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JKR PROJECTJKR PROJECTRISK MANAGEMENTRISK MANAGEMENT
BENGKEL PENGURUSAN RISIKO
Untuk
UNIVERSITI DARUL IMAN,
KAMPUS BESUT
10 – 12 JANUARI 200910 – 12 JANUARI 2009
BACKGROUNDBACKGROUND
PROJECT MANAGED CHANGE MANAGEMENT PROGRAM
ESTABLISHMENT OF COMPLEX PROJECT MANAGEMENT DIVISION (PROKOM)
INSTITUTE BEST PRACTICE PROJECT MANAGEMENT WITHIN JKR
Benefits of Risk ManagementBenefits of Risk Management
Improve predictability and potential to meet deadlines. Prevents additional costs and potential for budget overruns
due to unforeseen and planned for events. Ensure projects and operations deliver promised functions. Achieve higher quality by increased conformance to
defined requirements. Achieve better stakeholder satisfaction by avoiding
damaging events of direct interest to them. Identify the requirement to prepare contingency plans
where necessary. Ability for earlier problem resolution. Early detection makes
risks less expensive to manage. Highlight options and trade-offs.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT FACILITATION GUIDELINES (RMFG)FACILITATION GUIDELINES (RMFG)
PURPOSEA guiding tool for Trainers and JKR
Project Managers to facilitate risk management workshops and activities
Provide information and methodology on the Risk Management Process
CONTENTS Introduction Risk Management – Framework, Benefits, PLC Risk Management Process Roles and Responsibilities Risk Management Plan Tools and Techniques Procedures for Risk Management Process Procedures for Risk Management Workshop Templates for Risk Management
JKR RISK MANAGEMENT JKR RISK MANAGEMENT FACILITATION GUIDELINESFACILITATION GUIDELINES
JKR RISK MANAGEMENT JKR RISK MANAGEMENT FRAMEWORKFRAMEWORK
RISK MANAGEMENT RISK MANAGEMENT IN JKR PROJECT LIFECYCLEIN JKR PROJECT LIFECYCLE
Letter of Authority, Project
Brief, Budget, Regulation, Standards
INPUT
Planning
Activity 1
Design
Activity 2
CompletedProject
OUTPUT
Procurement
Activity 3
Construction
Activity 4
Handover
Activity 5
Initial Project Risk
Assessment(Initial Risk Register)
Strategic Risks
emerging from program
proposals
Risk Register updated ex
Planning Phase – Treatment measures
developed for High Risks
Depending on project
classification/type risk
management plan developed
or section in PMP
Risk Register updated ex Design Phase – Treatment measures updated for High Risks
Risks monitored
and/or managed
during construction
PhaseResidual
Risks identified as
part of Handover process
Risk Register updated ex
Procurement Phase –
Treatment measures
updated for High Risks
Specific risks may also be
monitored with contractor –
dependent upon contract vehicle
(e.g. PPP) chosen
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
ESTABLISH CONTEXT RISK IDENTIFICATION RISK ANALYSIS RISK EVALUATION RISK TREATMENT RISK MONITORING & CONTROL COMMUNICATE & CONSULT
JKR RISK JKR RISK MANAGEMENT MANAGEMENT
PROCESSPROCESS
Establish the Context• The strategic context
• The organisational context• The risk management context
• Develop criteria• Decide the structure
Risk Identification• What can happen?• How can it happen?
Risk AnalysisDetermine existing controls
Risk Evaluation• Compare against criteria
• Set risk priorities
Risk Treatment• Identify treatment options
• Evaluate treatment options• Select treatment options • Prepare treatment plans
• Implement plans
Co
mm
un
icat
e an
d C
on
su
lt
Mo
nit
or
and
Rev
iew
Risk Assessment
Determineconsequences
Determinelikelihood
Estimate level of risk
Acceptrisks
Yes
No
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
ESTABLISH THE CONTEXTDetermine the environment in which the risks will be managed where the project operates. Prepares JKR for the procedures needed to manage risks and the structure for escalation of business risks to Senior Management.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
RISK IDENTIFICATIONAllows JKR to identify the various risks and categorise them according to a suitable and controllable structure. The result of this is a list of risky events or conditions grouped under a suitable classification.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
RISK ANALYSISAnalyses all events by assessing each against two major parameters, the likelihood that an event might take place and the impact of the event. Results in risk rating.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
RISK EVALUATIONConsidering the best method of handling the risks – reduce, accept, avoid or transfer. If risks are to be accepted, develop contingency plans
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
RISK TREATMENTIdentification, evaluation and selection of the appropriate treatment options and the development and implementation of the required plans.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
MONITORING & CONTROLPresents the procedures needed to monitor and track risky events, revising the Risk Register and learning from the various results.
JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS
COMMUNICATE AND CONSULTStakeholders have significant impact on decisions pertaining to risks undertaken and should be continuously communicated over the risk process. Risk status must be reported to key stakeholders
Roles & ResponsibilitiesRoles & Responsibilities
Risk Owner
One whoever is best placed to manage the risk
Agrees to own the riskBe aware of the responsibility of
managing the risk
Roles & ResponsibilitiesRoles & Responsibilities
Risk ManagerResponsible for operating the project’s
risk management process Custodian of the Risk Management Plan
and Risk RegisterMonitoring the mitigation measures and
evaluating the effectivenessReports to the risk owner
JKR RISK CATEGORIESJKR RISK CATEGORIES
1. Political 9. Contractual
2. Scope 10. Technical
3. Schedule 11. Environmental
4. Financial 12. Suppliers
5. Human Resources 13. Industrial Relations
6. Quality 14. Organisational
7. Communications 15. Occupational Health & Safety
8. Other Resources 16. Cultural & Social
RISK DESCRIPTIONRISK DESCRIPTION
Risk need to be given a structured description so that it is fully understood :
Source of risk has a likelihood of causing an event which depending on the context will have an impact.
RISK STATEMENTSRISK STATEMENTS
Risk statements are generally written in one of two ways: An IF – THEN type of risk statement; or A CONDITION – CONSEQUENCE risk
statement.(Given the “condition”, there is a likelihood that “impact” will occur).
EXAMPLE OF RISK STATEMENTEXAMPLE OF RISK STATEMENT
Source Likelihood & Event Impact
There may be one or more sources …
… potentially causing a variety of events …
… leading to one or many impacts.
Loss of funding Will cause a reduction in available resources
Leading to project delays or reduction in agreed deliverables
LikelihoodLikelihood
Likelihood is classified as: rare, unlikely, possible, likely, almost certain
Example of Likelihood Example of Likelihood Assessment ScaleAssessment Scale
Descriptor Qualitative StatementProbability that the event will occur
Rare May occur in exceptional cases
< 10%
Unlikely Is unlikely to occur 10% - 30%
Possible May Occur 31% - 70%
Likely Will probably occur 71% – 90%
Almost Certain Can be expected to occur > 90%
ImpactImpact
Impact is classified as: insignificant, minor, moderate, major, severe
Example of Impact Assessment ScaleExample of Impact Assessment Scale
DescriptorFinancial
ImpactImage
ReputationEnvironment
Possible delay to
the Schedule
Community/
Stakeholder Response to the
Impact of the Event
Health & Safety
Insignificant <RM10,000.00 Brief Local Media Coverage
Short term damage < 2 days Minor complaint No injuries
Minor RM10,000 – RM50,000
Local Media Coverage
Limited but medium term negative
effects
2 – 5 days Formal correspondence
written by stakeholder
First aid required
Moderate RM50,000 – RM100,000
Regional Media Coverage
Major but recoverable
ecological damage
5 – 7 days Local political intervention
Medical treatment
Major RM100,000 – RM500,000
Sustained Regional Media
coverage
Heavy ecological damage, costly
restoration
7 – 10 days
Ministerial involvement Extensive injuries
Severe >RM500,000 National Media Coverage
Permanent widespread
ecological damage
> 10 days Political intervention Fatality
JKR Risk MatrixJKR Risk Matrix
InsignificantI
MinorII
ModerateIII
MajorIV
SevereV
IMPACT
5
4
3
2
1
Almost Certain
Likely
Possible
Unlikely
Rare
H
M
L
L
L
H
M
M
L
L
H
H
M
M
M
E
E
H
H
M
E
E
H
H
E
LIKELIHOOD
LOWRisk(L)
MEDIUMRisk(M)
HIGHRisk(H)
EXTREMERisk(E)
Tolerances:
Preferred
Acceptable
Undesirable
Unacceptable
Recommended Actions Recommended Actions
Ratings Risk Mitigation Actions Who
E
Extreme
Mitigation actions, to reduce the likelihood and impact, to be identified, costed and prioritised for implementation before the project commences or immediately as they arise during project execution.
Steering Committee/
Project Sponsor
H
High
Mitigation actions, to reduce the likelihood and impact, to be identified, costed and prioritised. Appropriate actions implemented during project execution
Steering Committee/
Project Manager
M
Medium
Mitigation actions, to reduce the likelihood and impact, to be identified and costed for possible action if funds permit
Project Manager
L
Low
To be noted; no action is needed unless grading increases over
time Project Manager
RISK DOCUMENTSRISK DOCUMENTS
RISK REGISTER
RISK ANALYSIS TEMPLATE
RISK MANAGEMENT PLAN
eg. 1
eg. 2
eg. 3
THE FUTURE ……….THE FUTURE ……….
Risk management an integral practice in project management
Risk management – developing specialist as Risk Managers
Venturing into high level risk management and further…
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