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Of Interest

See archived entries


Managing risk in a first-of-a-kind project

The classic approach to project management is to group risks into three separate categories. The first consists of known risks, the second of unknown risks, and the third of unknowable risks, often referred to as the "unknown unknowns." This approach of classifying risks is used on most large projects—and ITER is no exception.

Known, unknown and unknowable ... project managers categorize risks as a way to devise the best strategy to plan for and mitigate when or if they materialize. ITER, as a first-of-a-kind project, is no exception. (Click to view larger version...)
Known, unknown and unknowable ... project managers categorize risks as a way to devise the best strategy to plan for and mitigate when or if they materialize. ITER, as a first-of-a-kind project, is no exception.
The easiest risks to manage are the known risks. When you have managed a project before, you know from experience what can go wrong. You know what to do to head the risks off early, and you know how to minimize damage if they do occur.

When you are running a first-of-a-kind project, however, many of the risks initially fall into the unknown category. While you can identify them, you may not immediately know how to mitigate them. But with further research about how others have solved similar problems, many of the unknown risks can be promoted to the known category.

The toughest risks to manage are the unknowable—the ones you cannot even identify. The classic approach for dealing with unknown unknowns is to put a lot of schedule or budget contingencies into the project from the beginning—providing slack that can be taken up as the inevitable surprises occur.

A first-of-a-kind project with no initial contingencies

"There was a debate about contingencies among the ITER Members," says Hans-Henrich Altfeld, Head of the Project Control Office at ITER. "Some Members insisted on having contingencies, because in their view it's good project management practice to do so, particularly for first-of-a-kind projects. Other Members took the position that if you put a contingency into a budget or a schedule, you can be certain it will be consumed. These differences in perspective are in part cultural, and the type of challenge that comes with international project management." In the end, the decision was made to include no contingency, thereby assuming that all major risks can be mitigated.

This is how ITER began on a first-time-right assumption, with no initial cost or schedule contingencies. Over time however, the Project Control Office hopes to build up contingencies by looking for opportunities to generate savings in time or money to create some of the slack that will be needed to handle surprises. "We look particularly at parallelizing work," says Altfeld. "But often when you do this, you also introduce additional technological risks. There is always a price to pay. It requires judgment in the end."

A variety of level-one risks at ITER

At ITER, risk management is carried out using a classic approach, where risks are identified, assessed and prioritized. Project actors may come forward with risks, or the risk management team may identify risks by asking challenging questions. But regardless of how they are spotted, for each of the important risks, the project management office develops a mitigation strategy and reviews both risks and mitigation strategies on a regular basis.

"Our way of ranking risks is pretty standard, with one exception," says Altfeld, who arrived at to ITER three years ago with 30 years of program and project management experience, including a 23-year stint at Airbus. "The exception is that we factor in the impact a risk might have on schedule. In particular, we rank a risk higher if it could lead to an issue on the critical path. For the time being, the critical path is the path that leads to First Plasma, our major milestone in 2025."

The project management team pays very close attention to risks with the highest rankings. One of the top risks in ITER's register, for example, is that one or more of the seven signatories to the ITER Agreement do not pay their complete cooperation.

Other high-level risks are technical, and are very well known in the tokamak environment—for example, leakages to the vacuum. "There is so much welding going on to create the actual torus, and all the pipes which bring the liquid helium and the water and the gases and so on, that if one weld is not perfect, there could be enough leakage to destroy the performance of the tokamak," says Altfeld.

Another top risk shared with all large projects is losing control of the data you need to generate along the lifecycle of the project, or losing track of configurations. "We need to always know where we stand technically, and particularly at the interface between engineering and construction," says Altfeld. "That interface is critical. The construction teams can only build what was designed up front. The data must be accurate and complete."

The failure, for whatever reason, of the Domestic Agencies to provide their in-kind components on time, and on quality, is another major risk. This risk is always present when a supply chain is involved. But on the ITER Project, this risk is particularly pronounced, says Altfeld. "A big corporation, such as Airbus, gets a lot of components from suppliers. Something could go wrong, of course. But Airbus has financial leverage to mitigate the problem because it has those suppliers under direct contract. The ITER Organization does not have that kind of leverage with the Domestic Agencies."

Conservatively optimistic

Altfeld says that ITER is comparable to building the A380, the biggest Airbus. The two projects are of about the same financial value; they are also similar in terms of complexity. He also compares ITER to the International Space Station (ISS) project which, like ITER, started with a large number of unknowable risks. "While there were many surprises requiring extra money and time, the ISS was successful in the end, and it has been operating for a long time."

"Yes, there are risks with ITER," says Altfeld, "especially given the first-of-a-kind nature of the project. But is it beyond imagination? No. Are we confident that we can manage those risks in a way that the objectives of the ITER Project can be met? The answer is clearly yes. We are conservatively optimistic, because we know we are doing our homework well."

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