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Pmp risk management

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  • 1. PMP PreparationPROJECT RISK MANAGEMENTWaleed El-Naggar, MBA, PMP
  • 2. Project Risk Management The processes of conducting risk management planning, identification, analysis, response planning and monitoring and control on a project Objectives are to increase the probability and impact of positive events and decrease the probability and impact of negative events In the project PMP Preparation - Risk Management 2
  • 3. Mapping the Processes Process Group InitiaPM Planning Executing Controlling Closing tionKnowledge Area11. Risk 11.1 Plan Risk 11.6 Monitor and Management Control Risk 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Response PMP Preparation - Risk Management 3
  • 4. 11.1 Plan Risk Management The process of defining how to conduct risk management activities for a project Important to provide sufficient resources and time for risk management activities, and to establish an agreed upon basis for evaluating risk. PMP Preparation - Risk Management 4
  • 5. Plan Risk Management PMP Preparation - Risk Management 5
  • 6. Plan Risk Management: Inputs Project Scope Statement Cost Management Plan Schedule Management Plan Communication Management Plan Enterprise Environmental Factors Organizational Process Assets PMP Preparation - Risk Management 6
  • 7. Plan Risk Management: Tools &Techniques Planning Meetings and Analysis Project teams meet with stakeholders High level plans for risk management are define in these meetings PMP Preparation - Risk Management 7
  • 8. Plan Risk Management: Outputs Risk Management Plan  Methodology  Roles and Responsibilities  Budgeting  Timing  Risk Categories PMP Preparation - Risk Management 8
  • 9. Plan Risk Management: Outputs Risk Categories  Risk Breakdown Structure PMP Preparation - Risk Management 9
  • 10. Plan Risk Management: Outputs Definition of Risk Probability and Impact PMP Preparation - Risk Management 10
  • 11. Plan Risk Management: Outputs Probability and Impact matrix Revised Stakeholders Tolerance Reporting Formats Tracking PMP Preparation - Risk Management 11
  • 12. Q: “ An uncommon state of nature, characterized by the absence of any information related to a desired outcome” , is a common definition for:A. An act of GodB. An amount at stakeC. UncertaintyD. Risk aversion Answer C PMP Preparation - Risk Management 12
  • 13. 11.2 Identify RisksIdentify Risks is the process of determiningwhich risks may affect the project anddocumenting their characteristics PMP Preparation - Risk Management 13
  • 14. Identify Risks: Inputs1. Risk Management Plan2. Activity Cost Estimates3. Activity Duration Estimation4. Scope Baseline5. Stakeholder Register6. Cost management Plan PMP Preparation - Risk Management 14
  • 15. Identify Risks: Inputs (contd.)7. Schedule Management Plan8. Quality Management Plan9. Project Documents10. Enterprise Environmental Factors11. Organizational Process Assets PMP Preparation - Risk Management 15
  • 16. Identify Risks: Tools & Techniques Documentation Reviews Information Gathering Techniques  Brainstorming  Delphi Technique  Interviewing  Root Cause Analysis Checklist Analysis PMP Preparation - Risk Management 16
  • 17. Identify Risks: Tools & Techniques (contd.) Assumptions Analysis Diagramming Techniques  Cause-and-effect diagrams  System or process flow charts  Influence diagrams SWOT Analysis (Strength, Weakness, Opportunities, Threats) Expert Judgment PMP Preparation - Risk Management 17
  • 18. Identify Risks: Outputs Risk Register  List of identified risks  List of potential responses PMP Preparation - Risk Management 18
  • 19. Q: Risk tolerances are determined in order to help:A. The team rank the project risksB. The project manager estimate the projectC. The team schedule the projectD. Management know how other managers will act to the project Answer A PMP Preparation - Risk Management 19
  • 20. 11.3 Perform Qualitative Risk AnalysisThe process of prioritizing risks for furtheranalysis or action by assessing and combiningtheir probability of occurrence and impact PMP Preparation - Risk Management 20
  • 21. Perform Qualitative Risk Analysis: Inputs Risk Register Risk Management Plan Project Scope Statement Organizational Process Assets PMP Preparation - Risk Management 21
  • 22. Perform Qualitative Risk Analysis:Tools & Techniques  Probability and Impact Matrix PMP Preparation - Risk Management 22
  • 23. Perform Qualitative Risk Analysis:Tools & Techniques  Risk Probability and Impact Assessment  Risk Data Quality Assessment  Risk Categorization  Risk Urgency Assessment  Expert Judgment PMP Preparation - Risk Management 23
  • 24. Perform Qualitative Risk Analysis: Outputs Risk Register Updates  Relative ranking or priority list of project risks  Risks grouped by categories  Causes of risk or project areas requiring particular attention  List of risks requiring response in the near-term  List of risks for additional analysis and response  Watch lists of low-priority risks  Trends in qualitative risk analysis results PMP Preparation - Risk Management 24
  • 25. 11.4 Perform Quantitative RiskAnalysis The process of numerically analyzing the effect of identified risks on overall project objectives. Quantitative analysis is performed on risks that have been prioritized by the qualitative risk analysis process as potentially and substantially impacting the projects competing demands. PMP Preparation - Risk Management 25
  • 26. Perform Quantitative Risk Analysis:Inputs Risk Register Risk Management Plan Cost Management Plan Schedule Management Plan Organizational Process Assets PMP Preparation - Risk Management 26
  • 27. Perform Quantitative Risk Analysis:Tools & Techniques Data Gathering and Representation Techniques  Interviewing PMP Preparation - Risk Management 27
  • 28. Perform Quantitative Risk Analysis:Tools & Techniques  Probability Distribution PMP Preparation - Risk Management 28
  • 29. Perform Quantitative Risk Analysis:Tools & Techniques Quantitative Risk Analysis and Modeling Techniques  Sensitivity analysis  Expected monetary value analysis PMP Preparation - Risk Management 29
  • 30. Sample Sensitivity Analysis PMP Preparation - Risk Management 30
  • 31. Perform Quantitative Risk Analysis: Tools& Techniques Expected monetary value analysis :  Example Decision tree diagram PMP Preparation - Risk Management 31
  • 32. Perform Quantitative Risk Analysis: Tools& Techniques Modeling And Simulation  Cost/Risk simulation results Expert Judgment PMP Preparation - Risk Management 32
  • 33. Perform Quantitative Risk Analysis:Outputs Risk Register Updates  Probabilistic analysis of the project  Probability of achieving cost and time objectives  Prioritized list of quantified risks  Trends in quantitative risk analysis results PMP Preparation - Risk Management 33
  • 34. QuizQ: If a project has a 60% chance of a US $ 100,000 profit and a 40% chance of a US $ 100,000 loss, the expected monetary value for the project is : A. $ 100,000 profit B. $ 60,000 loss C. $ 20,000 profit D. $ 40,000 loss Answer C PMP Preparation - Risk Management 34
  • 35. 11.5 Plan Risk Responses The process of developing options and actions to enhance opportunities and to reduce threats to project objectives. PMP Preparation - Risk Management 35
  • 36. Plan Risk Responses: Inputs Risk Register Risk Management Plan PMP Preparation - Risk Management 36
  • 37. Plan Risk Responses: Tools &Techniques1. Strategies for negative risks or threats  Avoid  Transfer  Mitigate  Accept PMP Preparation - Risk Management 37
  • 38. Response Strategies for Threats Avoidance:  Risk prevention  Changing the plan to eliminate a risk by avoiding the cause/source of risk  Protect project from impact of risk  Examples:  Change the implementation strategy  Do it ourselves (do not subcontract)  Reduce scope to avoid high risk deliverables  Adopt a familiar technology or product PMP Preparation - Risk Management 38
  • 39. Response Strategies for Threats Mitigation  Seeks to reduce the impact or probability of the risk event to an acceptable threshold  Be proactive: Take early actions to reduce impact/probability and don’t wait until the risk hits your project  Examples:  Staging - More testing - Prototype  Redundancy planning  Use more qualified resources PMP Preparation - Risk Management 39
  • 40. Response Strategies for Threats Transfer  Shift responsibility of risk consequence to another party  Does NOT eliminate risk  Most effective in dealing with financial exposure  Examples:  Buy/subcontract: move liabilities  Selecting type of Procurement contracts: Fixed Price  Insurance: liabilities + bonds + Warranties PMP Preparation - Risk Management 40
  • 41. Response Strategies for Threats Acceptance  Used when project plan cannot be changed & other risk response strategy cannot be used  Active Acceptance  Develop a contingency plan to execute if the risk occur  Contingency plan = be ready with Plan B  Passive Acceptance  Deal with the risks as they occur = No Plan B prepared Contingency allowance/ reserve  Established amount of reserve (e.g.: time and/or money) to account for the identified known risks.  Amount is decided based on probability and impact PMP Preparation - Risk Management 41
  • 42. Plan Risk Responses: Tools &Techniques Strategies for Positive Risks or Opportunities  Exploit: Ensure opportunity is realized  Ex: Assigning organization most talented resources to the project to reduce cost lower than originally planned.  Share: Allocating some or all of the ownership to third part best able to capture the opportunity  Ex: Joint ventures, special-purpose companies  Enhance: Increase the probability and/or the positive impact of the opportunity  Ex: Adding more resources to finish early  Accept: Welling to take advantage of opportunity if it comes, but not actively pursuing it. PMP Preparation - Risk Management 42
  • 43. Plan Risk Responses: Tools &Techniques Contingent Response Strategies Expert Judgment PMP Preparation - Risk Management 43
  • 44. Plan Risk Responses: Outputs Risk Register Updates Risk-Related Contract Decisions Project management Plan Updates Project Documents Updates  Assumptions log updates  Technical documentation updates PMP Preparation - Risk Management 44
  • 45. Q: Purchasing insurance is BEST considered an example of risk:A. MitigationB. TransferenceC. AcceptanceD. Avoidance Answer B PMP Preparation - Risk Management 45
  • 46. Monitor and Control RisksThe process of implementing risk response plans,tracking identified risks, monitoring residualrisks, identifying new risks, and evaluating riskprocess effectiveness throughout the project. PMP Preparation - Risk Management 46
  • 47. Monitor and Control Risks: Inputs Risk Register Project Management Plan Work Performance Information Performance Reports PMP Preparation - Risk Management 47
  • 48. Monitor and Control Risks: Tools &Techniques Risk Assessment Risk audits Variance and Trend Analysis Technical Performance Measurement Reserve Analysis Status Meetings PMP Preparation - Risk Management 48
  • 49. Monitor and Control Risks: Outputs Risk Register Updates Organizational Process Updates Change Requests  Recommended corrective actions  Recommended preventive actions Project management Plan Updates Project Document Updates PMP Preparation - Risk Management 49
  • 50. Q: What should be done with a non- critical Risk?A. Document them for historical use on other projectsB. Document them and revisit during project executionC. Document them and set them aside because they are already covered in your contingency plansD. Document them and give them to the customer Answer B PMP Preparation - Risk Management 50
  • 51. Thank you waleed_k@aucegypt.eduFacebook: http://www.facebook.com/waleedePMPEgypt Group:http://www.facebook.com/group.php?gid=7273274765 PMP Preparation - Risk Management 51