INS549
The PCNet Project (A):
Project Risk Management in an IT
Integration Project
06/2014-5272
This case was written by Christoph H. Loch, Professor of Technology and Operations Management at INSEAD. It is
based on a real situation, but the names of all companies and individuals in the case are disguised, and any similarity
with any existing organization is accidental. The case is intended to be used as a basis for class discussion rather than
to illustrate the effective or ineffective handling of an administrative situation.
Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at
cases.insead.edu.
Copyright © 2005 INSEAD
COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION MAY BE COPIED, STORED,
TRANSMITTED, REPRODUCED OR DISTRIBUTED
IN ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER.
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
On 18 September 2003, Jack Muller, the project manager of the PCNet project, was preparing
for the Integration Management Committee Meeting scheduled that afternoon. The PCNet
project involved the merging of the entire IT network infrastructure, including routers,
telecom lines and 40,000 PCs, following the takeover of RBD Inc. by Metal Resources Co.
The IT merger promised net present value (NPV) savings of $142 million over four years at a
cost of $146 million. The team had carried out an extremely thorough planning exercise and
felt that they had gained a good understanding of the drivers and contingencies. The project
had got off to a good start, closely watched by upper management because it was so important
for the entire merger and subject to a number of significant risks.
But recent events were threatening to throw them off track. Unforeseen problems had dogged
implementation, such as files lost in the migration to the new operating system, and
unexpected requirements for “local content” in newly installed PCs by the authorities of
several countries including Angola. Moreover, the plant manager of a major chemical plant
was refusing to migrate (jeopardizing the migration of 900 seats), having originally agreed to
the migration. One major partner, the Sri Lankan government, had suddenly decided to
“further study the matter” before proceeding, threatening the migration of 2,000 seats. To top
it all, the world economy was sliding into the severe post-9/11 crisis, and there was even talk
that the combined company might not be able to afford to keep this very expensive IT
migration project going to the end.
Background
The Acquisition of RBD Inc. by Metal Resources
In 2002, Metal Resources Co., a first-tier diversified resource company headquartered in
Austin, Texas, announced a cash offer for the Winnipeg-based metals company RBD Inc.
The offer was recommended by the RBD board to its shareholders and then swiftly executed.
The combined companies formed the second largest mining and resources company in the
world. By 2004 Metal Resources Co. had activities in 28 countries, with $29 billion in sales,
40,000 employees, and leadership positions in aluminum, nickel, copper, uranium, gold,
carbon steel metals, diamonds, manganese, and various specialty metals used in steel
production.
The integration of the two organizations (of which the acquirer was much the larger)
emphasized speed (“Choose 80% solutions that you can execute quickly”), and followed four
design principles: (1) Formal structures, processes and systems were quickly reviewed to
reach a decision on either keeping the existing structures separate, merging them, or creating a
new structure. (2) Strategic reviews selected a few processes to be significantly enhanced, for
example, performance management. (3) Some product/market positions and brand identities
were chosen to be reassessed. (4) Cultural integration was proactively tackled using broad
programs to achieve rapid familiarization with the combined company’s values, such as
diversity.
The acquisition implementation placed heavy emphasis on synergies, that is, gross annual cost
savings. Five top-level integration areas were established to capture the savings: IT
infrastructure, HR systems and processes, financial systems and processes, operational
Copyright © INSEAD
1
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
integration (of operating procedures and policies), and organizational integration. The total
synergy target amounted to a saving of $1.9 billion in annual gross operating costs.
The IT Merger Project and the Planning Team
An important aspect of the merger was the consolidation of the IT systems of the two
companies, a huge undertaking involving 900 IT employees throughout the combined
company. Not only had the IT integration its own target of $210 million of savings, but it
also critically enabled the other merger areas by providing a transparent, integrated and
reliable application platform. Max Schmeling, the enterprise CIO, was responsible for
executing the IT integration.
For the execution to succeed required close collaboration between the enterprise and
operating companies’ IT staff. Each side, enterprise and operating company, controlled about
50% of the total IT budget, so management created a new position known as Operating
Company Chief Information Officers. These CIOs were assigned to the leadership teams of
the operating units, but reported to the enterprise CIO: 80% of their deliverables went to the
operating units, while having them report to Max Schmeling helped ensure that the other 20%
went to the corporation.
A pre-integration team planned the integration project in detail over a period of nine months,
up to October 2002. The team started from an overall vision (“get $210 million in annual
savings by consolidating the IT structure”) and successively broke this down into more
detailed tasks. To begin with there were six large consolidation areas (e.g., financial systems
integration, desktops, network, operating companies’ technical applications). Within each
area large projects were defined, then sub-projects, with every project defined down to
detailed tasks that could be assigned. This work built on previous analyses carried out for the
Y2K problem (“millennium bug”), which had identified the companies’ critical systems. The
planning team could now focus on the challenges of migrating those critical systems.
In total, 110 projects were defined, to be executed in parallel by project managers and subproject managers, supported by a central project office. The projects had to be carefully
coordinated as some of them served as enablers for others, and all were competing for the
same scarce staff time.
The Planning Meeting
After the acquisition had been officially enacted, CIO Max Schmeling brought his direct
reports and operating company CIOs together (about a dozen people in all) in September 2002
and presented them with the breakdown of the work that the planning team had produced:
“Nobody leaves this room before every one of the 110 savings opportunities has a name on
it,” he said.
As the first outcome of this marathon meeting – lasting two days – a project organization was
put in place (see Exhibit 1) which set out the project accountabilities and assigned a corporate
sponsor to each project manager to help them drive change through the organization. At the
top were enterprise projects. Control of these was critical, and a project management office
Copyright © INSEAD
2
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
was to track them continuously – both in terms of schedules (on which other projects
depended), and budgets.
The key projects within the IT integration were General (including mainframe
decommissioning and UNIX integration, and office consolidation at the various sites of the
previous companies), Knowledge Management (including the consolidation of portals,
intranets, yellow pages, instant messaging, collaboration tools and publishing), the ERP
Program (moving to an enterprise-wide SAP installation encompassing HR systems and
financial reporting across both companies), the Web Applications Center, IT Strategy (which
was to connect the IT changes to headcounts and re-engineered processes, and strategic IT
sourcing), and the PCNet Project, on which this case focuses.
The last piece (not producing bankable savings but critical to the overall success), was the
“Time Zero” project: IT systems were to be changed while simultaneously running the
business. The IT merger organization had to guarantee that e-mails, global address lists, help
desks and all business applications would work immediately (but not, for example, cross unit
calendar lookup). Without this minimal functionality the business damage would have been
too great, and resistance would have prevented a successful migration.
The second outcome of the marathon meeting was a “Gantt Chart from hell” – a preliminary
plan showing how the 110 projects would be sequenced, when they would reach their critical
milestones, and ultimately completion. The full Gantt Chart filled a wall (Exhibit 2 shows an
aggregated summary of key milestones). In addition to the large number of tasks, the
planning job was made even harder because all 110 projects had to be coordinated with the
other merger projects and with the activities of the operating companies who were responsible
for carrying out so many activities.
The PCNet Project
The PCNet project was the key enabler of the whole merger, not just the IT integration. It
encompassed the development of a global communications network, a standard network
server infrastructure, an enterprise security and directory system, and a worldwide standard
desktop environment (see Exhibit 3). The business case called for total NPV savings of $115
million, with a project budget of $149 million. The NPV figure was based on direct savings
on infrastructure costs alone. In addition, the project enabled further savings, such as cutting
130 different applications in the finance area, and it later made the transition to an enterprisewide ERP system (SAP) much faster and smoother.
The lion’s share, both in savings and budget, came from getting the 40,000 desktops (31,000
on the original Metal Resources side and 9,000 on the RBD side) to standardize on Windows
XP desktops (HP) and laptops (IBM). The corporate network, previously centered on the
bottlenecks in Austin and Winnipeg, was to be consolidated around three central hubs:
Austin, Johannesburg and Singapore (see Exhibit 3), with added bandwidth to the rest of the
network and added internal redundancy. The servers were standardized to Windows 2000.
Previously, the network had had almost 900 routers, a number that was greatly reduced by the
consolidation. Ultimately the goal was to go from 10 different directories and multiple
security systems and firewalls down to one each. The multiple directories caused some
Copyright © INSEAD
3
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
headaches – for example, executives who had been re-assigned stopped receiving their emails until the IT staff could locate the directory in which they had been listed!
The network integration involved reconciling outsourcing decisions that had been handled
differently in the past by the two companies: Metal Resources had outsourced mainframe,
telecoms and the help desk to EDS, while RBD Inc. had outsourced the server environment
and the help desk to IBM. To move fast, IT management decided to shift the entire package
to EDS (the provider who already had the bigger piece), and to take some server services back
in house.
In addition to the four integration areas, Jack Muller’s project organization included his own
project management office, one group for implementation and operations, and a planning
group with several analysts who compiled business cases, risk analyses, and maintained the
tracking tools. Embedded in the master plan for IT integration, the PCNet planning group
developed and maintained its own plan and milestones (Exhibit 4). Much of the actual work
(such as physically installing routers in basements and desktops in offices) was performed by
local staff in the operating companies; the central project organization coordinated,
standardized, oversaw time plans, and centrally sourced the standardized components.
Risk Management
Risk Identification
Great attention was paid to risk management from the beginning. Risk plans and reviews
were formally included in all project plans. (An aggregate risk list is shown in Exhibit 5).
The main risk areas were seen as operating company acceptance (they had to perform and pay
for a lot of the detailed implementation work and loathed the distraction from their pressing
priorities); “staying focused” when too many activities were competing for the same scarce
resources; security breaches during the transition; and any change in business climate that
could threaten the availability of funds to complete the merger. Risks were estimated with
potential impacts (where possible), “mitigation” (or countermeasures) and “contingent action”
(a prepared fast response when risks did occur).
The aggregate risk list rested on many lower-level risk identification efforts (see Exhibit 6
which focuses on HR and personnel retention risks), showing where the impact would lie
(e.g., in achieving synergies, or in continuing business), whether the impact would be
financial, or on the schedule, or on solution quality, and how great it would be in financial
terms. The list estimated the probability of the risk and indicated the impacted parties and the
“owner” or party responsible for responding to it.
A project of this size can never be executed without encountering adverse events or
“hiccups”. The risk planning represented a thorough homework exercise that allowed the
organization to be prepared in case adverse events struck – anticipating such events prevented
any potential panic and the mitigation/contingent action exercise provided ready-made
(rough-cut) solutions around which a team could develop a quick response.
Copyright © INSEAD
4
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
Risk Prioritization
Hundreds of distinct risks were identified and listed in the risk planning which had to be
prioritized in order to maintain focus (which itself was one of the risks!) and efficiency.
Rather than classify the hundreds of risks themselves, the merger team chose to classify the
sub-projects using a type of ABC analysis according to their value (that is, the amount at
stake when a risk occurred) and the probability of failure (aggregated from individual risks
affecting that project). The logic of this analysis is shown in Exhibit 7. The project
management team aggressively intervened in high priority projects (high value and high risk),
whereas projects with high risk but low value were delegated to the operating companies, with
an offer to help them if requested. Well-running projects were either watched (high value) or
let run (monitored only on a routine basis).
For the larger sub-projects (from around $10 million), Max Schmeling went one step further:
he demanded a scenario business plan with respect to the ultimate success measure (the NPV
of savings): “With only 10% probability we will fail to deliver at least x, with 50% probability
y, and with 90% probability we will not be able to deliver as much as (or more than) z in this
project” (in other words, a pessimistic, medium, and optimistic scenario). The scenarios were
called P10, P50 and P90 (a method and terminology that comes from geology and exploration
engineering), and were connected to a value-distribution curve (see Exhibit 8 for the entire
PCNet project). Exhibit 8 indicates that they thought to have a 50% chance of achieving
annual savings of $135 million, but virtually no chance of beating $180 million.1 The value
distribution for the PCNet project rested on similar curves for the four major sub-projects. For
example, the desktop migration was estimated to have a 10% chance of not achieving $81
million, 50% of not achieving $100 million, and a 90% chance of not achieving $117 million
in annual savings.
Each project value distribution curve offered two benefits. First, it forced the team and
management to acknowledge that the outcome could not be planned exactly, as a number, but
that many outcomes were possible with different probabilities. In other words the team could
not offer a fixed target, only a “service level” (for example, “the probability of achieving $81
million in savings is 90%”). This gave them the same flexibility as project buffers used in
other companies. Second, the value curve forced the project team to clearly identify the key
value drivers (a small subset of the previously identified risks), to estimate their possible
variance and to formulate a model of how that variance impacted the project’s savings value.
The discipline of producing such value models was very useful in identifying key drivers, that
is, the risk factors that were really important.
Risk Monitoring and Management
Risk prioritization allowed the merger team to be proactive and responsive. First, supervision
concentrated on areas of high exposure. For example, the PCNet project came out as high
priority (see the classification in Exhibit 7), the desktop and server subprojects were in the
upper right quadrant (high value and high risk), and the network project, while not directly of
high value, was of high strategic importance and thus classified as high risk. Jack Muller
could not complain about any lack of attention from upper management.
1
Note that these numbers are not comparable to Exhibit 4, which shows the NPV of savings over four years.
The numbers here, in contrast, refer to annual savings themselves, a more operational number.
Copyright © INSEAD
5
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
In addition, the identification of the most important risk drivers by the value distribution
curves (Exhibit 8) allowed the project team to manage them proactively. Two examples
illustrate this. For the desktop project the dominant risk lay in the prices set by the PC
vendors (HP for the desktops and IBM for the laptops), so a team of project managers visited
the vendors and aggressively negotiated in order to lock in prices at a low level. Not only did
this reduce the savings variance (guaranteed prices for all countries were obtained), but the
centralized negotiation also achieved prices that were even lower than hoped for, garnering
additional savings.
The second example relates to the schedule risk of actually delivering all the desktops to all
countries on time for the “new” system to start. As Metal Resources Co. operated in countries
such as Angola, Congo and Armenia, warfare might disrupt delivery and “gatekeepers”,
“consultants”, or bureaucrats could block every move until their permission had been sought.
(Sometimes they merely wanted to be shown attention and respect). Generally, the schedule
risk was high in such countries – deployment might even be endangered entirely – so for
countries with significant bureaucratic restrictions a plan was devised with countermeasures,
emergency procedures and appropriate buffers to allow for disruption. Deployment was not
started until any remaining uncertainty had been removed and a high level of confidence
installed that it could be carried out within the buffers imposed.
Project Execution
Monitoring and Reporting
In October 2002 work started in earnest, hitting multiple fronts at the same time: telecom lines
were rented and connected, network equipment exchanged, security policies and software and
directories set up, and PCs switched. Control of the larger projects was paramount to keep the
integration on track and produce the savings. An integration management office was set up
for the merger as a whole (the Integration Management Committee Meeting, of which Max
Schmeling was a member), and ITC had its own integration office, the project management
office.
At monthly meetings progress was tracked using metrics summarized in a “deployment
progress” monitoring tool (Exhibit 9) which reported on the status of PC deployment (for
example, in January 2003, 1,447 of the 40,000 PCs had been migrated), sites with upgraded
networks, reduced Internet access points to the global network, and reduced standard
applications. The dashboard also showed the current budget status and included remarks
about current events in the various regions of deployment.
In addition to the progress tool which focused on operational figures, budgets and, of course,
financial synergies (or savings) were reported. Savings were a matter of urgency: only when
they had been achieved and documented could they be incorporated into the accounting and
book-keeping systems, and then reported to external financial analysts. Being able to report
booked synergies is very important for a CEO after an acquisition.
It soon became clear that the synergy progress reporting was causing misunderstandings and
tensions. As Exhibit 10 shows, progress was not smooth but occurred in jumps. For example,
a site had to be completely migrated (up to three months’ work) before savings really accrued,
Copyright © INSEAD
6
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
but then a large sum was saved at once. The gray bars in Exhibit 10 indicate internal progress
targets, the dotted red line represents synergies captured at the day of the report (April 30),
and the solid blue line the synergy forecast (top panel: all IT systems, bottom panel: ITC). As
is usual practice, the forecast line had been smoothed. This caused a seeming deviation from
the plan as for up to three months it looked as if synergy capture was lagging (before it caught
up), although it was a reporting artifact. This required a lot of reassurance: “Although nothing
has been booked, you have to trust us that the site migration is really on track and the savings
will accrue as planned!” Reporting to and educating of the supervising committees had to go
hand in hand.
Unexpected Events
The PCNet project had gotten off to a good start. After the huge initial effort to get things
going, Jack had had the feeling that things were going well. But more recently problems had
begun to arise, none of them catastrophic by itself but damaging overall, and Jack started to
worry about continuing progress.
For example, the IT organization had managed on day one of the merger to build connectors
between the two corporate networks, but there were no standards in place across the entire
merged corporation. Without rigorous change management processes in place, well-meaning
people could (and did) introduce “tweaks” in, say, the e-mail system, unwittingly
destabilizing an entire sector of the network. As a result, e-mail files were lost and messaging
capabilities corrupted. There were frequent small outages in some areas (some of which
persist to this day).
Moreover, some of Metal Resources Co.’s partner national companies suddenly started to
demand “local content” or “brokers” to be included in the channels of the hardware systems.
These channel conflicts often caused delays and had to be mapped out and worked around,
taking time and resources. A different kind of problem occurred in Sri Lanka: the
government partner, who was paying for the migration of 2,000 seats, decided that it would
need to study the proposal more thoroughly before giving its approval. This meant extra
justification and a localized business case had to be submitted, again costing Joe time and
resources.
And problems not only came from the outside. Several times a business unit leader within
Metal Resources would decide to slow the migration or postpone it from the original schedule
to avoid business disruptions or to avoid the costs. One large European office threatened to
delay a major deployment that had scheduling impacts on several other sub-projects.
The 18 September 2003 Integration Management Meeting
The overall merger progress status looked still OK. Of the six huge integration areas, none
was seriously behind. IT integration had passed a major milestone in the summer and the
next major one at this aggregate level was not until January. In that sense, the situation was
not urgent. However, the string of unexpected events made Jack worry; hiding them was not
an option. If the Integration Management Committee got the impression that progress was
stalling in the linchpin PCNet project, they might panic and start breathing down his neck real
hard.
Copyright © INSEAD
7
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
The economy had slipped into a severe crisis, and Metal Resources Co. (like all major
industrial companies) had started a general belt-tightening and budget-cutting exercise. The
IT migration project was very expensive; if top management started to doubt the benefits, they
might take radical steps and stop the entire thing or major parts of it.
Jack Muller gathered his slides and braced himself for a fierce discussion. How was he going
to calibrate the progress hiccups to Max Schmeling and the Integration Management team?
How would they react?
Copyright © INSEAD
8
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
Copyright © INSEAD
PCNet
Program Lead: Peter Lazonge
Estimated Completion Date: 7/03
Knowledge
Management
Program Lead: Mike Wu
Estimated Completion Date: 12/04
Web Applications
Support
Program Lead: Jeff Nales
Estimated Completion Date: 9/04
ERP Implementation
Program Lead: Chip Bales
Estimated Completion Date: 1/04
General
IT Strategy
Program Lead:
Nancy Lee
Time Zero
Program Lead: Jill Gross
Estimated Completion Date: 9/04
Gwendolyn Myers
Taka Nunaki
Program Lead: Jack Muller
Estimated Completion Date: 3/04
IT Strategy
IT Delivery
Max Schmeling
IT CIO
Exhibit 1
Organization Structure of the IT Merger Projects
9
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
Dec 02
2
3
Feb 03
4
5
• Corporate
IT
Research
• Consol.
RBD SAP
Financials
into Metal
Resources
Copyright © INSEAD
Oct 02
0• 1
• Knowledge
Processes
• Decommissioning
Approval
• Change
Management
& Communication
• Common Yellow
Pages
• Winnipeg Office
Apr 03
6
7
• Singap.
Office
• IBM-EDS
Transition
• Consolidation
Technology
Research
• Austin Office
• Portals
Jun 03
8
9
• PCNet
Server
• Collab.
Tools
• Intranet
• Webcasting
• Integrate
RBD
Australia
Marktg.
• HR
Reductions
London
Office
Aug 03
10
Paris and
Jo’burg
Offices
11
Oct 03
12
13
• Integrate RBD
into Metal
Resources HR
• Moscow Office
Dec 03
14
15
17
18
19
Jun 04
20
21
23
27
10
Months
Feb 05
28
Mainframe
Decommissioning
Dec 04
25 26
Oct 04
24
Define &
Implement
New Org.
Structure
Aug 04
22
Organization &
Process
Efficiency
• Profess.
Applications
complete
• E-purchasing
Apr 04
Network
Upgrade
Feb 04
16
• Desktop
Reductions
• Telephone
Reductions
• Directory and
Security
Integration
• Paris & Hong
Kong Offices
• Publishing
• IT System
Consol.
Exhibit 2
Aggregate Summary of Key IT Merger Milestones
11
Copyright © INSEAD
Exhibit 3
The PCNet Project and Projected Business Value
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
12
Copyright © INSEAD
Exhibit 4
The PCNet Project Key Milestones
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
13
Copyright © INSEAD
Exhibit 5
High Level Risk List with Contingent Action
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
All
All
All
RESOURCE RISK - will not
have enough IT staff to
handle all the projects the
functional groups have
planned around
CHANGE MANAGEMENT /
COMMUNICATION - People /
teams / mgmt may not align
on what the priorities are
(productivity, working on right
things, etc)
If CULTURE of IT people do
not integrate then effort could
dissolve into wars.
Copyright © INSEAD
All
Financial
Quality
Time
Financial
Quality
Time
Financial
Quality
Time
Quality
Financial
L
M
M
M
M
M
H
H
$
%
Operations
ATTRITION OF
TECHNOLOGY TALENT
could jeopardize exploration,
operations and IT
operations and transition
H = > $5mm
M = $5-$1mm
L = < $1mm
H = >80%
M = 80% - 20%
L = < 20%
I
I
(IT)
O,I
O,I
O,I
O
O = Owner
I = Impacted
I
I
I
(IT) (IT) (IT)
Project Team Impacted by Risk
Exploration
Time
Financial
Quality
ONE YEAR
FINANCIAL
IMPACT
Technology
Synergy
Day One
Business - Local
Business - Global
PROBABILITY
THAT RISK
WILL OCCUR
Finance
Describe the Risk
RISK
TYPE
IT/Systems
(Tech Support & IT)
RISK
CATEGORY
HR Integr.
(Tech Support & IT)
RISK
DESCRIPTION
Exhibit 6
Detail Risk List on Retention and HR Risks
Corporate
I
Procuremt.
I
New Management
CIO and
project
management
IT Planning
CTO and
technology
officers
Person
responsible for
monitoring the risk
and reporting it if it
occurs.
RESPONSIBLE
RISK OWNER
U
U
A
A
O
O
O
O
U
U
U
U
14
Good communication and buy-in is essential.
Good communication and buy-in is essential.
Good project prioritization and planning will be
needed.
RETENTION RISK
Medium" probability contingent upon absence
of severance triggering event after the merger.
OPERATIONAL RISK
- spend more in long run to maintain
competencies operating companies want
VALUE RISK
- 5-10 times operational risk in not capturing
value by focusing on fewer, higher value
projects
General Notes
A/U O/C U/M
COMMENTS
STATUS
U - Unmitigated
M - Mitigated
O - Open
C - Closed
A - Assigned
U - Unassigned
Other
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
<1
2
3
4
5
6
7
8
9
>10
Minor
issues
Significant
issues
High risk of
failure
Example:
• Records management
Implementation Risk
Tracking
Example:
• Personnel file migration
Delegate
Provide assistance to help
identify core issues and
mitigate risks
Let run
Example:
• Trading – trade capture system
Identify core issues and
aggressively pursue solutions
and risk mitigation
Engage
Exhibit 7
Risk Prioritization
Review status updates
Example:
• Desktop migration
• Exploration technical
application rationalization
Review status updates
and discuss process
Watch
Beyond
expectations
Copyright © INSEAD
Value ($ million)
15
Provide additional support
and guidance to projects in
top quadrants
Periodic status meetings to
update risk information
Risks along 3 dimensions:
• Schedule
• Technology
• Business (cost and
synergy capture)
Risk Management
Process:
16
250
NPV of Annual Savings ($MM)
200
Copyright © INSEAD
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
Exhibit 8
Probabilistic Business Impact of Risks on PCNet Project
Cumulative Probability
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
17
Copyright © INSEAD
Exhibit 9
Summary Project Monitoring Tool
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.
18
18
15
Months Post Close
Synergy Actual/Forecast
21
12
11
IT Systems
Captured To Date
24
10
9
8
7
6
5
4
Exhibit 10
Synergies Captured as of 4/30/2003
Synergy Target
>24
3
2
Copyright © INSEAD
0
50
100
150
200
250
$MM
1
This document is authorized for use only in Professor Ma. Carmen L. Testa's SEELL - Project Management Course 2021-PMC 2021 at Asian Institute of Management from Mar 2021 to Sep
2021.