Filtering Process

The four-staged filtering process identifies those projects that represent the most significant risk. This process is shown below:

Undertaking Pilot Projects

Two or 3 pilot projects should be undertaken at the beginning of each new filtering stage, to:

• Prove the worth of the process
• Allow the organization to gain a better understanding of the costs and efforts involved.

The three projects should include the different failure modes and represent an average amount of effort required for the analysis.

This allows the organization to make a better 'value judgment' as to how many of the projects (that got through the last filter) should be exposed to this level of validation.

Level 1 Basic

This involves:

• Apply the confidence level rating approach to each projects
• Rank the projects using the inverse of the CLR multiplied by the project's value, to indicate the most significant commercial risks to the organization
• Select those projects that should move on into the next phase
• Make a sound value judgment on the complexity (Delphi group) and the size of the project.

This process should be applied to at least 80% of all projects on the current CIP.

Approximately 50% of the projects should pass through to the second stage.

The ranking process is shown below:

Level 2 Secondary

The steps of the secondary level are:

• Assess Business Risk Exposure (BRE).The BRE is the probability of failure multiplied by economic consequence to the organization. It is the multiple of that consequence by the probability of that failure mode actually happening. This initial BRE assessment uses a basic approach which is a 10 x 10 matrix of consequence and probability. The BRE rating will be between 1 & 100.
• Rank projects using the previous ranking parameters, multiplied by the BRE.

The ranking process is shown below:

Level 3 BRE Validation

The ranking process is shown below:

Level 4 Final Business Case Validation

This final stage involves a full business case analysis. This is the ultimate process, which will eventually be used for all capital works of $1 million and over.

However, during transition, it is restricted to the four or five projects that the organization warrants taking to this level.

The full business case includes developing a benefit / cost analysis that:

• Is done in full economic terms
• Covers all aspects including understanding of the residual risk exposure (RBRE) that will remain after the proposed works are undertaken.

The organization can now rank its projects using a 'commercial approach', which includes the stakeholders, economics, social impacts, environmental impacts and the value of the assets.

All projects can be ranked on a benefit to organization basis.

This allows the organization to really understand when the work should be done. As shown in the following figures, it is even possible to separate projects with the same benefit cost.

The number of projects typically filtered is shown below:

This then allows the organization to identify major opportunities for:

• Reducing the size or sophistication of the project
• Reducing the redundancy or standby capacity
• Deferring projects for considerable periods of time, and in some cases forever
• Reducing the life cycle costs via a more logical configuration and reduced maintenance costs
• Mitigating or controlling considerable risks that existed.