Risk management

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Risk management

  1. 1. STEP BY STEP RISK MANAGEMENT FOR PROJECTS IN THE BUILDING SECTOR.CONSTRUTORA IBEN LTDA.
  2. 2. PROJECT RISK MANAGEMENT ACTS ON THE UNCERTAINTIES AIMING AT INCREASING PROBABILITY AND IMPACT OF POSITIVE EVENTS, THE OPPORTUNITIES, AND REDUCING PROBABILITY AND IMPACT OF NEGATIVE EVENTS, THE THREATS. IN OTHER WORDS, RISK MANAGEMENT INCLUDES THE PROCESSES REQUIRED FOR THE CONTROL OF PREDICTABLE EVENTS SO AS TO FAVOR PROJECT SUCCESS. CERTAIN STEPS ARE IMPORTANT FOR A SUCCESSFUL RISK MANAGEMENT. THIS METHODOLOGY IS APPLIED BY INSURANCE COMPANIES IN CALCULATING THE EXPECTED VALUE OF RISKS ASSOCIATED WITH CONTRACTS, IN ORDER TO DETERMINE THE PREMIUM TO BE PAID BY AN INSURED PARTY. THE ADVANTAGE IN THIS IS THAT, WHEN WE MANAGE OUR OWN RISKS, WE HAVE THE POWER NOT ONLY TO IDENTIFY AND QUANTIFY THEM, BUT ALSO TO DIRECT THEM SO AS TO FAVOR OUR INTERESTS. THE APPLICATION OF SAID KNOWLEDGE MAKES DECISION MAKING SAFER, GUIDES ACTIONS DURING THE PROJECT, INCREASES COMPANY COMPETITIVENESS AND TURNS UNCERTAIN EVENTS INTO OPPORTUNITIES FOR PROFITEERING.CONSTRUTORA IBEN LTDA.
  3. 3. FOR PROJECTS, RISK MANAGEMENT PROCESSES GUIDE THE PLANNING, IDENTIFICATION, ANALYSIS, RESPONSE PLANNING, MONITORING AND CONTROL OF RISKS. THIS METHODLOGY MUST BE APPLIED STEP BY STEP AND COUNT ON EXPERT CONSULTANCY AND SUPPORT IN ORDER TO MAXIMIZE PROJECT STEERING. EXPERT OPINION ADVISES EVERY SINGLE TECHNICAL DETAIL AND MAY BE PROVIDED BY ANY GROUP OR PERSON WHO HAS SPECIALIZED KNOWLEDGE OR TRAINING, AND IS AVAILABLE THROUGH SEVERAL DIFFERENT SOURCES. KNOWLEDGE ON THE REGIONAL SCENARIO, PROJECT MANAGEMENT METHODOLOGIES AND EXPERIENCE IN CIVIL CONSTRUCTION PROJECTS ARE KEY TO CHANNEL THOSE FACTORS WHICH USUALLY CATALYZE SUCCESS IN RISK MANAGEMENT. THE MATURITY OF A COMPANY IN UNCERTAINTY MANAGEMENT AND BENEFICIAL EVENT MANIPULATION IS DIRECTLY RELATED TO KNOWLEDGE MANAGEMENT VIA SYSTEMATIC COLLECTION AND DISTRIBUTION OF ALL LEARNT LESSONS.CONSTRUTORA IBEN LTDA.
  4. 4. RISK IDENTIFICATION RISK IDENTIFICATION IS THE FIRST STEP TOWARDS UNCERTAINTY MANAGEMENT. BOTH A LIST OF THREATS AND A LIST OF OPPORTUNITIES MUST BE PREPARED, INDICATING ROOT CAUSES, PROBABILITY FOCI, HARMFUL IMPACTS AND IMPACT FOCI. Threats Cause Effect Intense/Widespread outsourcing Low quality and frequent redoing Parallel work/projects Incorrect execution Labor claims Costs with claims and indemnifications Low performance of structural inputs Need for structural retrofitting Initial services performed by another company Scope Gap or Buffer Inflation above expectations Increased materials and labor prizes Competition for labor Increased labor costs Work-related accidents Indemnifications and leaves of absence Insufficient human resources Work behind schedule and increased indirect costs Problems after delivery of the product Warranty covered servicing Ignoring risks Lack of influence over threats Robbery and/or theft Associated losses Defaulting Financial Costs Pending approvals and regularizations ChangeCONSTRUTORA IBEN LTDA.
  5. 5. RISK IDENTIFICATION RISK IDENTIFICATION IS THE FIRST STEP TOWARDS UNCERTAINTY MANAGEMENT. BOTH A LIST OF THREATS AND A LIST OF OPPORTUNITIES MUST BE PREPARED, INDICATING ROOT CAUSES, PROBABILITY FOCI, HARMFUL IMPACTS AND IMPACT FOCI. Opportunities Cause Effect Outsourcing Reduced charges Mass/Scale purchasing Increased bargaining power Proximity to labor supplying neighborhoods Reduced commuting expendituresCONSTRUTORA IBEN LTDA.
  6. 6. RISK IDENTIFICATION THIS IS AN INTERACTIVE PROCESS WHICH TAKES PLACE ALONG THE ENTIRE LIFE CYCLE OF THE PROJECT, NEW RISKS MAY BE IDENTIFIED AND RANKED AS THE TEAM NOTICES THEM. FURTHER AHEAD WE SHALL SEE HOW THOSE RISKS NOT IDENTIFIED AT THE BEGINNING MAY BE ACCOUNTED FOR IN ASSESSING THE EXPECTED VALUE OF THE RISKS WITHOUT BURDENING THE INITIAL EXPECTATIONS UNDER WHICH THE PROJECT WAS APPROVED.CONSTRUTORA IBEN LTDA.
  7. 7. QUALITATIVE RISK ANALYSIS QUALITATIVE RISK ANALYSIS IS RISK PROBABILITY AND IMPACT ASSESSMENT AIMING AT ESTIMATING RISK LEVELS VIA THE PROBABILITY X IMPACT FORMULA. LOWER LEVEL RISKS MAY BE CONSIDERED FALSE AND FILED, ACCORDING TO THE RISK TOLERANCE POLICY OF THE COMPANY. MORE RELEVANT RISKS, ON THE OTHER HAND, ARE RANKED FOR MANAGEMENT GUIDANCE PURPOSES. Risk Analysis Context Risk level (GR) Very 0.90 High GR>0.1 TRUE 0.70 High GR<0.1 FALSE 0.50 Medium 0.30 Low 0.10 Very LowCONSTRUTORA IBEN LTDA.
  8. 8. QUALITATIVE RISK ANALYSIS ASSESSING PROBABILITY AND IMPACT LEVELS REDUCE THE BIAS IN RISK PRIORITISATION AND THEIR ANALYSIS ALLOWS TO ASSESS THE IMPORTANCE OF EACH RISK FOR THE PROJECT. Threats Number Cause Effect Probability Impact Risk Level Validation 1Intense/Widespread outsourcing Low quality and frequent redoing 0.90 0.50 0.45 TRUE 2Parallel work/projects Incorrect execution 0.90 0.30 0.27 TRUE 3Labor claims Costs with claims and indemnifications 0.70 0.30 0.21 TRUE 4Low performance of structural inputs Need for structural retrofitting 0.50 0.50 0.25 TRUE 5Initial services performed by another company Scope Gap or Buffer 0.50 0.30 0.15 TRUE 6Inflation above expectations Increased materials and labor prizes 0.50 0.70 0.35 TRUE 7Competition for labor Increased labor costs 0.70 0.50 0.35 TRUE 8Work-related accidents Indemnifications and leaves of absence 0.70 0.50 0.35 TRUE Work behind schedule and increased indirect 9Insufficient human resources costs 0.70 0.50 0.35 TRUE 10Problems after delivery of the product Warranty covered servicing 0.70 0.30 0.21 TRUE 11Ignoring risks Lack of influence over threats 0.10 0.90 0.09 FALSE 12Robbery and/or theft Associated losses 0.30 0.30 0.09 FALSE 13Defaulting Financial Costs 0.10 0.30 0.03 FALSE 14Pending approvals and regularizations Change 0.30 0.30 0.09 FALSE 15 - FALSECONSTRUTORA IBEN LTDA.
  9. 9. QUALITATIVE RISK ANALYSIS ASSESSING PROBABILITY AND IMPACT LEVELS REDUCE THE BIAS IN RISK PRIORITISATION AND THEIR ANALYSIS ALLOWS TO ASSESS THE IMPORTANCE OF EACH RISK FOR THE PROJECT. Opportunities Number Cause Effect Probab. Impact Level of Risk Validation 1Outsourcing Reduced charges 0.50 0.50 0.25 TRUE 2Mass/Scale purchasing Increased bargaining power 0.70 0.50 0.35 TRUE 3Proximity to labor supplying neighborhoods Reduced commuting expenditures 0.90 0.30 0.27 TRUE 4 - FALSE 5 - FALSE 6 - FALSE 7 - FALSE 8 - FALSE 9 - FALSE 10 - FALSE 11 - FALSE 12 - FALSE 13 - FALSE 14 - FALSE 15 - FALSECONSTRUTORA IBEN LTDA.
  10. 10. QUALITATIVE RISK ANALYSIS ALONG THIS PROCESS WE MAY ALSO CATEGORIZE RISKS ACCORDING TO THEIR CAUSES OR EFFECTS, OR EVEN REFINE PRIORITISATION BY ONE ON ONE COMPARISON OF THE RISKS. IN THE EXAMPLE BELOW, THE LAST RISK IN THE TABLE IS DEEMED AS BEING THE MOST IMPORTANT AND SHALL BE PRIORITIZED; MOREOVER, CATEGORY 0001, WHICH IS LABOR RELATED, IS THE ONE FEATURING THE LARGEST NUMBER OF IDENTIFIED RISKS AND AN INTEGRATED ACTION PLAN IS TO ADDRESS IT DIRECTLY. Low quality and reworks Low quality and frequent redoing High level of outsourcing Intense/Widespread outsourcing Error on the performance Incorrect execution Paralelism between projects and Need for reinforcement of the performance Parallel work/projects structure Need for structural retrofitting Lack of human resources in Buffer or Gap of scope Scope Gap or Buffer sufficient number Insufficient human resources Increase of price of materials and labor Increased materials and labor prizes Increase of costs with labor Increased labor costs Work behind schedule and Work behind schedule and increased increase of the indirect cost indirect costs Provision of warranty Warranty covered servicing Lack of influence on the threats Lack of influence over threatsCONSTRUTORA IBEN LTDA.
  11. 11. QUANTITATIVE RISK ANALYSIS QUANTITATIVE ANALYSIS COMPRISES NUMERICAL RISK ANALYSIS VIA THE RISK IDENTIFICATION, CATEGORIZING AND PRIORITISATION PERFORMED ALONG QUALITATIVE RISK ANALYSIS. IMPACTS ON RISK AFFECTED ACTIVITIES AND RESOURCES ARE HEREBY NUMERICALLY ASSESSED, VIA INDIVIDUALIZED CALCULATION OF EXPECTED RISK VALUE OR ASSESSMENT OF EFFECTS ADDED RISKS HAVE ON THE PROJECT. EXPECTED VALUE = PROBABILITY X IMPACT. Threats Number Cause Effect Probab. Impact Expected Value 1Intense/Widespread outsourcing Low quality and frequent redoing 90.00% R$ 1,140.392.56 R$ 1,026,353.30 2Parallel work/projects Incorrect execution 90.00% R$ 346,583.92 R$ 311,925.53 3Labor claims Costs with claims and indemnifications 70.00% R$ 337,359.64 R$ 236,151.75 4Low performance of structural inputs Need for structural retrofitting 50.00% R$ 456,157.02 R$ 228,078.51 5Initial services performed by another company Scope Gap or Buffer 50.00% R$ 114,039.26 R$ 57,019.63 6Inflation above expectations Increased materials and labor prizes 50.00% R$ 1,732,919.60 R$ 866,459.80 7Competition for labor Increased labor costs 70.00% R$ 1,346,015.46 R$ 942,210.82 8Work-related accidents Indemnifications and leaves of absence 70.00% R$ 432,503.64 R$ 302,752.55 Work behind schedule and increased indirect 9Insufficient human resources costs 70.00% R$ 479,087.53 R$ 335,361.27 10Problems after delivery of the product Warranty covered servicing 70.00% R$ 558,566.29 R$ 390.996.40 Totals R$ (6,943,624.91) R$ (4,697,309.56)CONSTRUTORA IBEN LTDA.
  12. 12. QUANTITATIVE RISK ANALYSIS QUANTITATIVE ANALYSIS COMPRISES NUMERICAL RISK ANALYSIS VIA THE RISK IDENTIFICATION, CATEGORIZING AND PRIORITISATION PERFORMED ALONG QUALITATIVE RISK ANALYSIS. IMPACTS ON RISK AFFECTED ACTIVITIES AND RESOURCES ARE HEREBY NUMERICALLY ASSESSED, VIA INDIVIDUALIZED CALCULATION OF EXPECTED RISK VALUE OR ASSESSMENT OF EFFECTS ADDED RISKS HAVE ON THE PROJECT. EXPECTED VALUE = PROBABILITY X IMPACT. Opportunities Number Cause Effect Probab. Impact Expected Value 1Outsourcing Reduced charges 50.00% R$ 1,265,098.67 R$ 632,549.33 2Mass/Scale purchasing Increased bargaining power 70.00% R$ 553,735.08 R$ 387,614.56 3Proximity to labor supplying neighborhoods Reduced commuting expenditures 90.00% R$ 421,699.56 R$ 379,529.60 Total R$ 2,240.533.30 R$ 1,399,693.49CONSTRUTORA IBEN LTDA.
  13. 13. QUANTITATIVE RISK ANALYSIS AGGREGATE EFFECT OF RISKS ON THE PROJECT DETERMINE THE EXPECTED VALUE FOR THE PROJECT IN THE PRESENCE OF RISK. EXPECTED VALUE OF THE PROJECT WITH RISKS = BASE VALUE OF WORK + THREATS + OPPORTUNITIES. AT THIS TIME, IT IS ALSO POSSIBLE TO PERFORM BEST CASE (ACCOUNTING FOR OPPORTUNITIES ONLY) AND WORST CASE (ACCOUNTING FOR THREATS ONLY) VALUES CALCULATION. Expected value – Prior to reaction Result Analysis Base Value of Work R$ 34,658,391.90 Risks – Threats R$ (4,697,309.56) Risks – Opportunities R$ 1,399,693.49 Expected Value of the Project (accounting for Risks) R$ 37,956,007.97 Expected Value - Best Case Scenario R$ 32,417,858.60 Expected Value - Worst Case Scenario R$ 41,602,016.82CONSTRUTORA IBEN LTDA.
  14. 14. PLANNING RISK RESPONSE IT IS FROM THIS POINT ON THAT THE PMO STARTS INTERFERING ON RISK EVENTS AND IMPACTS. THE PRECISE IDENTIFICATION WAS FUNDAMENTAL TO BEGIN THIS PHASE WITH PARAMETERS ON WHICH TO MAKE DECISIONS ABOUT THE FUTURE OF THE PROJECT. WHAT STRATEGY SHALL WE USE TO TACKLE EACH RISK? IS THERE A REACTION TO THE RISK? WHICH IS THE COST/BENEFIT OF SAID REACTION? WHEN MUST IT BE TAKEN AND BY WHOM? THERE ARE 04 BASIC RESPONSE TO RISK STRATEGIES, NAMELY; - ELIMINATE OR CAUSE = RESPECTIVELY TURNING THE PROBABILITY OF THREATS/OPPORTUNITIES TO 0%/100%. - TRANSFER OR SHARE = RESPECTIVELY OUTSOURCING THE IMPACT/ACTION OF THREATS/OPPORTUNITIES. - MITIGATE OR LEVERAGE = RESPECTIVELY REDUCING/INCREASING THE PROBABILITY AND/OR IMPACT OF THREATS/OPPORTUNITIES. - SOAK = WHEN COST/BENEFIT OF A GIVEN REACTION IS UNJUSTIFIABLE AND THE RISK IS THEN ACCEPTED AND MONITORED.CONSTRUTORA IBEN LTDA.
  15. 15. PLANNING RISK RESPONSE A GIVEN REACTION MAY BE ALSO RANKED AS CONTAINMENT OR CONTINGENCY, I.E., CONTAINMENT IS ANY REACTION PERFORMED REGARDLESS OF RISK EVENT OCCURRENCE, WHILE CONTINGENCY IS THAT REACTION PERFORMED AS A GIVEN RISK EVENT TAKE PLACE. Reaction - Containment or Contingency of Risk - Threats Cause Effect Expected Value Moment Strategy. Probab. Impact 1 Intense/Widespread outsourcing Low quality and frequent redoing 1,026,353.30 Contingency Mitigate 90.00% 1,140.392.56 2 Parallel work/projects Incorrect execution 311,925.53 Contingency Mitigate 90.00% 346,583.92 3 Labor claims Costs with claims and indemnifications 236,151.75 Contingency Mitigate 70.00% 337,359.64 4 Low performance of structural inputs Need for structural retrofitting 228,078.51 Contingency Transfer 50.00% 456,157.02 Initial services performed by another 5 company Scope Gap or Buffer 57,019.63 Containment Accept 50.00% 114,039.26 6 Inflation above expectations Increased materials and labor prizes 866,459.80 Contingency Mitigate 50.00% 1,732,919.60 7 Competition for labor Increased labor costs 942,210.82 Contingency Mitigate 70.00% 1,346,015.46 Indemnifications and leaves of 8 Work-related accidents absence 302,752.55 Contingency Mitigate 70.00% 432,503.64 Work behind schedule and increased 9 Insufficient human resources indirect costs 335,361.27 Contingency Mitigate 70.00% 479,087.53 10 Problems after delivery of the product Warranty covered servicing 390.996.40 Containment Mitigate 70.00% 558,566.29 11 Ignoring risks Lack of influence over threats - Contingency Transfer 10.00% - (4,697,309.56) (6,943,624.91)CONSTRUTORA IBEN LTDA.
  16. 16. PLANNING RISK RESPONSE REACTIONS ARE TO BE LISTED AND ASSOCIATED COSTS CALCULATED. Reaction - Containment or Contingency of Risk - Threats Probabilit Cause Effect Expected Value Reaction Moment Strategy. $ Reaction y Impact 1 Intense/Widespread outsourcing Low quality and frequent redoing 1,026,353,30 Quality/Contract Control Contingency Mitigate 75,000.00 90.00% 30.00% 1,140.392,56 2 Parallel work/projects Incorrect execution 311,925,53 Compatibility of Project Contingency Mitigate 30,000.00 90.00% 30.00% 346,583,92 3 Labor claims Costs with claims and indemnifications 236,151,75 3rd Party Document Control Contingency Mitigate 90,000.00 70.00% 30.00% 337,359,64 4 Low performance of structural inputs Need for structural retrofitting 228,078,51 Performance Clause Contingency Transfer 10,000.00 50.00% 10.00% 456,157,02 Initial services performed by another 5 company Scope Gap or Buffer 57,019,63 Soak Containment Accept - 50.00% 50.00% 114,039,26 6 Inflation above expectations Increased materials and labor prizes 866,459,80 Anticipated purchase Contingency Mitigate - 50.00% 30.00% 1,732,919,60 7 Competition for labor Increased labor costs 942,210.82 Labor Fidelity Contingency Mitigate 150,000.00 70.00% 30.00% 1,346,015,46 Indemnifications and leaves of 8 Work-related accidents absence 302,752,55 Safety Technician Contingency Mitigate 135,000.00 70.00% 10.00% 432,503,64 Work behind schedule and increased 9 Insufficient human resources indirect costs 335,361,27 Fund raising agencies Contingency Mitigate 30,000.00 70.00% 10.00% 479,087,53 10 Problems after delivery of the product Warranty covered servicing 390.996,40 Quality/Contract Control Containment Mitigate 75,000.00 70.00% 30.00% 558,566,29 11 Ignoring risks Lack of influence over threats - Net Premium Contingency Transfer 200,000.00 10.00% 0.00% - (4,697,309,56) 595,000.00 (6,943,624,91)CONSTRUTORA IBEN LTDA.
  17. 17. PLANNING RISK RESPONSE SINCE REACTIONS INTERFERE IN THE FUTURE OF THE RISKS, THE NEXT STEP IS TO REASSESS EXPECTED RISK VALUES AND COMPARE THE RESULTS TO THOSE PRIOR TO REACTIONS. Reaction - Containment or Contingency of Risk - Threats New Cause Effect Expected Value Reaction Moment Strategy. $ Reaction Probab. Probab. Impact New E.V. 1 Intense/Widespread outsourcing Low quality and frequent redoing 1,026,353.30 Quality/Contract Control Contingency Mitigate 75,000.00 90.00% 30.00% 1,140,392.56 342,117,77 2 Parallel work/projects Incorrect execution 311,925.53 Compatibility of Project Contingency Mitigate 30,000.00 90.00% 30.00% 346,583.92 103,975,.8 3 Labor claims Costs with claims and indemnifications 236,151.75 3rd Party Document Control Contingency Mitigate 90,000.00 70.00% 30.00% 337,359.64 101,207.89 4 Low performance of structural inputs Need for structural retrofitting 228,078.51 Performance Clause Contingency Transfer 10,000.00 50.00% 10.00% 456,157.02 45,615.70 Initial services performed by another 5 company Scope Gap or Buffer 57,019.63 Soak Containment Soak - 50.00% 50.00% 114,039.26 57,019.63 6 Inflation above expectations Increased materials and labor prizes 866,459.80 Anticipated purchase Contingency Mitigate - 50.00% 30.00% 1,732,919.60 519,875.88 7 Competition for labor Increased labor costs 942,210.82 Labor Fidelity Contingency Mitigate 150,000.00 70.00% 30.00% 1,346,015.46 403,804.64 Indemnifications and leaves of 8 Work-related accidents absence 302,752.55 Safety Technician Contingency Mitigate 135,000.00 70.00% 10.00% 432,503.64 43,250.36 Work behind schedule and increased 9 Insufficient human resources indirect costs 335,361.27 Fund raising agencies Contingency Mitigate 30,000.00 70.00% 10.00% 479,087.53 47,908.75 10 Problems after delivery of the product Warranty covered servicing 390.996.40 Quality/Contract Control Containment Mitigate 75,000.00 70.00% 30.00% 558,566.29 167,569.89 11 Ignoring risks Lack of influence over threats - Net Premium Contingency Transfer 200,000.00 10.00% 0.00% - - (4,697,309,56) 595,000.00 (6,943,624.91)(1,832,345.69)CONSTRUTORA IBEN LTDA.
  18. 18. Expected value prior to reactions Result Analysis Base Value of Work R$ 34,658,391.90 Risks – Threats R$ (4,697,309.56) Risks – Opportunities R$ 1,399,693.49 Expected Value of the Project (accounting for Risks) R$ 37,956,007.97 Expected Value - Best Case Scenario R$ 32,417,858.60 Expected Value - Worst Case Scenario R$ 41,602,016.82 Expected value accounting for reactions Result Analysis Base Value of Work R$ 34,658,391,90 Reaction cost for threats R$ 595,000.00 Reaction cost for opportunities R$ - New Base Value of Work R$ 35,253,391.90 Risks – Threats R$ (1,832,345.69) Risks – Opportunities R$ 1,399,693.49 Management Reserves R$ - Expected Value of the Project Accounting for Risks (POST-REACTION) R$ 35,686,044.10 Expected Value - Best Case Scenario (Improbable) R$ 33,012,858.60 Expected Value - Worst Case Scenario (Improbable) R$ 42,197,016.82 Expected Value - Best Case Scenario (Probable) R$ 33,853,698.41 Expected Value - Worst Case Scenario (Probable) R$ 37,085,737.59 Improbable Worst Case Scenario Risk Differential R$ 7,538,624.91 Probable Worst Case Scenario Risk Differential R$ 2,427,345.69 Most Probable Scenario Risk Differential R$ 1,027,652.20 Probable Best Case Scenario Risk Differential R$ (804,693.49) Improbable Best Case Scenario Risk Differential R$ (1,645,533.30)CONSTRUTORA IBEN LTDA.
  19. 19. PLANNING RISK RESPONSE THE MOST PROBABLE RISK DIFFERENTIAL POST-REACTION INCREASED THE BASE VALUE OF WORK IN 2.97%. THIS FIGURE IS THE SUPERIOR ACCEPTABLE THRESHOLD (“CEILING”) FOR RISK IMPACT FOR THIS PROJECT. Expected value Post-reaction Result Analysis Base Value of Work R$ 34,658,391.90 Reaction cost for threats R$ 595,000.00 Reaction cost for opportunities R$ - New Base Value of Work R$ 35,253,391.90 Risks – Threats R$ (1,832,345.69) Risks – Opportunities R$ 1,399,693.49 Management Reserves R$ - Expected Value of the Project Accounting for Risks (POST-REACTION) R$ 35,686,044.10 Expected Value - Best Case Scenario (Improbable) R$ 33,012,858.60 Expected Value - Worst Case Scenario (Improbable) R$ 42,197,016.82 Expected Value - Best Case Scenario (Probable) R$ 33,853,698.41 Expected Value - Worst Case Scenario (Probable) R$ 37,085,737.59 Improbable Worst Case Scenario Risk Differential R$ 7,538,624.91 Probable Worst Case Scenario Risk Differential R$ 2,427,345.69 Most Probable Scenario Risk Differential R$ 1,027,652.20 Probable Best Case Scenario Risk Differential R$ (804,693.49) Improbable Best Case Scenario Risk Differential R$ (1,645,533.30)CONSTRUTORA IBEN LTDA.
  20. 20. PLANNING RISK RESPONSE METRICS FOR RISK PERFORMANCE ASSESSMENT SHALL BE BASED ON THE EXPECTED VALUE FOR THE PROBABLE BEST CASE SCENARIO. IDR (RISK PERFORMANCE INDEX) SHALL BE A FUNCTION OF SAID FIGURE. ACHIEVED GOALS IMPLY IDR = 100%. Expected value Post-reaction Result Analysis Base Value of Work R$ 34,658,391.90 Reaction cost for threats R$ 595,000.00 Reaction cost for opportunities R$ - New Base Value of Work R$ 35,253,391.90 Risks – Threats R$ (1,832,345.69) Risks – Opportunities R$ 1,399,693.49 Management Reserves R$ - Expected Value of the Project Accounting for Risks (POST-REACTION) R$ 35,686,044.10 Expected Value - Best Case Scenario (Improbable) R$ 33,012,858.60 Expected Value - Worst Case Scenario (Improbable) R$ 42,197,016.82 Expected Value - Best Case Scenario (Probable) R$ 33,853,698.41 Expected Value - Worst Case Scenario (Probable) R$ 37,085,737.59 Improbable Worst Case Scenario Risk Differential R$ 7,538,624.91 Probable Worst Case Scenario Risk Differential R$ 2,427,345.69 Most Probable Scenario Risk Differential R$ 1,027,652.20 Probable Best Case Scenario Risk Differential R$ (804,693.49) Improbable Best Case Scenario Risk Differential R$ (1,645,533.30)CONSTRUTORA IBEN LTDA.
  21. 21. RISK MONITORING AND CONTROL AS A RULE OF THUMB, BUILDING COMPANIES INCLUDE IN THEIR PROJECT COST CALCULATIONS RISKS RANGING FROM 3% TO 5%. THIS PARAMETER HAS BEEN UNDULY RELIED ON, SINCE IGNORED AND UNMANAGED RISK TENDS TO STAY WITHIN SAID MARGINS. THE FACT IS THAT RISK MANAGEMENT MAY TURN UNCERTAINTIES INTO A COMPETITIVE ADVANTAGE AND MAKE THE DIFFERENT ON DECISION MAKING. THIS METHODOLOGY MUST BE APPLIED AFTER THE DETERMINATION OF A RISK POLICY DEFINING THE ORGANIZATION RISK TOLERANCE. THIS POLICY MAY BEGIN ON A PESSIMISTIC NOTE AND BECOME MORE OPTMISTIC AS THE PROJECTS REGISTER BETTER PERFORMANCE AND LEARNT LESSONS HELP THE ORGANIZATION TO MATURE. MATURE COMPANIES ARE MORE COMPETITIVE! THE SUCESS IN OBTAINING STREAMLINED RISK PERFORMANCE METRICS LIES IN MONITORING AND CONTROLLING THEM ALONG THE ENTIRE LIFE CYCLE OF THE PROJECT.CONSTRUTORA IBEN LTDA.
  22. 22. RISK MONITORING AND CONTROL TIPS ON RISK MONITORING AND CONTROL: - ALL REACTIONS MUST HAVE A RESPONSIBLE PERSON ASSIGNED AND A SCHEDULED PERFORMING DATE. - REACTIONS MUST BE SCHEDULED AS ACTIVITIES. - ROOT CAUSE OF RISKS MUST BE MONITORED AND WARNINGS INCLUDED IN THE COMMUNICATION PLAN. - MANAGEMENT RESERVES ARE TO BE USED TO TACKLE NON IDENTIFIED RISKS ONLY. - THE PMO MUST ESTABLISH GOVERNANCE FOR THE APPLICATION OF THE PROCESSS AND RISK FOLLOWING-UP. - PRESERVE DOCUMENTED RISK, TREND AND SCENARIO CHANGING LOGS. - IMPROVE MATURITY OF THE ORGANIZATION BY INCORPORATING RISK MANAGEMENT LEARNT LESSONS INTO KNOWLEDGE MANAGEMENT.CONSTRUTORA IBEN LTDA.
  23. 23. WRITTEN BY EDUARDO MILITÃO ELIAS, MBA / PMP® ID 1396759 SPONSORED BY CONSTRUTORA IBEN LTDA., RCP PMI® ID 1463462CONSTRUTORA IBEN LTDA.

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