PMM Risk Management 1

Project BasedRisk Management

Defusing a potential ticking time bomb

• What is Risk Management?• Why do we need to manage Project Risk?• How do we manage Project Risk?

PMM Risk Management 2

What is Risk?

Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives. PMBOK® Third Edition

PMM Risk Management 3

Risks That Can Effect a Project• The technology used on the project• The environment in which the project is executed• The relationships between team members• How well the project fits the culture or business

area or strategic objectives of the agency• How great of a change will result from the project

PMM Risk Management 4

Project Risk can increase when you have:

• Lack of resources

Lack of communication and information

Lack of authority and/or responsibility

PMM Risk Management 5

Using Risk Management to Plan• Identify risk mitigation strategies

– How can we fix it?

– Are we working on the “right” risks?

• Identify risk contingency strategies– If we can’t fix it, how do we do it differently?

• Develop Action Plans– Prioritize items

– Minimize impact

– Don’t over-correct

PMM Risk Management 6

PMM Risk Management StepsRisk

ManagementStrategy

Development

RiskIdentification

Qualitative andQuantitative

Analysis

Risk ResponsePlanning

Risk Monitoringand Control

PMM Risk Management 7

Risk Management Strategy Development– Decide on a Risk Management Methodology– Identify Risk Assumptions– Define Risk Management Roles and

Responsibilities– Define Risk Management Timeframes– Define Risk Communication Strategy– Define How Risks Are to be Tracked– Define any Risk Thresholds – Define Ranking/Scoring Techniques

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Identifying Risk

• Some Techniques: – Brainstorming

• All team members participate - include stakeholder perspectives

• Initially list all potential risks, no matter how small

• Watch for contradictory information

– SME Interviews

– Project Documents• Deliverable Descriptions

• Specifications Documents

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Identifying Risk(continued)

• Categorizing Risks– Technical, Quality, or Performance risks

– Project Schedule risks

– Project Management risks

– Organizational risks

– External risks

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Risk Analysis• Qualitative Analysis

– Individual Risk Ranking– Probability/Impact Matrix (below)– Overall Risk Ranking of the Project

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Risk Analysis(continued)

• Quantitative Analysis – Sensitivity Analysis– Decision Analysis

Note: Not every Risk needs Quantitative Analysis – only those that need to be highly quantified, such as needing to determine certain cost and time objectives for the project.

PMM Risk Management 12

Risk Response Planning• Risk Avoidance

– Eliminate Cause

• Risk Transfer– Purchase Insurance

– Subcontract high risk tasks

• Risk Mitigation– Minimize Probability

– Minimize Impact

• Risk Acceptance– Contingency Plans

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Risk Monitoring and Control

• Using the Risk Management Plan to monitor risk (periodically reviewing the known risks) and controlling risk (mitigating and tracking known risks)

• Dealing with actual risk events (taking corrective action)

• Identifying new risks

• Updating the Risk Management Plan

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PMM Risk Management TemplateGeneral Info

Risk Management Strategy

Risk Response Planning

Risk Identification

Qualitative and Quantitative

Analysis

PMM Risk Management 15

State of Michigan Project Management Methodology

(PMM)

More information on Risk Management can be found in the

PMM starting on page 3-70