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
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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
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Project Risk can increase when you have:
• Lack of resources
Lack of communication and information
Lack of authority and/or responsibility
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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
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PMM Risk Management StepsRisk
ManagementStrategy
Development
RiskIdentification
Qualitative andQuantitative
Analysis
Risk ResponsePlanning
Risk Monitoringand Control
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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.
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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
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State of Michigan Project Management Methodology
(PMM)
More information on Risk Management can be found in the
PMM starting on page 3-70