcome of the May 2003 meeting of Futura Consultants in Copenhagen. New ideas were presented on how to make better schedule analyses, how to make better triple estimates, how to use the Method to handle different types of uncertainty (e.g., ‘either-or’ situations), and how to develop better action plans. These ideas were then discussed in small group workshops after an excellent lunch in the SaabTech canteen.

The final presentation of the Conference was given by Johnny Tedenfors from Sagus AB and Mats Persson from Futura. Their presentation concerned the WILMA project, which is an information system for handling immigration cases in Sweden (Web-based Information System Linking Migration Authorities). WILMA is a joint project involving a number of users, each with differing needs, but all using a common information database (e.g., various embassies abroad, the Police, the Migration Board and the Aliens Appeals Board).

Many goals had been set: shorter processing time for applications, reduced costs, enhanced legal fairness, etc. PROPS and MiniRisk had been used for planning. A Futura analysis was carried out just before the first roll-out in order to secure delivery of WILMA within time and budget. The conclusion was that the available project duration of 28 weeks to get WILMA up and running at the first embassy site could only be achieved if certain recommended actions were immediately carried out.

These were implemented, and a successful result was achieved. WILMA has now been rolled out to more than 20 embassies and the project continues to expand.

Johnny and Mats highlighted one key success factor: that the project Steering Group should be trained in order to fully understand the results of the Futura analysis. This comment led to an impromptu discussion about the role of Steering Groups. Another discussion topic was how to handle the results of an Uncertainty Analysis in different organisational and national cultures.

In parallel to the main afternoon sessions, Thomas Lillskogen gave an introductory talk to a number delegates who wanted a more formal explanation of the approach and Method. It was nice welcome quite a few ‘newcomers’ to the Conference.

Futura conference participants 2003

The Conference ended with a Final plenary session. Last, but not least, we especially want to thank Udo Siegert and SaabTech for inviting us to hold the User Meeting at the excellent conference facilities at Järfalla. It was a truly memorable occasion.

The Year 2002 Futura User Meeting was held at the Gresham Hotel in central Dublin. It was attended by around 25 delegates from Scandinavia, the UK, Europe and Australia, representing a diverse range of industries as well as the public sector.

We maintained our tradition of focusing on ‘green issues’ as a key part of risk management, with Halvor Stormoen giving an introductory presentation about sustainable development. Halvor has considerable experience of the subject. Amongst other things, he was involved as an advisor to the Norwegian delegation at the 2002 Earth Summit in Johannesburg. The key challenge is how to develop projects which are sustainable in an environmental sense but which are still economic in a financial sense. Feedback from our small group discussions showed that sustainable development generally receives less priority than it deserves.

This year’s Conference included a number of ‘Snapshot’ presentations which gave a brief insight into a number of projects and experiences of the Method.

• Thomas Lillskogen from Futura presented the outcomes of two projects that had been analysed using the Method. In one case the analysis was sponsored by senior management, and in the other it was sponsored by a deputy project manager. In the first project the results were accepted and acted upon and a successful outcome came about. In the second case the results were rejected by senior management with serious consequences – the project overran by nearly three years!
• Arne Bjørn outlined how the method is being adopted in the Norwegian Defence Estates Agency (NDEA). Norwegian law now requires all public procurement projects with a capital investment value of more than 70 million Euros to be risk-analysed by an independent body before approval. Within NDEA, all projects costing 3.5 million Euros or more are assessed internally by Futura-trained facilitators.
• Gunnar Bohlin from Semcon Project Management AB gave an overview of his insights from applying the Method at Ericsson over many years. He stressed the benefits of developing a common understanding of a project, the need to be proactive in managing and mitigating the greatest uncertainties, and how the Method has enabled goals, budget and timescales to be met.
• Leif Gyllsdorff from IT consultant Guide Integration outlined his ideas about applying the Method to IT Systems Management Projects. Taking Problem Management as a typical example, he illustrated how the use of a Futura schedule uncertainty analysis can focus minds onto the key issues that are involved.

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Steen Lichtenbergs presentation

Steen Lichtenberg began the second day of the Conference by outlining how he and Lorens Borg from Futura have been assisting the Swedish Nuclear Power Inspectorate (SKI) with developing a more sophisticated way of planning for the financing of nuclear power station decommissioning. Funds are built up via a levy (fee per unit of electricity produced), and the question is – how much should this levy be?

A new procedure has been developed using the Lichtenberg Method which enables the many complex uncertainties to be modeled. These include uncertainties over how long production will last, what annual production will actually be, how much decommissioning will cost, and when it will actually be carried out. In addition, there is uncertainty over the rate that invested existing funds will grow, and also what discount rates to use for calculating Net Present Values (NPVs). Considerable care has also been taken to ensure that the Analysis Group involved will be a balanced one. Steen outlined the structure of the model that has been developed, and illustrated it with a simplified example.

The Conference also included two small group sessions – one about keys to effective preparation for a workshop, and the other about how an uncertainty analysis could be ‘fast-tracked’ in order to take up less time.

Finally, delegates were told that Futura International has recently changed its name to Futura One Oy. With this will come a new corporate identity, including a new logo:

Introduction

The 2001 Futura International User Group Meeting was held in Bergen, Norway’s second city. Attended by a total of 26 delegates including Professor Steen Lichtenberg, the Meeting took place at the Golden Tulip Bergen Airport Hotel. The Conference Dinner on the Thursday evening was at the Fløyen restaurant, which is accessed from the centre of Bergen by a steep funicular railway. The weather was kind to us, and we had a splendid night time view over the city, from an elevation of about 300 metres’

The User Meeting began with an introductory address by Peter Adlington, Managing Director of Futura International. He noted that the past year has been a particularly significant one:

Futura International has recently signed an agreement with Aon Risk Consulting for the provision of software and services based on the Futura approach the new software tool, Futura Nova, was launched in the summer. Delegates were each given a CD which contained a short 15 minute demonstration movie about the tool and the Lichtenberg Method the Futura International web site has been completely updated

Review of the Futura Nova Software Tool

The afternoon of Thursday 18 October began with a short review of users’ initial experiences with Futura Nova. There was strong agreement that it is a considerable improvement over the previous tool (Futura v3.0). Installation is very easy and reliable, the user interface is greatly improved, and the tool is robust and reliable. The current version is a stand-alone tool, but an Oracle version is also being developed. Users were advised to make more use of the comprehensive on-screen help, and they were also reminded that a PDF file of the Installation and Quick Start Guide is included in the ..\Documentation sub-directory of Futura Nova.

It was agreed that users who wish to report software-related issues should initially contact with their local Futura representative.

Key Note Address: Our Environment and its Protection: Project Uncertainties Seen from the “Green Side”

Kurt Oddekalv - keynote speaker

Kurt Oddekalv is Norway’s original ‘green warrior’. After starting virtually on his own in 1993, he now heads up an influential organisation which is staffed by qualified scientists and environmentalists. Norges miljøvern-forbund has helped to persuade many Norwegian companies change their attitude to the environment.

In 1993, about 70% of the organisation’s time was spent protesting and checking-up on companies and incidents. The remaining 30% was spent on teaching/educating about environmental issues. Today these proportions have been reversed – a real success story. The organisation now runs a conference centre, and it also has a diverse range of activities, including a materials recycling business. In addition, it is about to complete an office block in Bergen which is made of second-hand materials – the first of its kind in Norway.

Kurt Oddekalv covered a wide range of issues during a hard-hitting, humorous and provocative talk. He said that we have learned a lot about the environment in the past few years – but now is the time to act. Kurt has very little time for ‘environmental idealists’ who can sometimes push environmental aspects so strongly that otherwise worthwhile projects get cancelled on economic grounds. Instead, he promotes a more pragmatic approach, in which environmentalists are ‘realistic idealists’.

Case Study: Use of the Successive Principle in Changing World

Peter Klemsdal, Managing Director, Umoe Mandal

Umoe Mandal is a Norwegian defence contractor which manufactures GRP vessels for mine-hunting and naval patrols. Peter Klemsdal explained that the Successive Principle has been used for schedule and cost risk analyses since 1994. He was therefore able to give a most interesting ‘long view’ of the benefits of the Method and how accurate the quantitative predictions have been compared to the actual results.

Peter Klemsdal discussed two cost analyses and one schedule analysis using the Successive Principle which had been made in 1994/95. The 50/50 (mean) results from the cost analyses were 2% above the actual out-turn cost, and the schedule analysis result was 5% longer than the actual time taken. He was very satisfied with this accuracy, especially since the projects were of such long duration (> 5 years). Significant effort had been devoted to managing the key risks and uncertainties that were highlighted during the analyses.

Peter believed that the inclusion of Overall Influences into the quantitative models is probably the most important feature of the Method (i.e., aspects such as technological change, supplier performance, customer influences and the quality of project management). Bottom-up estimating in the normal way is relatively easy, but, he said, unfortunately two-thirds of the uncertainty sometimes comes from Overall Influences, which are not in the estimating manual. In a changing world where there are rapid technology shifts (especially in IT hardware and software) and rapid organisational change (e.g., globalisation, rationalisation), projects are more susceptible to Overall Influences. The Successive Principle is a proven tool to help our understanding of these factors.

In summing up, Peter Klemsdal suggested that risk evaluation strategies could include joint risk evaluation by the contractor and the purchaser, common cost/contingency sharing, and more flexible pricing formats (e.g., a combination of fixed-price and reimbursable elements).

Case Study: Uncertainty in Designing a Large Hospital Project

Tom Haugstad, C F Møllers Tegnestue (Architects)

Tom Haugstad works on project control for the New Central Hospital for Akershus Fylkeskommune near Oslo (Nytt Sentralsykehus I Akershus, or ‘Nye SiA’ for short). Nye SiA will be constructed on land adjacent to an existing hospital. It is due to be opened in Fall 2008. The project implementation group is unusual since it has been assembled by the customer, and not through a self-selecting alliance.

Tom described recent cost and schedule analyses that were made using the Successive Principle. He commented that was ‘quite scary’ how accurate the predictions had proved to be, especially the significance of political and client influences. The cost analysis had suggested that reduction in the overall concept would be required, and this has subsequently happened. The schedule analysis indicated that the current timescales were too short, and these have now been extended to close to the mean date that was predicted by the Uncertainty Analysis.

Like Peter Klemsdal before him, Tom felt that considerable benefit could have been gained by involving the client in the two day Uncertainty Analysis workshop. This would have helped to ensure that all parties develop a common understanding of the risks and pitfalls that the project faces, and it would then also be possible to develop a common risk management strategy.

Collaboration with Aon Risk Consulting

The Friday morning agenda for the User Meeting (19 October 2001) began with a short talk by John Moore from Aon Risk Consulting (London). John outlined the work of the worldwide Aon Group, and he explained how the recent agreement with Futura International for software and consultancy services fitted in. He also outlined the recent UK emphasis on ‘corporate governance’, whereby company directors are being held directly responsible for managing the risks in their companies (business/market risks, physical risks and human/organisational risks).

Software Demonstration: Artemis Portfolio Director

Pekka Pajuoja brought greetings from Futura International’s parent company, Proha plc. He outlined recent progress within Proha, especially the consolidation of Artemis Management Solutions into a single global entity. As Manager of new product development for international products, Pekka has recently been heavily involved in the development of a new management tool called Portfolio Director, and he gave a short demonstration of its capabilities.

Portfolio Director is a Web-based, enterprise-level software solution which is designed to improve executives’ ability to focus on strategically-relevant initiatives throughout the enterprise by providing a process that helps make well-reasoned management decisions. The software should foster more efficient collaboration among executives and department leaders, and allow companies to examine programs in terms of potential return on investment, allocation of resources and impact on other projects. With this strategic analysis, executives should be better able to identify resource-heavy programs, modify on-going projects, and maintain a more consistent focus on programs that support corporate objectives.

Small Group Workshops

The rest of the Friday agenda was devoted to small group workshops on the following topics:

• how to develop the Planning Reference scenario for an Uncertainty Analysis using Futura
• how to use the Method for planning/ranking a portfolio of products why do we find it so difficult to really face up to highly damaging future possibilities and begin to make sufficient preparation? For example, why did many foresee the current recession in various industrial sectors (e.g., telecomms), but did so little about it? In the light of the terrorist attacks on 11 September 2001, how can we better handle significant ‘either-or’ or force majeure events when carrying out Uncertainty Analyses using the Lichtenberg Method?

Feedback from Participants

Futura conference participants 2001

Feedback from those attending indicated a high level of satisfaction with the conference itself and with the hotel facilities. Once again, the chance to share ideas and experiences in a small group environment was particularly valued.

You are very welcome to join us next year!

• Concept development
• Profitability analysis
• Life cycle value
• Bid development and strategy
• Budgeting
• Estimating where detailed information is unavailable
• Checking the realism of “bottom up” detailed estimates and plans
• Schedule analysis
• Schedule or cost risk and contingency assessments
• Investment planning
• Team building workshops
• Overall project monitoring and control

If any of this is what you need, contact us for further information.

The Method involves an Analysis Group in a creative, multi-disciplinary process in which qualitative and quantitative data about the future are captured and modelled. The total ‘world’ of the task is considered – the task itself, the client organisation, the business environment; human issues, technical issues, commercial/financial issues. A ‘top-down’ philosophy helps to avoid unnecessary detail and enables the Group to develop the best possible result in the minimum time.