Abstract

This study addresses a gap in enterprise risk management related to project team performance. Poorly functioning teams may severely erode project net present value (NPV). The erosion of project NPV can be quantified in terms of probability of success (POS). In the oil business POS is based on success criteria for likelihood that exploration efforts for oil & gas prospects will realize the EMV for those assets. Similarly, POS in team work and negotiations is based on success criteria for the likelihood that cooperation between team individuals will be able to deliver the maximum value for the project. Practical rules are formulated to support teams and team leaders in their efforts to optimize the alignment of team members in order to enhance the team’s effectiveness. The probability of success (POS) is split into three fundamental factors of alignment: PCulture , PSkills and PGoals. The dynamic effect of team learning on team alignment is graphed as the Cumulative POS. The cost of failure is graphed for a range of POS values, and visualizes the impact on the EMV of extra Team OPEX, each normalized by the project NPV. Applications are possible in all kinds of functional teams, including change management teams that need to build coalitions to effectuate lasting change. The interaction between members of engineering and other professional teams has been studied intensively, but the expression of team performance in numbers as quantified here is a new direction.

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