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Risk Management
What is it?
Assessing, reducing, and controlling risks so that project objectives are met without requiring excessive schedules or resource budgets.
Note, all project planning can be consider risk management; however, this topic discusses specific actions to plan for risk.
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Risk Assessment
• Identifying risks– Risks concerned with the tasks
themselves– Risks that occur between tasks
• Estimating consequences– Monetary cost of shortfall– Impact to schedule overrun– Shortfall on cost and schedule
overrun
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Risk Reduction
• Reduce uncertainty– Prototyping,
simulation, modeling – Planning in detail,
including mitigation plans
– Parallel alternative developments
• Reduce consequence– Decoupling related
items– Providing margins or
reserves
– Checking references– Using trained or
certified staff– Using proven
technology– Verifying suitability of
inputs
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Other risk management techniques
Risk Avoidance
• Reducing requirements• Increasing budget (locally)• Extending schedule (locally)
Risk Transfer
• Insurance• Aligning responsibility and
authority
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5
Problem ResolutionProblems are inherent in complex projects.
Problem Sources• Motivation• Conflict• Technology• Poor Planning• Mother Nature
Problem Solving• Communication• Root cause analysis• Obtain advice
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Project Ethics (see attached)
• Applicable codes of ethics:– Project Management Institute (PMI) Member Ethical
Standards– Code of Ethics for Engineers (NSPE)– other professional codes of ethics
• Let’s compare PMI and NSPE codes …
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Project Ethics
Are there always clear answers to ethical questions?
Sample discussion questions:
Should you quote projects for less than the estimated cost?
If you do under-quote a project should you go back and ask for additional funds?
Should you ever go back and ask for additional funds?
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Project Ethics
Discussion questions continued:
If in your opinion, the specifications are in excess of what is required, should you design to a more realistic set of specifications in order to save the customer money?
If there is an opportunity to save the customer money even though it may mean smaller profits for yourself, should you inform the customer?
Should you give more attention to the “squeaky wheel”?
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Project Ethics
Discussion questions continued:
Should you pay one worker more than another, even though they do equivalent work?
If you make an agreement to purchase materials from a vendor, but find a lower price elsewhere, should you buy from the new source?
Other situational questions from the class….
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Ethics Resources
Examples of codes of ethics for project managers can be found at the following web sites:
http://www.iappm.org/code.htm - International Association of Project and Program Management (IAPPM)
http://www.pmi.org/PDF/ap_pmicodeofethics.pdf– Project Management Institute
http://www.infra.kth.se/courses/1H1146/Files/codeofethics.pdf – “generic” code of ethics for project management professionals