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Project Management by Mostafa Ewees

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  • 1. LECTURE 3 RISK MANAGEMENT MOSTAFA EWEES EMAIL:DRMUS2000@YAHOO.COM Project Management
  • 2. Agenda
    • Project
    • Risk
    • Project Risk Management
    • The Risk Management Process
    • Purpose: get an understanding of basic project risk management
  • 3. Project
    • A project is a temporary organisation, separate from, but strongly dependent of the organisation, (the ordinary organisation). A project has a fixed, well defined and controllable objective. A project has its own resources (time, money, personal etc).
    • All projects have three interrelated objectives: to 1 meet the budget, 2 finish on time, 3 meet specifications that satisfy the client.
  • 4. Project A PROJECT is an organisational form with a defined objective limited in resources and time. Objectives Time Resources
  • 5. Risk
    • The chance that something happens that will have an impact on objectives. It is measured in consequence and likelihood. The consequences may be positive or negative
    • There is no human activity which does not have risks .
  • 6. Risk Management
    • Risk Management: refers to the way in which risks faced by the business are dealt with. Risks may arise from the nature of the business operations and/or the way in which the business is financed.
    • The purpose of (Project) Risk Management is to minimize the risk of not achieving the objectives of the project.
  • 7. Project Risk Management
    • Risk Management assists project managers in setting priorities, allocating resources and implementing actions and processes that reduce the risk of the project not achieving its objectives.
    • Risk Management facilitates better decision making and better project outcomes.
  • 8. The Project Risk Management Approach
    • We must ensure that:
      • All significant risks are identified
      • Identified risks are understood (likelihood and consequences)
      • Assessment is undertaken of individual risks relative to other risks
      • Strategies for treating risks are established
      • The process itself and the risk treatment strategies are implemented cost-effectively
  • 9. The Risk Management Process
  • 10. Establish the context
    • The context is a framework in which all activities of a project takes place.
      • Strategic Context
        • Relationship between the organisation(s) and their environment.
      • Organisational Context
        • What is the organisation all about?
      • Risk Management Context
        • This level focus on the project which the Risk Management Process is being applied. Do we understand the project (goals, time frame etc.)?
    • Summary: Do we clearly understand what should be the role of risk management in the project?
  • 11. Risk Identification
    • The process of determining:
      • What could happen?
      • How could it happen?
      • Why can it happen?
    • A risk which is not identified can not be treated
  • 12. Risk Identification
    • Methods:
      • Brainstorming
      • Examination of previous similar projects
      • Standard Questioners and Surveys (sources: insurance companies)
      • Scenario analysis
      • Work Breakdown Structure analysis
  • 13. Risk Assessment
    • Risk assessment is the overall process of risk analysis and risk evaluation. Its purpose is to develop agreed priorities from identified risks.
  • 14. Risk Analysis
    • The systematic use of available information to determine how often specific events may occur and the magnitude of their likely consequences.
    • Determine likelihood and consequence
      • Two types of methods:
        • Qualitative: expresses in word form or in descriptive scales the likelihood and consequences of an event
        • Quantitative: using numerical values to determine likelihood and consequences
  • 15. Risk Analysis
    • Likelihood
      • How likely is the loss to occur?
      • What is the probability of this loss?
    • Consequence
      • If the loss occurred, how would it affect the project?
        • Financially?
        • Operationally?
        • The ability of the project to meet its objectives?
  • 16. Risk Evaluation Likelihood Consequence High Low Low High Medium risk High risk Low risk Medium risk
  • 17. Risk Treatment
    • Identify the options for reducing the likelihood or consequence for each risk
    • Determine potential benefits and costs of the options
    • Select the best options for the project
    • Develop and implement a detailed Risk Treatment Plan
    • Make appropriate provisions in project budgets
  • 18. Risk Treatment
    • Risk avoidance
      • Possible?
    • Loss control options
      • Reduce likelihood
      • Reduce the expected consequence
      • Transfer the risk to another entity
        • Contractual
        • Insurance
        • Joint ventures
  • 19. Monitoring and review
    • Continuous monitoring and review of risks ensures new risks are detected and managed, and that treatment plans are implemented and progressed effectively.
    • Method
      • Implement a review process as part of the regular management meeting cycle.
      • Undertake major reviews at significant project phases and milestones.
  • 20. Communication and reporting
    • Senior managers need to understand the risks they face, and risk reports provide a complement to other project reports in developing this understanding.
    • Method
      • Submit reports on a regular basis or as required, as part of standard project reporting.
  • 21. Summary
    • How do we define a project?
    • What is a risk?
    • How can we analyse and treat risks?
    • Questions?

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