Project managment 10

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Project Management

Knowledge Areas

Section – 3

Chapter – 11

Project Risk Management

Session Objectives…

1. To identify the project Risk management knowledge area’s processes

2. How to plan Risk Management for the project

3. How to identify Risk

4. How to perform Qualitative Risk Analysis

5. How to perform Quantitative Risk Analysis

6. How to plan risk Responses

7. How to perform Risk Monitoring and Control

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Exam Objectives

1. Planning for Risk Management

2. Identifying Risks

3. Creating a Risk Register

4. Performing Qualitative Risk Analysis

5. Performing Quantitative Risk Analysis

6. Planning for Risk Responses

7. Monitoring and controlling Risks


The Project Risk Management Knowledge

area, discusses the processes of

Plan Risk management

Identify Risks

Perform Qualitative Risk analysis

Perform Quantitative Risk analysis

Plan Risk responses

Monitor and Control Risks

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What is Risk?

Risk is unplanned event or condition that

can have a positive or negative effect on its

success

Not all Risks are bad, and are seen as a

Threat

Risk is uncertainty

Plan Risk Management The process is to decide

How to approach

How to conduct

Risk management activities

Exam point to remember

The objective of Risk Management Planning is to ensure that the level, type and visibility of Risk Management are commensurate with both the risk and importance to the project to the organization, to provide sufficient resources and time for risk management activities and to establish an agreed-upon basis for evaluating risks.

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Plan Risk Management

• 1. Project Scope Statement

• 2. Cost Management Plan

• 3. Schedule Management Plan

• 4. Enterprise Environmental Factors

• 5. Organizational Process Assets

Input

• 1. Planning Meetings and

Analysis

Tools & Techniques

• 1. Risk Management Plan

Output


Inputs

1. Project Scope Statement

2. Cost Management Plan

3. Schedule Management Plan

4. Enterprise Environmental Factors

5. Organizational Process Assets

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Tools and Techniques

1. Planning Meeting and Analysis

Outputs

1. Risk Management Plan

Risk Management Plan

Contains…

Methodology

Roles and Responsibility

Budgeting

Timing

Risk Categories

Definitions of Risk Probability and Impact

Probability and Impact Matrix

Revised stakeholders’ tolerances

Reporting formats

Tracking

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Risk Categorization

Risk Breakdown Structure

The Categories are

Technical

External

Organizational

Project Management

Risk Categorization

Risk Breakdown Structure

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Probability :-

Is the chance that something is likely to happen

Ranked as “Very Unlikely” to “Almost Certainty”

Impact:-

The resultant of the probable event, is measured as impact

Negative for threats or

Positive opportunities

Ranked as “Very Low”, “Low”, “Moderate”, “High”, “Very High”


Defined Conditions for Impact Scales of a Risk on

Major Project Objectives

Project

Objectives

Very Low

/ .05

Low

/ .10

Moderate

/ .20

High

/ .40

Very High

/ .80

Cost

Time

Scope

Quality

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Legend - Watch list - Moderate - High

Alert

Defined Conditions for Impact Scales of a Risk on

Major Project Objectives

Probability/i

mpact

/ .05 / .10 / .20 / .40 / .80

Very Low

Low

Moderate

High

Very High

Identify Risk

The process of

Identifying the Risks

Documenting their characteristics

The process is repetitive

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Identify Risk

Risks may be found

1. Budgets/funding

2. Schedules

3. Scope or requirement changes

4. Project plan

5. Project management processes

6. Technical issues

7. Personnel issues

Identify Risk

Risks may be found

8. Hardware

9. Contracts

10. Political

11. Business risk

12. Legal

13. Environmental

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Identify Risk


• 2. Activity Cost Estimates

• 3. Activity Duration Estimates

• 4. Scope Baseline

• 5. Stakeholder Register

• 6. Cost Management plan


• 8. Quality Management Plan

• 9. Project Documents

• 10. Enterprise Environmental Factors


Input

• 1. Documentation Reviews

• 2. Information Gathering Techniques

• 3. Checklist Analysis

• 4. Assumptions Analysis

• 5. Diagramming techniques

• 6. SWOT Analysis

• 7. Expert Judgment

Tools & Techniques

• 1. Risk Register

Output

Identify Risk

Inputs


2. Activity Cost Estimates

3. Activity Duration Estimates

4. Scope Baseline

5. Stakeholder Register

6. Cost Management Plan

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Identify Risk

Inputs

7. Schedule Management Plan

8. Quality Management Plan

9. Project Documents

10. Enterprise Environmental Factors


Identify Risk


1. Documentation Reviews

2. Information Gathering techniques

Brainstorming

Delphi technique

Interviewing

Root Cause Identification

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Identify Risk


3. Checklist Analysis

4. Assumptions Analysis

5. Diagramming Techniques

Cause-and-Effect diagrams

System or Process Flow charts

6. SWOT Analysis

7. Expert Judgment

Identify Risk

Outputs

1. Risk Register

List of identified Risks

List of Potential Responses

Root causes of Risks

Updated Risk Categories

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Perform Qualitative Risk Analysis

Qualitative Analysis is a subjective approach to prioritizing risks.

According to probability and potential impact, identified risks are rated

The ranking categorizes into

That require additional analysis

That may proceed directly to risk response planning

That are not critical

And prioritizes risks




• 3. Project Scope Statement


Input

• 1. Risk probability And Impact Assessment

• 2. Probability and Impact Matrix

• 3. Risk Data Quality Assessment

• 4. Risk Categorization

• 5. Risk Urgency Assessment


Tools & Techniques


• Updates

Output

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Inputs

1. Risk Register


3. Project Scope Statement




1. Risk Probability and Impact

Assessment

2. Probability and Impact Matrix

3. Risk Data Quality Assessment

4. Risk Categorization

5. Risk Urgency Assessment

6. Expert Judgment

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Outputs

Updated Risk Register

Relative ranking or priority list of risks

Risks grouped by categories

List of risks requiring responses in the near term

List of risks for additional analysis and response

Watch-lists of low priority risks

Trends in qualitative risk analysis results

Perform Quantitative Risk

Analysis Quantitative Risk Analysis tries to numerically

assess the probability and impact of the identified risks

The objectives of quantitative risk analysis are

Ascertain the likelihood of project success

Determine the risk exposure

Determine the likely amount of contingency reserve needed

Determine the risks with largest impact on the project

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Perform Quantitative Risk Analysis



• 3. Project Cost Management Plan



Input

• 1. Data Gathering And Representation Techniques

• 2. Quantitative Risk Analysis And Modeling techniques


Tools & Techniques


• Updates

Output


Inputs

1. Risk Register


3. Project Cost Management Plan

4. Project Schedule Management Plan


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1. Data Gathering and Representation

Techniques

Interviewing

Probability Distributions

Expert Judgment



2. Quantitative Risk Analysis and Modeling

Techniques

Sensitivity Analysis

Expected Monetary Value Analysis

Decision Tree Analysis

Modeling and Simulation

3. Expert Judgment

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Outputs

1. Updated Risk Register

Probabilistic Analysis of the Project

Probability of Achieving Cost and

Time Objectives

Prioritized list of quantified risks

Trends in Quantitative Risk Analysis

Results


Buy or Build

Build 190,000

Strong 75%

142,500

Weak 25%

47,500

Buy 200,000

Weak 15%

30,000

Strong 85%

170,000

Best Decision

Probability of On-Time

Completion

Decision Name

Decision Tree Analysis

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Plan Risk Responses

Risk response planning is all about options and actions

It involves activities

How to decrease the possibility of risks

How to reduce the impact of the risk if has to happen

Effectiveness of Risk Response will control number of risks that occur

Exam Point:- Planned risk responses must be appropriate to the significance of the risk, cost effective in meeting the challenge, timely, realistic with the project context, agreed upon by all parties involved, and owned by a responsible person.

Plan Risk Responses



Input

• 1. Strategies For negative risks or Threats

• 2. Strategies for positive risks or Opportunities

• 3. Contingent Response Strategies


Tools & Techniques

• 1. Updated Risk Register

• 2. Updated Project Management Plan

• 3. Risk-related Contract Decisions

• 4. Project Document Updates

Output

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Plan Risk Responses

Inputs


2. Risk Register

Plan Risk Responses


1. Strategies for Negative Risks or

Threats

Avoid

Transfer

Mitigate

Accept

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Plan Risk Responses


2. Strategies for Positive Risks or Opportunities

Exploit

Share

Enhance

Accept

3. Contingent Response Strategies

4. Expert Judgment

Plan Risk Responses

Outputs


2. Updated Project Management Plan

3. Risk – Related Contract Decisions

4. Project Document Updates

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Plan Risk Responses

Risk Transfer

Insurance

Performance Bonds

Warranty

Guaranty

Fixed-Price contracts

Plan Risk Responses

Risk Mitigation

An effort to reduce the probability,

impact or both of an identified risk.

Ex:

Developing prototypes, simulations.

Adding activities to reduce the risk

probability or impact.

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Plan Risk Responses

Risk Acceptance

Is the process of simply accepting the risk because

No other option

Risk may be small probability, impact or both

Passive acceptance requires no action

Active acceptance requires developing a contingency plan if the risk occurs

Plan Risk Responses

Residual Risks

The remains of the risk after

avoidance, transfer, or mitigation

Secondary Risks

The risks that are resulted from risk

responses

Risk

Secondary

Risk

Solution

Secondary

Risk`

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Monitor & Control Risks

The process is for:

Monitoring identified risks triggers at the thresholdsControlling identified risks with

responses

Scouting for new risks that may creep up The objectives are to

Confirm risk responses are implemented as plannedDetermine if risk responses are effective

or new responses are needed


The objectives are to

Validate the project assumptions

Monitor risk triggers

Monitor for new risks

Confirm policies and procedures

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•1. Risk Management Plan

•2. Risk Register

•3. Approved Change requests

•4. Work performance Information

•5. Performance reports

Input

•1. Risk Reassessment

•2. Risk Audits

•3. Variance and Trends Analysis

•4. Technical Performance Measurement

•5. Reserve Analysis

•6. Status Meetings

Tools & Techniques

•1. Updated Risk Register

•2. Requested Changes

•3. Recommended Corrective Actions

•4. Recommended Preventive Actions

•5. Updated Organizational Process Assets

•6. Updated Project Management Plan

Output


Inputs


2. Risk Register

3. Approved Change Requests

4. Work Performance Information

5. Performance Reports

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1. Risk Reassessment

2. Risk Audits

3. Variance and Trend Analysis

4. Technical Performance Measurement

5. Reserve Analysis

6. Staff Meetings


Outputs


2. Requested Changes

3. Recommended Corrective Actions

4. Recommended Preventive Actions

5. Updated Organizational Process

Assets

6. Updated Project Management Plan

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To Sum Up….

1. We identified the project Risk management knowledge area’s processes

2. We know how to do Risk Management for the project

3. We know how to do Risk Identification

4. We know how to perform Qualitative Risk Analysis

5. We know how to perform Quantitative Risk Analysis

6. We know how to do risk Response Planning

7. We know how to perform Risk Monitoring and Control

Questions ?

Project managment 10

Economy & Finance