Project Risk Management - Sharifgsme.sharif.edu/~projectmanagement/PMSession10.2.pdf · 5 Risk Management Plan The systematic processes of identifying, analyzing & responding to project

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Project RiskManagement

Sharif Project Management

Session 10.2

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Preparing for Possibilities

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Risk Management Plan

The systematic processes of identifying, analyzing & responding to project risks

A formal approach to the process as opposed to an intuitive one.

1. Define objectives2. Identify Risk3. Quantify Risk4. Develop Response5. Risk Control

Risk Management

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1- Define Objectives

Divide and then defineSubdivide by stakeholders

Subdivide by PM knowledge area

Subdivide by OBS (departments)

Subdivide by WBS (work package)

Subdivide by constraints

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Define Objectives, Sub-divide Objectives

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2- Risk Identification

Start with each objective•Cause to effect•Effect caused by

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Risk IdentificationHistorical data/closeout reportsStructured questionnairesStructured interviewsBrainstormingStructured checklist (WBS)Flow charts (build methods)Judgment based on experienceSystem AnalysisScenario Analysis

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Why Projects Fail

InnovationConcurrencyStakeholders CommunicationScope of workPoor estimatingPoor planning

Insufficient reviewsInsufficient controlLack of commitmentIncomplete and/or in-accurate informationLack of supportfrom team members. . . .

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3- Risk Qualification

For each risk, identify the risk degree,qualify by experts, and quantify!

Subjective

Objective

• Probability• Expected Value• Variance

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Consequence, Priority

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5- Risk Response

• Eliminate Risk Remove early

• Mitigate Risk Reduce probability/impact

• Deflect Risk Transfer to another party

• Accept Risk

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Contracting

Fixed price contract

Cost plus contract

Unit rates contract

Turnkey contract

BOOT contract

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Risk Management Plan

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6- Risk ControlImplements Risk Management plan to make it happen. Most neglected, but most important.Includes communication, training, practice runs. Develop company culture & attitude.Risk Management plan is monitored/updated on a regular basis to include any changes:

Changes in the scope of workChanges in the build methodChanges in the team membersChanges in the suppliers

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You Never Know . . . .