Interview Summary
Written By: Jameson Smieja
Interviewer: Jameson Smieja______Date: November 17, 2004______
Interviewee: John Appelen | NPI Project Manager Organization: Caterpillar Paving Products Inc.
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Question 1.) What experience do you have managing project risk?
Answer) John Appelen is currently a Project Manager in charge of 4 New Product Introduction (NPI) projects for a specific line of Caterpillar products. He’s worked at CAT for 11+ years, and had some prior experience working for Loram Inc. He spends most of his time controlling the estimation, planning, and execution of new projects.
Question 2.) What is your educational background in project risk management?
Answer) Mr. Appelen hasn’t had much formal training in risk management. He’s taken a graduate-level project management course, and has a strong statistical background. Although he has done some personal reading about project management processes, most of his risk management education has been “trial-by-fire” while working on actual company projects.
Question 3.) What sort of continuing education classes have you taken, if any, in order to remain up-to-date with current risk management techniques?
Answer) He has taken a variety of courses through Caterpillar’s own education system. Specifically, he has taken courses about legality issues regarding patent violations, as well as about using the Quality Function Deployment technique. Both of these courses have helped him to better manage risk in one project or another.
Question 4.) What typically determines when a project has failed?
Answer) A project is deemed a failure when PINS (Percent Industry Share) or price targets are not obtained. A project can be behind schedule or over budget, but PINS and price are the key goals. If these targets are not met, then the overall goal to fulfill customer expectations has not been obtained.
Question 5.) Describe some techniques that have been used which demonstrate some form of risk response planning (i.e. risk avoidance, acceptance, transference, and mitigation):
Answer) Avoidance is the primary technique used within CPPI. A full attempt is made to solve any foreseen issues, thus avoiding the risk of future product issues. Lessons Learned are frequently used to identify and mitigate the potential risks of a project. Concurrent development plans are also developed to protect against risk. Lastly, procurement contracts are used to transfer the risk of warranty issues to the suppliers of individual components.
Question 6.) Describe a difficult situation in which good risk management helped:
Answer) In order to significantly reduce the cost of a new project, a prototype component was designed specifically for a given machine. The component itself was vital to the operation of the machine. To ensure that there would be no reliability risks, rigorous tests were performed to validate the component and avoid potential future issues. As a result, the component had two necessary redesigns before the machine went into production. Thus good risk buffers allowed the project to avoid a potential reliability problem by allowing enough time to validate the new component.
Question 7.) What effects do you feel poor risk management has on a project?
Answer) Poor risk management has the tendency to increase the variability of positive results from project to project. In essence, it increases the probability of failure for individual components, which in turn makes it hard to identify, monitor, and control any issues which may arise within a project.
Question 8.) What managerial approach do you feel is best suited for risk management (risk-averse, risk-neutral, or risk-seeking)?
Answer) The risk utility best suited for management depends on the product in question. Volume is a key concern when determining which approach to take in regards to risk. For instance, it may be more appropriate to be risk-averse when designing a car, given that any initial failures may result in large warranty claims for the product. The design of planes should also be risk-averse, given that any critical failure of the product may result in the loss human life. However, a risk-seeking approach may be very beneficial when designing toys, given that there is little risk to the consumer when new designs are implemented.