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Risk Management


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by Sergii Zabigailo

Published in: Technology, Business
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Risk Management

  1. 1. Risk Management • Sergii Zabigaylo, Program Manager
  2. 2. What is Risk? Project Failure Risk Management, theory and practice The Cone of Uncertainty Notes about Risks Content 2
  3. 3. The optimism bias 3
  4. 4. Risk Management Strategies 4
  5. 5. What is Risk? 5 Uncertain Event or Condition Always in the Future Effect on Project Objective Has Causes, Impact and Probability Negative or Positive Outcome
  6. 6. 6 Practice: What are the benefits of risks management? Define common ways to manage risks, analyze, response plans Increase project success probability Realistic estimates Remove obstacles on project launch phases Increase profitability Less stress Professionalism and reputation
  7. 7. Whenever a project doesn’t meet to the expectation of the Stakeholders. 7 Project Failure A Project is considered as Failure……
  8. 8. • Cost & Time Over-runs • Quality Degradation • Frustration & Stress: sometime resulting in people quitting • Low Job Satisfaction • Low Corporate Market Value • Low Public Opinion • Negative Media Campaigns • May even force the company into Closure Impact of Project Failure 8
  9. 9. Primary Causes of Project Failure 9
  10. 10. Problems:  The changes that were not initially planned for, are added to project.  The Project takes longer and costs more than planned and there is no record of WHY?? Causes:  Not having a method to handle or recognize changes. 1. Lack of Change Management 10
  11. 11. Problems:  Team Members do not have the information they need when they need it.  Issues or changes do not get escalated.  Project reporting is sluggish Causes:  The project’s communication plan was not completed.  The project’s communication plan doesn’t have enough details. 2. Poor Communication 11
  12. 12. You do not have enough people, the right skill-sets, or the team is not committed to the projects. Problems:  Tasks take longer than expected to complete.  Deadlines and milestones get missed.  Project completion date comes into jeopardy.  You end up working double shifts to complete all the works. Causes:  There was no pre-commitment of resources to the projects.  The Project was not supported.  There was no analysis and documentation of all skill-set required 3. Inadequate Resources 12
  13. 13. “I would like a set of stairs that leads up to a bridge.” Problems:  Customer will be unhappy.  Customer will complain and you will end up doing the what they want- at your expense. Causes:  What the customer wants, was not clearly documented.  What you believe the customer wants is different that what the customer believes they have asked for? 4. Poorly Defined Requirement 13
  14. 14. How do you figure out how long the project will take? Problems:  An unrealistic timeline or budget will be agreed to.  You will not be able to do all the work in the time allocated. Causes:  No formal estimating method  Estimate confidence is law.  Volume of work not understood 5. Inaccurate Estimates 14
  15. 15. Sorry about the project, I left it in my car & there was a bit of an incidents. Problems:  Unexpected events cause delays.  Domino effect of thing going wrong. Causes:  No Formal Risk Management.  Just try to predict the big things that can go wrong.  It’s the sum of the all little things that make a project late.  Nothing is more stressful than trying to keep on schedule when unexpected things keep happening. 6. Poor Risk Management 15
  16. 16. “Emergency Phone installed, Deliverable completed” Problems:  Difficult to get the agreement that the product is finished.  Customer Keep wanting more, saying you didn’t do it to their Specification. Causes:  The Milestones or deliverables were not measurable.  The customer never told us How many they wanted So we just assumed 1, 7. Poorly Defined Deliverables 16
  17. 17. Of course we Can do that for you. Problems:  There was little or no planning before deciding you can get the job done.  The task you agree to turns out to be more work than expected.  It takes you longer and jeopardizes other deliverables. Causes:  Not enough time spent planning.  You may have been pressured into giving an answer right then and there.  Didn’t have a full understanding of the work involved before committing. 8. Over Optimism 17
  18. 18. Hurry .... We have a tight deadline. No time to plan. Just start digging. Problems:  The plan is flawed from the start.  The project gets out of control and can’t be recovered. Causes:  You have to do the work and weren’t also given time for project management.  Perhaps you only have 10% or 20% allotment for the project management duties. 9. No time for Project Management 18
  19. 19. You Don't Know What You Don't Know. Problems:  Your project don’t finish on time.  Your project are always squeezed at the end.  Your project are stressful.  You have to deal with unrealistic expectation or customers.  You feel your projects are out of control. Causes:  People often don’t know what they don’t know.  Their project are out of control but they don’t know WHY??  They feel they are doing okay but could benefit from formal PM education. 10. Improved PM Skill-set needed 19
  20. 20. Risk Management Process 20 Plan Risk Management Identify Risks Perform Risk Analysis Plan Risk Responses Monitoring & Control
  21. 21. Define how will we work with Risks: resources, responsibilities, frequency, risk tolerance… Plan Risk Management 21
  22. 22. Risk Management Plan: • Categorize risk sources • Probability Matrix • Roles, Responsibilities, Activity Plan • Monitoring, Reporting, Communication • Tolerance, Management/Contingency reserves, reaction (before, after) Plan Risk Management 22
  23. 23. Risk Breakdown StructureRisk Breakdown Structure
  24. 24. Influence Source Time Budget Quality Scope … Technologies External Environment Internal conditions, Project, Process + + + People, Communication + + … Categorization of Sources and Influence 25
  25. 25. Scale: (1-3, 1-10, 1-100) 26 Matrix of Probability and Impact
  26. 26. Matrix of Probability and Impact Scale: Planning Poker Matrix of Probability and Impact
  27. 27. Matrix of Influence Definition Should correlate with Matrix of Probability and Impact and with Categorization of Sources and Influence Matrix of Influence Definition Should correlate with Matrix of Probability and Impact and with Categorization of Sources and Influence
  28. 28. Identify RisksIdentify Risks
  29. 29. Risk Register 30 ID Risk Impact Probability Impact Risk Value Notes 1 Application response will be worse than expected according to the acceptance criteria Architecture redesign – 3 weeks 2 Specifications aren’t confirmed by client Corresponding time delay, budget increase 3 … …
  30. 30. ID Risk Impact Probability Impact Risk Value Notes 1 Application response will be worse than expected according to the acceptance criteria Architecture redesign – 3 weeks 3 5 15 2 Specifications aren’t confirmed by client Corresponding time delay, budget increase 2 1 2 3 … … Perform Qualitative Risk Analysis Current Risks Watchlist Perform Qualitative Risk Analysis
  31. 31. Negative Risks: Avoid, Transfer, Mitigate Positive Risks: Exploit, Share, Enhance Acceptance of Positive and Negative Risks Plan Risk Responses 32
  32. 32. Risk Management Strategies 33 If your project requires that you stand on the edge of a cliff, then there’s a risk that you could fall. If it’s very windy out or the ground is slippery and uneven, then falling is more likely.
  33. 33. Risk Management Strategies - Avoid 34 The easiest way to avoid this risk is to walk away from the cliff… but that may not be an option on this project
  34. 34. Risk Management Strategies - Mitigate 35 If you can’t avoid the risk, you can mitigate it. This means taking some sort of action that will cause it do as little damage to your project as possible.
  35. 35. Risk Management Strategies - Transfer 36 One effective way of deal with risk is to pay someone else to accept it for you. The most common way to do this is to buy insurance.
  36. 36. Risk Management Strategies - Accept 37 If you can’t avoid the risk and there’s nothing you can do to reduce its impact then accepting it is you only choice Looks like falling is the best option
  37. 37. Monitor and Control Risks 38 Information Management Systems ▪ Expert Judgment ▪ Meetings
  38. 38. Monitor and Control Risks Iteratively! Monitor and Control Risks Project Start Project EndProject Plan Changes, Change Requests, Change in Risk Register and Project Documents
  39. 39. Emergency Budget (direct, indirect) strategy “Before”:  Most critical Risks in the project plan from very beginning strategy “After”:  Contingency Reserve should be in the project plan management Reserve:  5%-7% for unpredictable cases (in addition to known risks) Risks and Client 40 Project Scope Proactive Reaction Contingency Reserve Management Reserve
  40. 40. The Cone of Uncertainty 41
  41. 41. Don't make promises if you can't keep them 42
  42. 42. Estimates as a range. 43
  43. 43. 10 Golden Rules of Risk Management 1. Make Risk Management Part of Your Project 2. Identify Risks Early in Your Project 3. Communicate About Risks 4. Consider Both Threats and Opportunities 5. Clarify Ownership Issues 6. Prioritize Risks 7. Analyze Risks 8. Plan and Implement Risk Responses 9. Register Project Risks 10.Track Risks and Associated Tasks 10 Golden Rules of Risk Management • Make Risk Management Part of Your Project • Identify Risks Early in Your Project • Communicate About Risks • Consider Both Threats and Opportunities • Clarify Ownership Issues • Prioritize Risks • Analyze Risks • Plan and Implement Risk Responses • Register Project Risks • Track Risks and Associated Tasks
  44. 44. The optimism bias 45
  45. 45. Thank you USA TELEPHONE Toll-Free: 866.687.3588 Office: 239.690.3111 EMAIL WEBSITE: EUROPE OFFICES United Kingdom Germany Netherlands Ukraine Bulgaria US OFFICES Austin, TX Fort Myers, FL Boston, MA Newport Beach, CA Salt Lake City, UT
  46. 46. There is a web application – business analytics. Known technologies, DB, 23 main modules, DB architecture is very complex, DB performance is very critical with the strict acceptance criteria. Requirement are 50% defined, very low chances for requirements to be changed, but they should be very clear before the realization. Now is August, release is on April 1. Client wants to have full transparency on progress. There couldn’t be delay with the delivery of the whole scope, it is more important than budget. Test environment is on client’s side, very big load on the network connection (more than the channel is now). Client is very qualified in business area, will be doing UAT. Main expert on the client’s side is Jar Jar Binks. Project team should be 15 people, 5 are missing, they will be not used after project completion. DB architect works on another project 60-70%. Client’s expert Jar Jar Binks hardly uses email and has strong non-English accent. Practice 47