TABLE OF CONTENTS In this appendix, a case study involving the use of the entire 3D risk method is presented. It involves understanding traditional risk-return thinking, inverse risk-return thinking (also called opportunity management), and understanding the maturity phase, engine phase, decision management, strategy, marketing, and target market segmentation.
A particular program, the development of a new car design, requires that a revised transmission be mated to an existing power plant and to a totally new body. The three projects, involving transmission, power plant, and body, would have separate risk management programs (not separate risk management processes), which are summarized in a risk plan and applied by the appropriate work breakdown structure (WBS) element. We will also assume the three projects have different earned value management (EVM) and net present value (NPV) standards, which summarize to a program plan and are also linked to WBS elements.
The program can tolerate a certain level of cumulative risk, say a 6, which fits into the corporate portfolio. The portfolio consists of financial returns, liability concerns, warranty projections, profitability, and plant investment on 12 models. Each model is a program. Of the 12 models, which are always in flux, 2 are considered totally new, 6 are in various stages of revision, and 4 are established cash cows. Our new car program consists of various projects. The engine is one major project. The engine on our example car was specifically chosen for its proven reputation and known cost. For the first...
