Risk Project Management 9

8/8/2019 Risk Project Management 9

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RISK PROJECTM ANAGEMENT



RISK PROJECT M ANAGEMENT

The art and science of identifying, analyzing, andresponding to risk throughout the life of a projectand in the best interests of meeting projectobjectives

Can have a positive impact on selecting projects,determining the scope of projects, and developingrealistic schedules and cost estimates



CONT«

Help project stakeholders understand the nature

of the project, involves team members in defining

strengths and weakness, and helps to integrate

the other project management knowledge areas Its goal can be viewed as minimizing potential

risks while maximizing potential opportunities or

payoffs



PROJECT RISK M ANAGEMENT

Risk management planning

y Involves deciding how to approach and plan the risk

management activities for the project

Risk Identificationy Involves determining w/c risks are likely to affect a

project and documenting the characteristics of each



CONT«

Qualitative risk analysis

y Involves characterizing and analyzing risks and

prioritizing their effects on project objectives

Quantitative risk analysisy Involves measuring the probability and consequences

of risks and estimating their effects on project

objectives





RISK M ANAGEMENT PLANNING

Documents the procedures for managing risk

throughout the project

Summarizes the results of the risk identification,

qualitative analysis, quantitative analysis,response planning, and monitoring and control

processes



RISK MITIGATION

Reducing the impact of a risk event by reducing

the probability of its occurrence




T he risk management plan can include the

following

y Methodology for risk management

y

Roles and responsibilities for activities involved inrisk management

y Budgets and schedules for the risk management

activities



CONT«

y Description of scoring and interpretation methods used for the

qualitative and quantitative analyses of risk

y Threshold criteria for risks

y Reporting formats for risk management activities

y Description of how the team will track and document risk

activities




Many Projects also include:

y Contingency plans ² redefined actions that the

project team will take if an identified risk event

occurs.

y F allback plans ² developed for risks that have a

high impact on meeting project objectives, and are put

into effect if attempts to reduce the risk are not

effective.



CONT«

Contingency reserves or contingency

allowances ²provisions held by the project

sponsor that can be used to mitigate cost or

schedule risk, if changes in project scope or

quality occur.



RISK IDENTIFICATION

Below are some tools and techniques for identifying

risks:

y Reviewing project documentation

y

Analyzing project assumptionsy Gathering risk-related information

Project team members and outside experts often hold

meetings to discuss some project documents and

assumptions after w/c they ask important questions about

them as they relate to risk.. Then, the project team uses

different information-gathering techniques.



RISK IDENTIFICATION

Information-gathering techniques include:y Brainstorming ² a technique by w/c a group attempts to

generate ideas or find a solution for a specific problem bygathering ideas spontaneously and w/out judgment

y Delphi technique ² derive a consensus among a panel of

experts to make predictions about future developments. Ituses repeated rounds of questioning and written responses,including feedback to earlier-round responses to takeadvantage of group input, while avoiding the biasing effectspossible in oral panel deliberations



CONT«

y Interviewing ² a fact-finding technique for

collecting information on face-to-face or telephone

discussions

y SWOT analysis ² often used in strategic planning;

it can also assist in risk identification by havingproject teams focus on the board perspectives of

potentials risks for particular projects.



RISK IDENTIFICATION

T wo other techniques for risk identification

Checklists - based on risks that have been

encountered in previous projects provide a

meaningful template for understanding risk in acurrent project.



CONT«

y Diagramming ² include using cause-and-effect

diagrams or f ishbone diagrams, flow charts,

and influence diagrams.



THE FF. ARE THE MAIN OUTPUTS OF RISK

IDENTIFICATION PROCESS:

Risk Events ² specific things that may occur to

the detriment of the project.

Trigger or risk symptoms ² indicators of

actual risk events.



QUALITATIVE RISK A NALYSIS

Calculating Risk Factor using Probability / Impact matrixes

to quantify risk probability and consequence, theDefense System Management College (DSMC)

developed a technique for calculating risk factors ² numbers that represent the overall risk of specific events, based on their probability of occurring and the consequences to the project if they do occur.



CONT«

Top 10 Risk Item Tracking

This is a qualitative risk analysis tool, and in

addition to identifying risks, it also maintains an

awareness of risks throughout the life of aproject. It involves establishing a periodic review

w/ management and, optionally, with the

customer.



QUANTITATIVE RISK A NALYSIS

Decision Trees and Expected Monetary Value

A decision tree is a diagramming method used to help

you select the best course of action in situations in w/c

future outcomes are uncertain. A common application

of decision tree analysis involves calculating expected

monetary value. Expected monetary Value(EM V)

is the product of a risk event probability and the

event·s monetary value.



CONT«

To create a decision tree and to calculate expected

monetary value specifically, you must estimate

the probabilities, or chances, of certain events

occurring.







Simulation - This uses a representation or

model of a system to analyze the expected

behavior or performance of the system. Most

simulations are based on some from of Monte

Carlo A nalysis - simulates a model·s outcome

many times to provide a statistical distribution of

the calculated results.



THE FF. ARE THE BASIC STEPS OF A MONTE

C ARLO SIMULATION:

1. Assess the range for the variables being considered

and determine the probability distribution for each

2. For each variable, select a random value based on

the probability distribution for the occurrence of the

variable.

3. Run a deterministic analysis or one pass through

the model using the combination of values selected

for each one of the variables.



CONT«

4. Repeat steps 2 and 3 a large number if times to

obtain the probability distribution of the results



RISK RESPONSE PLANNING

Below are the f our basic response

strategies of risk response planning:y Risk avoidance - involves eliminating a specific

threat or risk, usually by eliminating its cause.y Risk acceptance ² means accepting the

consequences should a risk occur.





RISK RESPONSE PLANNING

Important outputs of the risk responsedevelopment process include a risk managementplan, contingency plans, and reserves.

Important outputs from risk response planninginclude development of a risk response plan,analysis of residual risks, and analysis of secondary risks.



CONT«

The risk response plan describes identified risks,

people assigned responsibilities for managing

those risks, results from risk analysis, response

strategies, budget and schedule estimates for

response, and contingency and fallback plans.



CONT«

Residual risks are risks that remain after all of

the response strategies have been implemented

Secondary risks are a direct result of

implementing a risk response.



RISK MONITORING AND CONTROL

Carrying out individual risk management plans

involves monitoring risk on the basis of defined

milestones and making decisions regarding risks and

mitigation strategies.

It may be necessary to alter mitigation strategy if itbecomes ineffective, implement a planned contingency

activity, or eliminate a risk for the list of potential

risks when it no longer exists.



CONT«

Project teams sometime use workarounds -

unplanned responses to risk events ² when they

do not have contingency plan in place.