Futura is based on the Danish Lichtenberg Method, which is a structured approach to modelling the future which enables decisions and plans to be made with a greatly enhanced understanding of the key issues, assumptions and risks that are involved. The original concept was developed by Professor Steen Lichtenberg at the Technical University in Copenhagen more than 20 years ago, and the approach is now widely used throughout Scandinavia, Northern Europe and farther afield for activities such as strategic planning, project control, costs and schedule risk assessments, and bid preparation.

Multidisciplinary analysis group

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.

The Qualitative Analysis stage is used to understand the unique ‘World’ of technical, people and commercial issues that are involved.

The Analysis Group first carries out a brainstorming exercise in order to establish the issues. These issues are then grouped under various categories, each of which has a largely independent influence on the project. Typical categories include Skills & Know-how, Procurement, and Technical Aspects. Each Category of issues is then considered to determine the planning reference (Base Case) assumptions that are being made, and how these could vary both for better or worse. Simplified examples of how this Scenario Analysis is done are shown below:

The Quantitative Analysis stage which follows is first-of-all based on assumptions listed in the (green) Base Case scenario column. The potential impact of the opportunities and risks each side of the Base Case scenario are added afterwards.

Stage 2 – Quantitative Analysis

Two basic categories of model can be developed within the Futura software: time schedule analyses and cost-type analyses. Triple estimates are used to reflect the uncertainty of the different variables in the model.

The first stage of the Quantitative Analysis is based on the assumption that these overall planning references actually occur. The second stage adds the potential effects of the planning references varying from what has been assumed, for better or for worse:

Models are developed from a top-down perspective. The process begins with a relatively small number of activities or items which together cover the scope of the task. More are then added in order to break down the most uncertain aspects into more detail (this is known as Lichtenberg’s Successive Principle). Modelling in this way means that the best possible result can be achieved in the minimum possible time. An ‘Uncertainty Profile’ is calculated at each stage of model development, and this lists the principal contributors to overall uncertainty, in order of priority.

Quantitative Analysis Results

Mean value, most likely value

The quantitative analyses produce probability S-Curves for the overall results, together with Uncertainty Profiles of the principal causes of risk and uncertainty in priority:

S-curve

Uncertainty profile - Tornado diagram

Stage 3 – Action Planning and Risk Management

The third stage of the approach is to move from analysis to the agreement of Action Plans for Risk Management, using the Uncertainty Profile(s) as a guide. Experience shows that where an Analysis Group has worked together through the first two stages, there is considerable ‘buy-in’ to the results and clarity over what the key opportunities and risks actually are. Action Plans are a natural outcome.

Whilst a simple Action Plan may be sufficient, Futura also enables a more comprehensive approach to Risk Management which includes a simple risk management register in which activities can be planned and tracked.

Basic Requirements

The usual requirements for a Risk/Uncertainty Analysis workshop using Futura are:

• one or more trained facilitators
• a multi-disciplinary Analysis Group (max 10-15 persons)
• time: typically two or three days of group work
• equipment: laptop computer, LCD projector, standalone printer

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The process is led by one or more neutral facilitators. Selection of the participants in the Analysis Group is to obtain a suitably diverse range of disciplines and personality types.

The Futura software tool is used to capture ideas, underlying assumptions, issues and data ‘live’, and to build these into a comprehensive model of the project.

Benefits

When you choose top-down risk/uncertainty analysis using Futura, you are joining a family of clients and consultants who have benefited greatly from its use in a wide range of applications and industries. You become part of a story that has been unfolding for nearly twenty years – an approach with a proven track record.

This approach was described by Ericsson as the ‘Successful Principle’ in a recent International Futura User Group. It also described by an oil industry project manager as ‘the perfect approach to making those difficult discussions move forward to meaningful conclusions’.

Top-down risk assessment enables you to focus in on the strategic risks and uncertainties – those that could really hurt your business. It gives a clearer and more realistic picture than some other approaches because it includes significant ‘soft’ factors as well as more tangible risks and uncertainties.

Other benefits include:

• it’s not a ‘black box’ – although fairly simple, the approach still generates realistic results which can be turned into practical risk management activities
• analysis results are available on the day: no need to wait a week for them!
• there is a high level of ‘buy-in’ by participants: less chance that the results will be ignored
  improved overall view of the situation for management
• greater realism in plans and budgets
• clearer understanding of the major uncertainties and risks
• more focused risk management

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