General Session – Managing Business Risk Gary Poleskey Vice President, Dayton Aerospace, Inc. Member, NCMA Board of Dire

2. Risk Management -Importance of Proposal Risk Planning, Integration & Execution General Session – Managing Business Risk Gary Poleskey Vice President, Dayton Aerospace, Inc. Member, NCMA Board of Directors April 12, 2006 9:00 to 10:00 NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Objective • Review the importance of proper risk planning in the proposal phase of a program • Understand the importance of seamless transition for risk management from the proposal phase to program execution NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Early Risk Planning….. Source: Augustine’s Laws NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. What’s the need? • Increasingly, Government RFPs Require That Proposals Address An Integrated Risk/Scheduling Process : • Proposal Must Reflect Believable, Executable Risk Process • Supports the Government’s Schedule Risk Assessment • Integrated Risk Management With Program Execution Provides Ability To Anticipate Problems Rather Than React “Describe your risk management process….your (risk) mitigation plans and how they are integrated with your IMP, IMS, and cost proposal.” The Solution? Link Proposal Risk Planning With IMS Planning! NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Shortfalls We See Too Often!! • Risk Planning Done Independently • No clear or disciplined process – “check the box mentality” • Risk Documentation Cumbersome To Create/Maintain • Manual preparation of tables, metrics – hard to update • Tracked/Reported and not integratedseparately • Risk Mitigation Costs Unclear Or Missing • Not tied to the WBS – difficult for Government to evaluate • No clear linkage of mitigation plans to mitigation costs • Risk Mitigation Tasks Not Integrated With The IMS • Separate Databases • Risks Improperly Identified • Too broad and no distinction between Program and Proposal Risks • Risk Planning Re-Done Right After Contract Award NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Program Risks vs. Proposal Risk • Program Risks Relate To Specific Execution Risks • Example – Unreasonable software development timeline • Proposal Risk Relates To Government Confidence In – • The proposed approach and, • The contractors ability to perform • Example – Unique technical solution • Key Is To Relate Program Risks To Specific Section M Evaluation Factors • Increases Government visibility and confidence • Worth The Effort: • May have a “High” program risk with good mitigation plan • Could result in a “Green” proposal risk assessment (high Government confidence in approach) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. 5 Risk Management Process Elements Apply The Standard Risk Planning Elements To Prepare A Proposal Response Document Process 1 Risk Planning Risk Planning (IMP Narrative) Risk Assessment 2a Risk Identification Baseline Program and Proposal Risks 2b Risk Analysis Baseline Risk Mitigation Plans In the IMS 3 Risk Handling Summarize Planning Results in Proposal 4 Risk Monitoring Use same reporting documentation Planned for execution Risk Documentation Risk Documentation NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Date: 2/6/2004 11:04:56 AM Date: 2/6/2004 11:04:56 AM Samples: 1000 Samples: 1000 Unique ID: 967 Unique ID: 967 Name: Milestone C Readiness Review Completed Name: Milestone C Readiness Review Completed 1.0 1.0 0.14 0.14 0.9 0.9 0.12 0.12 0.8 0.8 0.10 0.10 0.7 0.7 Cumulative Probability Cumulative Probability Frequency Frequency 0.6 0.6 0.08 0.08 0.5 0.5 0.06 0.06 0.4 0.4 0.3 0.3 0.04 0.04 0.2 0.2 0.02 0.02 0.1 0.1 Fri 7/7/06 Fri 7/7/06 Wed 8/30/06 Wed 8/30/06 Fri 10/27/06 Fri 10/27/06 Completion Date Completion Date Northrop Grumman Northrop Grumman NexGen NexGen MWS, 6 Feb 04 MWS, 6 Feb 04 Executing within the IMF Environment Integrated Management Framework (IMF) Program Schedule Database (MS Project, Primavera, etc.) Other Metrics (TPM, etc.) Schedule Analysis (Risk+, etc.) Risk Management (inRisk, etc.) EVMS (wInsight, etc.) Dashboard Reporting NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. Goal – Integrated Management Framework Technical Definition Integrated Scheduling Risk Management Customer Requirements Resource Allocation (Cost) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Why Use Risk/IMS Integration Tools? • Proper Risk Planning And Integration Into The IMS Can Be A Significant Positive Proposal Discriminator • Software Tools Are Available To Facilitate Proposal Risk Planning And Integration Into The IMS • Plan And Integrate The Risks…..Then Execute The Integrated Risk Plan = Effective Program Execution Winning Proposals! & Seamless Transition to Program Execution! NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management