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1.  INTRODUCTION–A PROJECT MANAGEMENT PERSPECTIVE

As part of this series on Global Risk Analysis 2014, I wanted to look at the report from the framework of the risk management processes that are done in the course of managing a project.

The processes for Risk Management are as follows:

11.1  Plan Risk Management

11.2  Identify Risks

11.3  Perform Qualitative Risk Analysis

11.4  Perform Quantitative Risk Analysis

11.5  Plan Risk Responses

11.6  Control Risks

The first five of these processes are in the Planning Process Group, and the last of the six processes is in the Monitoring & Controlling Group.

Of course, the events of the world are not a “project” because they have no beginning and no ending, but I’m writing these posts from the standpoint of project management because risk management concepts are involved in it, and it is a framework I am familiar with.

The posts this week have been about the methodology of the report (analogous to the Plan Risk Management process), the identification of the 31 global risks and their classification into 5 categories (analogous to the Identify Risks process), and the ranking of these risks based on their probability, impact and the product of these two factors (analogous to the Perform Qualitative Risk Analysis process).

2.  GLOBAL RISK ANALYSIS 2014 and Quantitative Risk Analysis

This post is brief because it discusses the discussion in the Global Risk Report 2014 of what would normally be the next step, which is Quantitative Risk Analysis.   This would be where you take the probability of each risk and assign a probability to is from 0% to 100%, where you estimate the dollar impact of that risk if it were to occur, and multiply this quantitative estimate of the probability and the impact to achieve the EMV or expected monetary value of that risk.   For example, if the chance of a hurricane hitting the East Coast of the US of the same magnitude as Hurricane Sandy (the same one that hit in November 2012) in 2014 were 5%, then we know the dollar value of the impact of that hurricane, let’s say, $70B, then we can say that EMV of that risk is 5% x $70B or $3.5B.

Here’s what the Global Risk Report says about the this on pages 42-43:

“In the finance and insurance sectors in particular, there is strong reliance on quantitative measures of risk probability.   Some other firms, wary of being blindsided by erroneous assumptions in the numbers that go into calculating the likelihood of adverse events, prefer to focus solely on the severity of risks and disregard any attempt to estimate their probability of happening.”

However, since the risks that the Global Risk Report 2014 are discussing are a) global (by definition) and b) interconnected, it is hard to achieve a quantitative measure in terms of a dollar figure for the impact, so the Global Risk Report 2014 says that the team putting together the report decided not to try to have the respondents do such an analysis.

The important point of the quote from above is that you do not need a quantitative analysis to proceed with the next step, which is Risk Response.   However, in the case of an organization, the cost of the risk response measures has to be justified by the EVM of the risk were it to occur.   For example, in the case of an insurance company where I worked, the company paid for a “hot site” that would retain a duplicate of the data in its home office and be able to be used as a temporary headquarters were the home office to be temporarily (or even permanently) incapacitated in the case of an earthquake.   The probability of an earthquake is small but not negligible since the office was in Southern California near the San Andreas Fault.   The impact, however, of losing all the financial data would be ruinous to the company, so the expense of maintaining the hot site was justified.

Now, if you are a government and advocating for mitigating climate change as a risk response, then arguing for the funds for these measures, especially in a time of economic adversity, is a difficult task.   Getting a qualitative measure of the damage that would caused by climate change would allow someone arguing for such measures to justify the expenditure, but pointing to the cost of NOT doing those measures, if the risk were to occur.

So although it is understandable that the Global Risk Report 2014 is not getting quantitative risk analysis from the respondents, reinsurance companies are doing such analysis.   Munich RE, a multinational reinsurance company, attributes the rise of extreme weather related events to climate change.  Their records show a nearly quintupled number of weather related events in North America over the past three decades.  They estimate a loss of US $1,060 billion (in 2011 values) from 1980 to 2011 (from the website http://www.thisisclimatechange.org/extreme-weather/).

3.   Risk Responses

Rather than talk in general about risk responses for all 31 global risks, I will take a look at three specific risks that the report discusses in depth and discuss the risk responses that the report suggests for these risks.

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1.  INTRODUCTION

In my previous posts on the World Economic Forum’s Global Risk Report 2014, I have concentrated on

• the methodology of the report (corresponding to the Plan Risk Management process of Project Management),
• the identification of risks (corresponding to the Identify Risks process of Project Management)

and now in this third series of posts, I am concentrating on the next topic,

• the qualitative analysis of risks (corresponding to the Perform Qualitative Analysis process of Project Management)

This qualitative analysis is called “qualitative” because it does not fix a specific dollar amount to each risk (that would be “quantitative analysis”), but instead analyzes each risk according to some qualitative variable, usually something like likelihood, severity, and/or urgency

The three questions that the respondents were asked about the 31 global risks were:

1. Which five of the global risks are of highest concern?
2. Which five of the global risks have the highest probability of occurring in the next decade?
3. Which five of the global risks would have the greatest potential impact if they were to occur in the next decade?

In yesterday’s post, I discussed the result of asking the respondents to the survey the second question.   In this post, I discuss the result of asking them the third question, on those risks which would, if they occurred, have the greatest impact.

2.   RISKS OF GREATEST IMPACT

The respondents were asked to assess each of the 31 risks (these risks are listed on the post dated 02/04/2014) based on the probability of occurrence on a scale from 1 to 7, with a “1” meaning that the risk is not likely to happen, and a “7” meaning that the risk is very like to occur.

Those 5 risks that rated as having the highest probability of occurrence were as follows:

Here are some things to notice about these risks.

a.  Four out of five risks are highly correlated

Risk #1, the societal risk of fiscal crises, is highly correlated to Risk #4, the economic risk of unemployment and underemployment.   The fiscal crisis is the aftermath of the financial crash in 2008-2009, and has left national governments struggling in what is termed the Great Recession.   Although the federal deficit in the US has started to shrink, many state governments are still facing d

Likewise, Risk #2, the environmental risk of climate change is connected to Risk #3 of Water crises.   For example, in the US, the states west of the Rocky Mountains (like California) are experiencing record droughts.   According to the majority of scientists, this water crisis is due to a jet stream called the “polar vortex”, which normally circles the Arctic Circle at this time of year.   However, due to climate change, this jet stream has become misshapen and is forcing colder-than-normal air East of the Rocky Mountains and warmer-than-normal air West of those mountains.    This is creating the abnormal weather conditions on both sides of the mountains.   California is experiencing record droughts while Chicago, Illinois (where I currently live) is experiencing record low temperatures and snowfalls.

b. “Repeat offenders” in list

Risks #2 and #3 related to the environment are both risks that have been in the top five lists of having the greatest impact last year in 2013, with water crises having been on the list since 2012.

Regarding economic risks, the fiscal crises risk was also on the list last year, although it was called chronic fiscal imbalances in 2013.

c.   What is missing from the list?

The risk that was on the list last year but was missing this year is the diffusion of weapons of mass destruction, perhaps because of the interim agreement reached regarding Iran’s nuclear program, plus the temporary agreement reached in Syria to halt the use of chemical weapons.

3.  COMBINED MEASURE:  PROBABILITY & IMPACT

If you take a look at the risks that have highest probability, and those that have the highest impact.   Those that are high in both probability and impact are the ones that should have the highest priority.

If you look at the grid that is formed by combining these two dimensions, which is on page 16 of the Global Risk Report 2014, you see the risks which should have the highest priority.   If you take a look at the six of these data points with the highest total of probability times impact, you coincidentally get the top six risks as listed by the respondents in terms of the risks that are of highest concern.

You can conclude that these risks are the ones to watch in 2014, and that any funds for risk mitigation would be most profitably be put into measure that would reduce the risk of any of these risks.  The fact that risks #1, #2, and #4 are linked, and the fact that risks #3, #5, and #6 are linked is interesting, because it implies two things.

First of all, since they are perceived to be causally linked, efforts in improving one of them might have positive spillover effects on the other linked risks.   For example, measures to reduce structurally high unemployment/underemployment, for example, would create jobs that would in turn create demand for products and services.    The taxes on these new products and services would reduce the government fiscal crisis, and the demand for labor would also decrease the severe income disparity by raising median wages.

On the environmental side, efforts to mediate the effects of climate change by the reduction of greenhouse gas emissions would in the long run reduce the increase in the average global temperature, which is the mechanism which fuels the extreme weather events such as droughts, which in turn are causing the water crises.

The second observation is that since risks involving the economy and risks involving the environment are perceived as both being of greatest concern, that any efforts to spend money on one set of these risks be accompanied by measures that address the other.   Otherwise, your efforts will be perceived as a zero-sum game, and those stakeholders that hold one set of these risks as more important than the other will oppose your efforts.    B0th “constituencies”, if you will, need to be addressed in either case.

As an example, measures which improve the economy on a short-term basis, but which will be harmful to the environmental in the long-run, such as implementation of the Keystone XL pipeline in the US, will face more opposition due to the increased awareness of the environmental hazards attached to such a project.

However, it is also true that those who want to cancel the Keystone XL pipeline will have to assuage the concerns of those who will see a lost opportunity for jobs creation at a time when the US economy is in desperate need of the same.    Are there economic opportunities to be found in measures which would simultaneously reduce the risk of increased greenhouse gas emissions?

The insight from reading the Global Risk Report 2014 should extend not just to the awareness of those risks that need to be addressed, but also to the way to present those risks to the shareholders (the voters in democratic countries) in such a way as to maximize their acceptance.

The post tomorrow will deal with next topic of quantitative analysis as seen by the authors of the Global Risk Report 2014.

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1.  INTRODUCTION

In my previous posts on the World Economic Forum’s Global Risk Report 2014, I have concentrated on

• the methodology of the report (corresponding to the Plan Risk Management process of Project Management),
• the identification of risks (corresponding to the Identify Risks process of Project Management)

and now in this third series of posts, I am concentrating on the next topic,

• the qualitative analysis of risks (corresponding to the Perform Qualitative Analysis process of Project Management)

This qualitative analysis is called “qualitative” because it does not fix a specific dollar amount to each risk (that would be “quantitative analysis”), but instead analyzes each risk according to some qualitative variable, usually something like likelihood, severity, and/or urgency

The three questions that the respondents were asked about the 31 global risks were:

1. Which five of the global risks are of highest concern?
2. Which five of the global risks have the highest probability of occurring in the next decade?
3. Which five of the global risks would have the greatest potential impact if they were to occur in the next decade?

In yesterday’s post, I discussed the result of asking the respondents to the survey the first question.   In this post, I discuss the result of asking them the second question, on those risks which have the highest probability of occurring.

2.   HIGHEST PROBABILITY RISKS

The respondents were asked to assess each of the 31 risks (these risks are listed on the post dated 02/04/2014) based on the probability of occurrence on a scale from 1 to 7, with a “1” meaning that the risk is not likely to happen, and a “7” meaning that the risk is very like to occur.

Those 5 risks that rated as having the highest probability of occurrence were as follows:

Here are some things to notice about these risks.

a.  Four out of five risks are highly correlated

Risk #1, the societal risk of income disparity, is highly correlated to Risk #3, the economic risk of unemployment and underemployment.   You can see that the strategy of President Barack Obama in his State of the Union speech was to reduce the societal risk due to income disparity by creating policies that reduce the economic risk due to long-term unemployment and underemployment.

Likewise, Risk #2, the occurrence of extreme weather events, is happening in the US right now as the states east of the Rocky Mountains (like Illinois) are experiencing record low temperatures and snowfall as states west of the Rocky Mountains (like California) are experiencing record droughts.   According to the majority of scientists, these extreme weather events are being triggered by climate change, which is Risk #4.

b.  The top risk is a “repeat offender”

Risk #1 on the chart, the societal risk of “Income Disparity”, was also the risk considered to have the highest likelihood of occurrence in 2012 and 2013.   This shows that this problem is not only considered severe, but has remained at the forefront of the consciousness of global leaders for quite some time.

c.   What is missing from the list?

The risk that was considered #2 in terms of likelihood of occurrence in both 2012 and 2013, but which is absent from the “top 5” list in 2014, is “Chronic fiscal imbalances.”   This perhaps reflects the sea change in economic thinking from the belief that budget deficits are the most pressing economic issue for many of the world’s economies.   In Europe especially, but to a lesser extent in the US, it was considered that the solution to this issue was to cut government spending.

It seems like there is a shift to the realization that in the face of massive unemployment, stimulating the economy through some sort of government spending, particularly investments in infrastructure and vocational training, might be a more effective strategy to follow in order to improve the economy.   This, of course, is just my opinion, not that of the World Economic Forum, but this shift in thinking would account for the shift in the ranking of economic risks in the past three years.

3.  CONCLUSION

On the economic front, unemployment/underemployment and its societal counterpart in terms of income disparity is considered the risk that is most likely to occur, whereas on the environmental front, climate change and its consequences on extreme weather events are also very likely to occur.   Next in terms of likelihood is the occurrence of cyber attacks.

I’ll conclude this post with one interesting observation made in the report between a risk and a trend.   A risk is something which has not yet happened, and may happen in the future.   A trend is something which has already happened, but may reoccur in the future.   It may seem semantics, but many of the risks that are on the list describe events that have already occurred in some shape or form before 2014 and are either going to re-occur or get worse in the coming year(s).

It reminds of a quote from the science fiction novel by John Brunner called Stand on Zanzibar written back in 1968.   “Overpopulation–it’s one of those events that most people think is going to happen tomorrow, but in reality it started to happen yesterday, when most people weren’t looking.”    I’m quoting from memory, so it’s not an exact quote, but it gives the tenor of the point I am trying to make.

Okay, it’s one thing to say that a risk is likely to happen.   What about when it does happen?   What will be its impact?   The respondents were asked about that question as well, and that will be the subject of my next post.

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The first process in Risk Management if you are a project manager is to Plan Risk Management.   I covered this process for the Global Risk Report 2014 by the post two days ago on the methodology of the report, which describes the way the data for the report was collected.

The next process in Risk Management is to Identify Risks, and that process is covered by yesterday’s post, which showed that the 31 global risks that were identified as the key factors that the respondents needed to consider for the next process, which is the process of ranking and prioritizing those risks.   The reason for prioritizing risks is simply to allocate resources towards risk responses in the most effective way possible.

1.  INTRODUCTION–THREE QUESTIONS OF QUALITATIVE ANALYSIS

The three questions that the respondents were asked about the 31 global risks were:

1. Which five of the global risks are of highest concern?
2. Which five of the global risks have the highest probability of occurring in the next decade?
3. Which five of the global risks would have the greatest potential impact if they were to occur in the next decade?

This post today covers the first of these three questions, the risks of highest concern.   Based on the answers from the respondents, the chart below contains the top 10 of the 31 global risks considered to be of highest concern.   (For a list of the 31 global risks, see the post for 02/04/2014.)   The list contains which of the five risk categories that risk belongs to:   economic, environmental, geopolitical, societal, and technological.

2.  ECONOMIC RISKS

From the above chart, you can tell that the category of risks that receive the highest number of votes for risks of highest concern is economic, followed by environmental.

One could argue that the fiscal crises, leftover from the Great Recession of 2008-2009, are closely linked to the risk of next highest concern, structurally high unemployment/underemployment.    The risk here is that even if there is an economic recovery, which appears to be the case in North America and Europe, the epicenter of the Great Recession, that the economy will not return to the same pre-crisis levels.

And the 4th highest risk, severe income inequality, can be understood from the observation that, as productivity continues to increase due to gains from technological, quality control, etc., the gains from that productivity will be heading mainly to the capital side of the economic interactions of society and not to the labor side.   This is borne out by the fact that real wages in the US (adjusted for inflation) have been stagnant.

It appears that the President Barack Obama understands the danger of the 10th highest risk, political and societal instability, and is trying to ease this danger by focusing on measures to alleviate structural high unemployment/underemployment (risk #2) and severe income inequality (risk #4).

3.  ENVIRONMENTAL RISKS

The extreme weather we are experiencing in the US is symptomatic of  risk #6 (greater incidence of extreme weather events).  It’s not the frequency and severity of snow storms east of the Rocky Mountains that I’m referring to, but that phenomenon coupled with the severe drought that is occurring in California and places west of the Rocky Mountains, to the extent of causing water crises (risk #3 above).

This imbalance of extremes of heat and cold in the depth of winter are, in turn, caused by an imbalance in the arctic jet stream (the so-called “polar vortex”) which in previously years has circumscribed the Arctic Circle but is now bulging asymmetrically downwards east of the Rocky Mountains.   If you ask why this is occurring, it probably has to do with the reduced ice cover over the arctic.   If all of these causal links aren’t necessarily proven within a magnitude of certainty, they certain are suggestive of how many of the environmental risks listed in the above chart are interrelated.

4.  SUMMARY

Economic and environmental risks seem to be those that worry most thought leaders who are in a position to know; the point of reviewing this list of 10 risks is not only recognizing that these two categories consume the majority of concern of leaders, but also that many of these risks can be seen as interconnected (a topic of a later post).   Although this may seem daunting, it is also a way to garner a sense of modified optimism, in that measures used to mediate even one of these risks may have a positive spillover effect on other risks in that same category.

The next post will deal with the second question of the qualitative analysis, those risks which have the greatest likelihood  of occurring in the next 10 years.

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`.  INTRODUCTION

The World Economic Forum puts out a Global Risk Report every year, and the report for this year 2014 they put out their report in January.   The first process in risk management is identifying risks.   The WEF has taken a different tack in 2014.   They started out with 25 risks divided into 5 categories, and then they increased that number to 50 risks in 2012 and 2013.  In 2014 they are streamlining the process to include any intermediary number of 31 risks, which are as before divided into 5 categories:  economic, environmental, geopolitical, social, and technological.

The definition of a global risk used is an occurrence that causes significant negative impact for several countries and industries, and that occurrence is something which expected to appear within the next 10 years.

Here are some examples of risks which manifested in 2013 in each of these 5 categories.

• Economic (fiscal crisis in the US)
• Environmental (Typhoon Haiyan in the Philippines)
• Geopolitical (Syria’s refugee crisis)
• Social (record income disparity in the US)
• Technological (Massive data theft from Target in the US)

The fact that I have included three examples from the US is related to the fact that I live in the US.   This shows an example of bias, in that the risks I pay attention to are those in my immediate experience.   The WEF has tried to avoid that geographical bias by asking 700 leaders from all over the world.

2.  IDENTIFIED GLOBAL RISKS

Here is a chart of the 31 risks divided into the 5 categories mentioned above.   This is taken from Appendix A of the Global Risk Report 2014.

3.  CONCLUSION

The majority of the 31 risks are practically equally divided between the four categories of economic, environmental, geopolitical, and social risks.   There are a relatively small number (3) of technological risks.

The next step in risk management is performing qualitative analysis, which assigns to each risk a probability, a potential impact, and a level of concern.   That is the subject of the next post.

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On January 16th, the World Economic Forum which meets every year in Davos, Switzerland, put out its Global Risk Report, which describes those risks which have the highest likelihood of occurring and which would have the highest impact on the world if they do occur.   During the next week, I would like to delve into the details of the report, which can be found at the following site:　http://www.weforum.org/reports/global-risks-2014-report.

1.  INTRODUCTION

Since I started this blog in April 2012, I have followed these reports in 2012, 2013 and now this year’s report because they give an insight into the pressing problems around the globe, and how they interact.   Understanding these global risks can give insights into the background behind the major events that will transpire during the year, and so studying this report has become an essential tool in being prepared for what lies ahead.

Posts during this week and next week will go into the following topics:

• Methodology of the Global Risk Report 2014
• The 31 global risks identified by the survey and the 5 risk categories they belong to
• Ten Global Risks of Highest Concern in 2014
• Global Risks Landscape 2014–maps risks according to their likelihood and potential impact
• Global Risks Interconnections Map–showing interdependencies of the 31 global risks
• Risks and Trends to Watch–recent trends in global risks, and risks may become more important in the future
• Three Risks in Focus–an in-depth discussion of economic insecurity, youth unemployment, and the integrity of the Internet
• Strategies for Global Risk Management

2.  METHODOLOGY

Because I go into what the report tells us, I wanted to start today with a different question on how it was done.

a)  Identify global risks, which are risks that are global in geographic scope, cross-industry relevance, uncertainty as to how and when they will occur, and high levels of economic and/or social impact.    31 global risks were identified.

b)  Categorize these 31 global risks into five Risk Categories: economic, environmental, geopolitical, societal and technological.

This became the basis for the Global Risks Perception Survey, which was sent in October and November 2013 to over 700 decision-makers and leaders, and questions were asked about 31 selected global risks.

c)  First the respondents were asked to choose the five risks of highest concern globally and to rank them from 1 (relatively highest concern) to 5 (relatively lowest concern)–new for the 2014 report

d)  Then the respondents were asked to assess the likelihood and potential global impact for each of the 31 risks.   This then became the basis for the Global Risks Landscape 2014 part of the report.

e)   To see how the 31 risks were interconnected, the respondents were asked to identify three to six pairs of risks they believed were connected.   The strength of the interconnection of each pair of risks was determined by the number of respondents that had cited them.    This then became the basis for the Global Risks Interconnections Map part of the report.

f)   Then two open questions were asked of the respondents

Which additional issue could potentially emerge as a risk of major global concern in the future?

The first question, as mentioned above, was the first time that respondents were asked to nominate their own risks as ones facing the world at present.   The second question forms a “watch list”, that is, risks which are both low in terms of probability and/or impact at the present, but which could migrate due to future trends of increased probability and/or impact to a position where they might become prominent global risks at some point.

For more technical detail into the composition of the respondents in terms of gender, age, geographical area, and stakeholder group (i.e., business, academia, NGOs, national governments, or international organizations), as well as details on how these responses were handled from a statistical basis, you can go to Appendix B of the report which is at the website mentioned at the top of the post.

3.  CONCLUSION

In the past two years, I have gone through the results in the Global Risks Landscape, but I think this year I would like to do a more in-depth study of every aspect of the Global Risk Report, because such a study will have benefit to myself in going through the material, and hopefully will have benefit to those readers of this blog who may benefit from my summary.

Having worked in the automotive industry and the insurance industry, and now having become a project manager, I have been fascinated throughout my career with the concept and practice of risk management.   Such a thorough study of this global risks report is an excellent exercise in understanding how to identify and analyze risks, but it also is an inspirational example of how risk management, rather than being just an academic exercise, can actually be of help to global leaders who are trying to cope with the world’s most intractable problems.     The more people that are informed about the nature of these problems, the less they will be tempted to react to them with a sense of passivity based on fear, and more with a sense of purposeful action.

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Today is February 2^nd, Groundhog Day, which in my childhood I knew as a quaint folk custom involving predicting winter weather based on a groundhog emerging from its burrow and then either staying out or retreating back into its burrow after seeing its shadow.

In 1993,the movie “Groundhog Day” directed by Harold Ramis quickly became one of my all-time favorite comedies, and so I celebrated the day with a viewing of the movie as I do every year.

1. Groundhog Day: From Imholc, to Candlemas, to American Folklore

I have learned that Groundhog Day had its origin in Candlemas. Candlemas is a Christian holiday which celebrated the presentation of Jesus at the Temple of Jerusalem. However, it was essentially a Christianization of the older pagan holiday of Imbolc, the day halfway between the winter solstice and the spring equinox in the Celtic calendar. Many Christian holidays including Christmas itself were celebrated on days of pagan holidays, and Candlemas seems to be part of this tradition.

Here’s an interesting folk legend of Candlemas:

If Candlemas be bright and clear,
There’ll be two winters in the year;
If Candlemas bring wind and rain,
Old winter shall not come again!

Now on Groundhog Day, if the groundhog supposedly sees its shadow, it will retreat back into its burrow, and the winter weather will continue for six more weeks. That’s literally the functional equivalent of the ancient legend of Candlemas, and is probably its origin as well, since Groundhog Day began as a Pennsylvania German custom in the 18th century, and they imported the Candlemas tradition from Europe.

So it went from being a pagan holiday to a Christian holiday to an American folk tradition.

2. Groundhog Day: The Movie

For those who are unfamiliar with the plot of the movie, it stars Bill Murray as Phil Connors, an egocentric weatherman from Pittsburgh. He is assigned to cover the annual Groundhog Day event in Punxsutawney, Pennsylvania, together with his news producer Rita (played by Andie MacDowell) and cameraman Larry (Chris Elliott).

He loathes the assignment and can’t wait to get back to Pittsburg when it’s over. However, due to a freak snowstorm they have to return to Punxsutawney and the next morning he wakes up … and it’s Groundhog Day all over again. He is stuck in a time loop, but nobody else is aware of it. Because of this he first takes advantage of the situation, robbing a cash truck, seducing the women of the town, and generally behaving in a selfish and arrogant manner. He then tries to seduce Rita, but to no avail because she’s “not that kind of girl.”

Despondent, he now tries to escape the time loop through repeated attempts at suicide, but to no avail: he keeps waking up over and over again on the same day.  Finally he decides to reach out to Rita as a human being in a spirit of compassion and conquests, and tells her about what’s going on with him.  She is obviously skeptical at first, but his ability to tell her precisely what will happen at the next moment convinces her that something is going on.

Based on her advice to see this experience as a blessing and not a curse, he decides to reexamine his priorities and ends up helping the others in the town, rather than taking advantage of them. By the end of the film, he is the most popular guy in town, and Rita “buys” him in a slave auction after which he tells her as they lay in bed talking that he genuinely loves her.

Finally, the next day he wakes up … and it’s February 3^rd and the time loop has been broken! The last scene, he asks her to stay and live with him in the town of Punxsutawney, the town that he had been trying to escape from the entire movie.

3. Groundhog Day: The Interreligious Symbol

Heather Parton, the Santa Monica blogger who goes by the moniker of Digby in her blog Hullaballoo, related an article that ran a few years ago in The Independent about Harold Ramis discussing the reaction to the film that came from various spiritual leaders.

The largest reaction he got was from two religions that would seem very different. He got calls from Rabbis saying they were preaching the film as their next sermon.   The Rabbi of the New Shul congregation in Greenwich Village, Dr. Niles Goldstein, said that Murray’s character is rewarded for performing what Judaism refers to as good deeds, or mitzvahs.

Then the Buddhist monks chimed in and said it perfectly expressed the notion of samsara, the continuing cycle of rebirth that individuals try to escape.

Harold Ramis pointed out that many Buddhists in the US started as Jews, because there is a remarkable correspondence of philosophies and style between the two religions, which are focused more on redemption in life, rather than in the afterlife.

However, many Christians also found that the film contains themes within the Christian tradition, with the groundhog being an Easter-like symbol of hope for the renewal of life at springtime, whereas Catholics interpret the “time loop” as a symbol of Purgatory, which every soul must pass through before entrance into Heaven.

4. Groundhog Day: Cultural Legacy
Thanks to the movie, Groundhog Day has now become a symbol of two things in our culture. It can mean either an unpleasant, repetitive situation, such as when “Groundhog Day” became a term of military slang by those service members in Iraq to describe their tour of duty with its endless cycle of monotonous long periods of waiting between violent raids.

However, in its positive connotation, it has become a symbol of man’s spiritual transcendence of selfish and egoism to a state of selfless service towards others. The important thing is, you can’t escape that negative repetitive experience of your own Groundhog Day of your life until you make that journey.

Harold Ramis really touched upon a powerful image to turn a comic masterpiece into a cosmic one.

Note:  This is a repost from one year ago, which given the movie Groundhog Day, seemed a fitting way to post on this momentous day.

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1.  INTRODUCTION

This webinar is part of the Advanced Project Management series of webinars sponsored by Project Insight, which produces Project & Portfolio Management Software.  The webinar today is about validating requirements, a technical but vital subject for project managers, especially those in the IT field.  It is presented by Janelle Abaoag, who is the Marketing, and Public Relations coordinator, as well as Diane Altweis, the CEO of Core Performance Concepts. 

The Advanced Project Management series is to designed to

• Expand knowledge of more complex tools & techniques
• Build leadership skills to manage people more effective
• Identify practical methods to begin using advanced techniques
• Explore other methodologies and/or techniques that enhance PM competency

Here are the objectives of the webinar:  by the end of this webinar, you should be able to

• Define what validation means as it relates to project delivery
• Define team roles and responsibilities as it relates to requirements
• Identify the types of validation necessary for your project
• Develop action plans to validate key components of the project

2.  REQUIREMENTS GATHERING

Collecting the requirements is a matter of defining the business need for the project.  You need to ask yourself some basic questions.  What is the project we are working on, why are we doing it?  What is the need we are trying to fulfill?

To fully understand the problem, you need to know not just what you are doing, but WHY you are doing it.  The project should be something that is needed in the organization to respond to a problem that needs to be resolved.

Understand what your expected outcome is.  Let’s say you are manufacturing facility and you take 10 days to produce product, and the competition can do it in 7 days.  Is the problem really that you need to reduce your cycle time to 7 days or less?  Let’s say the problem is that the competitor has a larger capacity.  To reduce cycle time you need to understand what the problem is, and how you solve it.  You can’t ASSUME that solving the problem requires reducing cycle time; maybe it’s because you have a higher quality product than competitors.  If you reduce the cycle time, are you willing to trade product quality in order to do so?

Requirements gathering need someone who has excellent interviewing skills, has persistence, and can chip away at getting to the requirements.  Sometimes we plan for one session to take care of requirements gathering, but in reality, most people can’t disseminate or regurgitate all the information in one session.  One week later you may think of new ways to look at problem.

3.  PRODUCT DOCUMENTATION

These are the elements of product documentation that are needed on the front end of the project:

• Project charter
• WBS
• Business requirements
• Functional requirements
• Non-functional requirements—performance of a new system.  does it have to perform 24/7.
• Requirements traceability matrix
• Design requirements

These elements of product documentation should come AFTER requirements are spelled out clearly.

• Technical Specifications
• Use Case with Diagrams and Descriptions
• Test Plans
• Training Documents

4.  VALIDATING REQUIREMENTS

The definition of validation is “a technique of evaluating a component or product during or at the end of a phase or project to ensure it complies with the specified requirements.”

To do that we need to understand the following:

• the needs of the business,
• the problem that is being solved,
• the expected outcome.

All of the above is what we are trying to validate.

Let’s use an example of a website.  There is a screen with fields.  You may validate that the fields are there in the right place, and that all the data put in the field has the right attributes.  But you need to check to see that the screen ITSELF solves the problem, the underlying business need.  Does it meet the needs of the users?  You need to look at requirements with a microscope and a telescope, from details to big-picture issues.

This requires excellent analytical skills, an ability to visualize the solutions, and the proactive identification of requirements gaps.

Who writes the requirements on the project?  The project manager or a business analyst?  Or even the client (as a first pass)?  Who typically writes test plans?  If the person who writes the requirements and the person who writes the test plans are two different people, are those two parties talking to each other to see what is being tested and whether the tests validate the requirements?

You can’t put a test plan together in a vacuum.  The people writing the test plan need to be aware of the details of the business plan so they can validate whether the problem is actually being solved, and not just testing the details of the solution.  Does the screen capture all the information?  Is it easy to use?  Both the business analyst and quality assurance people need to work side by side.

5.  ROLES & RESPONSIBILITY FOR VALIDATION

6.  TECHNIQUES FOR VALIDATION

• Use a requirements traceability information as a starting point.
• Develop methods for validating business requirements and project objectives
• Budget as part of project the efforts associated with validating
• Identify who is responsible for measuring the solving of the business problem.

Less than 40% of all projects succeed.  As a profession, we still don’t have high success rate for projects in general.  We aren’t focused on solving the business problem.  The product of the project doesn’t always meet the expectations.

7.  VALIDATING YOUR PROJECT OBJECTIVES AND REQUIREMENTS

Share your goals, objectives, and business problem with your BA and QA team.  You want to make sure that your project achieves your goals and objectives.

It’s more than just meeting requirements.  We have to assess the probability of achieving the goals and objectives of the project. Let’s take the earlier example of cycle time.  Assumption:  the 10 days that we are currently taking to deliver products is the problem.  We want to get it down to 7 days.  Do we validate during the course of the project that we are actually reducing cycle time.  We want to, say, streamline this process, so that it should reduce it to 7 days.  You have to PROVE that it is reduced to 7 days.

Many people are in IT.  When you are under the gun to deliver on time, you jump to reducing scope.  When we do that, we increase the probability of us not achieving our goal because you are taking some level of scope that was needed to actually deliver on objectives.  By reducing scope, we are ADDING RISK of achieving our ultimate goals.  This is why 60% of project continue to fail.

Let’s take an example of building a website for a wine bar.

The project is to create a website to increase product revenue for a wine bar within one year of website launch.

Are objectives are:

• to increase revenues by at least 10% within one year.
• to increase customer base by at least 5%
• maintain or increase EXISTING customer purchases by 5%

What happens if you don’t have a separate person doing the PM, BA, and QA roles?  Sometimes it is more important that you know what SHOULD be happening in the real world than it is to get that extra person on the team.  It could be that the BA can do the work on the QA portion as well.  You need to recognize the role that you are playing.  Separating out the roles is important in getting more resources, but you may have to wear more than one hat.

Out of three primary measures of success–time, cost and quality–time might be the most important issue with most products, but with medical devices, it might be quality.  Define it in project charter which of these measures of success are most important.  .

In the case of the wine bar, when it launches is not important.  But when it does launch, revenue should increase within one year.

Here’s an example of the requirements for this project.

The BA and QA have to come up with tests that show that the purpose is fulfilled.  If information or a data baseline do not exist, you need to create it as part of the project so that the results can it can be measured against the baseline through the course of the project.

The question is, how can you prove that the website is the cause of increased revenue as opposed to some other cause.  If only thing you are changing is offering food products, the increase in food products should give you an indication that website is effective.  It’s hard to prove causality if you change too many things at once.

How do you validate requirements for new products?  You need to do market research:  what is the company expecting for that new product?  If it is a new product, you have a marketing team that is tracking revenues of that new product.  As PMs ,you normally aren’t following the lifetime of product after launch; however, you SHOULD maintain relationship with marketing to let the project team know that the product is doing well, to let team know that it made a difference.

8.  VALIDATING THE SOLUTION OF THE BUSINESS PROBLEM

The ultimate objective of the project needs to be achieved, so you need to think of measuring things beyond the end of the project, so that you know that the product was a success for the organization.

What we do as PMs is critical to the strategic growth of organizations.  Projects need to be delivered on time, on budget, with specified quality levels.  That is a contribution to the organization.  If we don’t deliver it on time, the company cannot achieve those goals.  So you have to be conscious of the business need.  You need to PROVE that project was delivered at the level it should be.

For example, if revenue growth year after year is the business problem, then the validation can include the following elements:

• Goal:  10% revenue growth annually baseline:  $1,000,000
• Responsibility:   Accounting department to report to CEO
• Timeline:  within one year

So the validations developed for goals and objectives can be used as tools for the overall business problem.  You need to make sure that the company can measure success, however, with the current reports and tools available.  If not, you need to develop them.

In summary,

• An objective should be defined to solve the business problem.
• Every requirements should point back to address an objective.
• Every requirement should be able to be validated.
• Every requirement in the requirement traceability matrix should have an owner.

You should be able to PROVE at the end of the project that all requirements have been met.  You may not be able to prove it perhaps when the product is launched, but you need to get everything in place so that you CAN prove it, say, one year from now.   It usually does take time beyond the project delivery to determine success.

Use requirements traceability information as a starting point.  What about requirements that were met but in a way that didn’t meet the project owner needs?  Having iterations and involvement throughout the project life is very important.  Many times it is difficult to get through requirements meetings, anything like prototypes, design layouts, will help get the project owners on board.

9.  INTEGRATING REQUIREMENTS VALIDATION WITH AGILE METHODOLOGY

You will always have a problem with not being able to measure things until after the project.  For example, if there is an ease of use or usability requirements, with agile, you can get feedback from user groups to make sure your requirements actually solve the problems.  People like to throw extra requirements in there that don’t meet the project objectives.  Your role as PM is to make sure that EVERY requirement that is being proposed is tied to one of the objectives.

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