Intelligent Manufacturing € August € 1996 € Vol. 2 € No. 8

A Smart Approach to Risk Management

By Brian Willoughby

A couple issues ago, we took a look at a U.S. Government-sponsored effort to improve manufacturing throughout the U.S. industrial base (Intelligent Manufacturing, June 1996). We've invited Brian Willoughby with the U.S. Navy's Best Manufacturing Practices Center of Excellence to explain how the implementation of intelligent systems - particularly a knowledge-based risk management system - has produced substantial, measurable improvements to date. - The Editors

Risk management is a term very much in vogue and talked about these days. However, most risk management methods are poorly effective at best.

The problem is that they are based on a faulty pretext. Typically, risk management is done based on a mathematical metric evaluated against cost and schedule values. Tests conducted on these methods have shown them to be only about 30% repeatable, i.e., if two different "experts" do an analysis, 30% of their results will be in common. Repeatability is the name of the game in a low-risk design and manufacturing environment.

Furthermore, doing risk management based on cost and schedule-tracking systems is a misnomer. Once indications are seen in these systems, the issue is no longer a risk but a program problem. Because of this, what is often talked about as risk management is actually problem management.

Computer Sciences Corporation (CSC), along with the Navy Best Manufacturing Practices Center Of Excellence (BMPCOE), have developed the Technical Risk Identification & Mitigation System (TRIMS) methodology and software. The TRIMS methodology is based on a knowledge-based, process-oriented approach to risk management.

As shown in Figure 1, the TRIMS definition of risk is a function of probability and effect. Probability is purely a function of statistics (that is where the word comes from), and statistics are purely a function of past experience. That's why TRIMS uses a knowledge-based approach to risk management.


Figure1. TRIMS can be tailored to an Acquisition/Development Program

Effect is purely a function of systems architecture. If one program is building a prototype machine gun and another is building 10,000 printed circuit boards, questions on activities like computer-aided manufacturing will be weighted quite differently.

To develop a knowledge base to do risk management at the product level is next to impossible due to the almost infinite size of the knowledge base needed to review criteria for every type of product conceivable. (However, a knowledge base can be developed for a specific product sector). The goal of risk management is early identification of potential problems, and after some research, it became obvious to us that we should be monitoring the development process - not the product - to receive the earliest indication of problems.

This also gave us a major breakthrough in the development of the TRIMS methodology. When you are monitoring the process instead of the product, the knowledge base essentially becomes finite and product-independent. In other words, we don't care as much what you are building as we do how you are building it.

If we add a third element - planning - to the above mix, we end up with risk management vs. risk assessment.

Tailoring will always improve any process and the TRIMS methodology allows for this to take place. Product-oriented templates can be developed by the user and added to the knowledge base.

The TRIMS Systems Engineering knowledge base has been developed over the past 10 years from experience gained by the U.S. Navy, Department of Defense and companies like Bell Laboratories. It is extensive and has proven itself effective on many military programs. TRIMS's repeatability, when done by independent assessors, is typically in the 60-70% range; while this is not perfect, it is a great improvement and value-added for the effort expended.

The TRIMS software helps the user through a structured approach to collecting data and answering questions in its knowledge base. Currently, the TRIMS software is a DOS-based program (which runs well in a DOS window under MS-Windows), but a conversion and capabilities upgrade to the Windows environment is underway with release expected later this year.

Brian Willoughby is manager of the Program Managers Workstation (PMWS) program at the U.S. Navy's Best Manufacturing Practices (BMP) Center of Excellence (COE), College Park, Md. He can be contacted at (301) 403-8100 or [email protected]