IS 556 Project Management

IS 556 Fall 2003 1

IS 556 Project Management

Risk Management Personal Notes Survival Guide – Chapter 7

David Lash

2David LashCS 556 - Winter

Unit Objectives

What is Risk Management? Three Main Steps to Risk Management

Identify Develop Response Control


Plan Early… Plan OftenMission Shared vision – Could be charter

Creates buy-in, understanding, motivation Achievable goals

Executive Champion – Critical to project successOpen planning

Include those who carry out planRefine estimates of effort throughout projectDocument and announce risks and achievementsProject web pageTop 10 Risks List- risk, resolution, progress


How Much Effort? Some budget should be committed to risk management.

Figure 7-2: Variation in risk level according to risk-management overhead. The average project devotes virtually no attention to risk management and accepts extremely high levels of risk as a consequence. Successful projects devote a small amount of overhead to risk management and substantially reduce their risk exposure


What Is Risk Management?The means by which uncertainty is systematically

identified and managed to increase likelihood of success

Risk might be obvious: Development of a new drug to treat cancer

Or less obvious: Large contract requires execution of 1 or more sub-contractors

(how will ensure they will deliver?) Turn-over in industry may result in loss of key people on project Departmental reorganization may disrupt project


Why Risk Management?

Proactively understand and manage risk of: being late being over budget uncertainty quality assurance

An iterative process to identify and manage risk throughout the project


Level Of Risk Management?Risks exists at business level - select right project

and project level - execution of the project For example, building a new office building on-time and on-cost

- project level responsibility If turns out there is no demand for office space (once done) -

business level responsibility.

Project managers are most concerned with project level execution

Program managers or functional managers or senior management with business risk


PM Should Be Defined Process Charter

Purpose review and publish

SOW A. Document goals, scope deliverables HL budget estimate Review with Project board

Communication Plan Document communication methods of various level Review with project board, various stakeholders

Risk Strategy Project Plan

Execute

HL Plan

LL Plan


Risk Management Influence

Allstakeholdersauthorize theproject rules

Definition

-Statement of Work - Repsonsibilty Matric - Communication Plan

Planning

RiskManage

ment

Schedule &budget

development

Changes to scope,deliverables,

cost, & schedule,communication plan

- New Risks

- Projectdeliverables

- Developmentapproach

- responsibilities- risk monitoring

•Risk mgmt influences project plan and rules


Risk Management Framework

Three main stepsI. Identify - find the sources of project risk

II. Develop Response - As risks are identified determine how you will mitigate them

May result in a change in change in documents that define project rules (e.g, scope change)

III. Control - Implement strategies and monitor effect of changes


Step I - Identify Risk • There are 4 techniques to identify risks

1.Asking stakeholders• Brainstorming sessions• Interviewing

2. Developing a risk profile list•A risk profile (or template) might be gathered from post-mortem reviews of projects. •Develop categories of risks under each category develop possible risk areas refine over time

3. Learning from similar projects (You may be able

to find historical records )


4. Identify Risk - Budgets & Schedules There are 4 techniques to identify risks

1.Asking stakeholders 2. Developing a risk profile list 3. Learning from similar projects 4. Focus on schedule and budget risk

For each task will need to develop time & cost estimates•How accurate do you believe estimates are? •How definite are estimates?

•What parts are uncertain?•How can you shore those up?


Risk Management Process

•Analyze the sourceof risks

Risk Identification

Response Development

Control

Known Risks

Risk ManagementPlan

•Define the risk & potential neg impact•Assign probability•Develop risk reduction strategy

•Implement the risk strategy•Continue to monitorfor new risks

NewRisks


Step II - Risk Response Strategy • Not all risks are equally important and/or likely

likely.• Need a plan that will

1. Identify the severity of risk –For each risk identify the:

Condition - description of the risk situation Consequence - what are

possible negative outcomes

2. Identify the probability of the risk3. Develop strategy to deal with the risk


1-2. Risk Severity - Probability • Condition - soil conditions require a complex boring machine with which we have little experience•Consequence - Improper use of machine may damage machine and/or riverbed.

•Machine damage could be from 50-250K•Riverbed damage may prevent future contracts

•Probabilities- •75K of equipment damage - 20%•200K of equipment damage - 20%•No damage at all 60%•Probable cost of damage - 55K

( 200*.2 + 75*.2 = 55k )


3. Defining the Risk Strategy • Strategy - Hire operator from equipment provider for estimated cost of 10K. (any damage by their operator paid by them).

•Adds 10K to cost of project but reduces possible additional cost and schedule risk


Another Example • Condition - required that all diagrams be developed

with a tool that tech writers don’t know.•Consequence - Document generation and management tasks will take longer. Possibly causing rework. •Probabilities-

•Work may be 25% slower. (Since everyone new to tool would work at junior level VS senior.)•Probable labor cost: 1.25*20=25•Probable schedule: 1.25*4 mon = 5 mon


Another Example - 2 • Strategy - Send all technical writers to 2 day course on new tool.

•Costs: $2,200 and will reduce training factor to 1.1.•Make 1 tech writer a tool expert to exercise tool and create templates for others to reduce productivity factor to 1.0.


Possible Format Example • Might organize material in a table

# Risk Risk Risk Risk Cond Consequence Prob Strategies

(H,M,L)1. Loss of Late Project H Increase project Staff documentation. Require formal

reviews.

However estimation of risk costs can be very useful


Another format (From survival guide)


Risk Management Process

•Analyze the sourceof risks

Risk Identification

Response Development

Control

Known Risks

Risk ManagementPlan

•Define the risk & potential neg impact•Assign probability•Develop risk reduction strategy

•Implement the risk strategy•Continue to monitorfor new risks

NewRisks


Step Three: Control Risk Control - not a 1-shot step•Monitor risks like monitor project execution

•periodic risk review with Project Board•evaluate status of identified risks•identify new risks

•Create a risk control log •Someone responsible for each risk •Rank risks by severity •Update periodically


Risk Control Log

Id Pr

Who Descript Strategy Status

7 1 J. Yoa Design requires O/S notyet released. Venodr haspoor track record

1. Get on beta testteam.2. Assess probabilityof risk by 6/1/013. Develop a alt design

1. Beta versions areunpredictable. New releasedue 6/15/01. RISK HIGH2. Meeting scheduled3. Identified alt software.Design will be ready 7/15/01

5 2 T. Chang All diagrams need to usesoftware tool that is newto tech writers.

1. Send everyone totraining2. TC will completestds and templates3. TC Will completeDoc mgmt strat

1. Completed. Helpedlearning curve2. Completed. Helpedeffectiveness3. Trouble will merging olddocuments. Working withvendor. RISK MED

12 3 T. Smith Require complex boringmachine that we coulddamage.

Equipment prodiverwill supply operatorfor 100k

Operator and equip arescheduled. RISK LOW.


Risk - The means by which uncertainty is systematically identified and managed to increase likelihood of success

3 basic steps I. Identify

• Work with othersII. Develop Response

• Quantify when possibleIII. Control

• Control log

Summary

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IS 556 Project Management