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Strengthen data center building to withstand hurricanes Secondary Risk: Increased construction costs Acceptance: Do nothing, accept loss if hurricane hits Residual Risk: Loss of data center still possible Situation: Company’s data center is in a hurricane zone. Risk: Loss of data center after major storm. Options: What are they? Strategies for Negative Risks (Threats) 39 Strategies for Positive Risks (Opportunities) Exploitation: Sharing: Enhancement: Acceptance: Situation: New technology may reduce project costs Risk: Cost savings opportunity Options: What are they? 40 Strategies

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1 https://www.magenium.com
Resources  PMBoK6  Long Island PMI Chapter  Mohamed ElSaadany lecture notes  Rita 8  Agile Training, Iad Saadah  Others shown on slides 2
Course structure Day Topics 1 Introduction, Certification, Basics, Processes 2 Integration, Stakeholders, Scope 3 Schedule, Cost 4 Quality, Resources, Communications 5 Risk, Procurement 6 Ethics, Agile, MS Project, Exam, Tips, Real Exam 3
Day 5 # Time (min) Topic 1 120 Risk 2 90 Procurement 3 120 Project 4
Definitions RISK - an occurrence that may affect the project for good or bad. UNCERTAINTY - the absence of any information related to a desired outcome. RISK APPETITE - the degree of uncertainty an entity is willing to accept in anticipation of a reward RISK TOLERANCES - the degree, amount, or volume of risk that an organization or individual will withstand RISK THRESHOLD - a measure of uncertainty or impact at which a stakeholder may have an interest CONTINGENCY RESERVES - time or money added to the plan to handle “known unknowns” MANAGEMENT RESERVES - time or money added to the plan to handle “unknown unknowns” 5
Project Risk Management Objectives  Increase the probability & impact of opportunities  Decrease the probability & impact of threats Simple & Clear-cut goals! 6
Why is Risk Management Necessary? Projects are:  New, Unique  Under Time Pressures  Uncertain  Under Budget Constraints 7
Six Step Approach to Handling Project Risk 1. Make a plan 2. Identify – Create a comprehensive list of risks 3. Screen or Qualify risks 4. Analyze only the screened risks and the overall project 5. Plan individual responses 6. Monitor the risks that have response plans and execute the responses. 8
Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks Plan Risk Management Process 9
11.1 10
Example Set of Risk Categories Technical/Quality/Performance Unproven or complex technology Expected changes (standards, technology) Project Management Poor allocation of time and resources Inadequate project plan quality Organizational Inconsistent objectives (scope, cost, time) Lack of prioritization Inadequacy/Interruption of funding Resource conflicts External Shifting legal, regulatory, environmental requirements Labor issues Force Majeure (natural disasters, war, LOTTO) 11
11.1 Plan Risk Management Facts Fact: The Risk Management Plan does not address responses to individual risks – that is done in the Risk Response Plan. Fact: Organizational assets are improved by lessons learned updates. Fact: Good Risk Management depends on good communications. 12
13 • Risk strategy. • Methodology. • Roles & Responsibilites. • Funding. • Timing. • Risk categories.
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Identify Risks Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 17
11.2 18
Risk Types Business Normal risk of doing business. Includes threats and opportunities. Threat Risk that presents a possible loss. Opportunity Risk that presents a possible gain. Pure (Insurable) Risk Risk that presents a possible loss & no possible gain! Known Risk Risks that were identified. Can be handled in a variety of ways, including contingency reserve Unknown Risk Risks that were not identified These can not be handled proactively It is prudent to allocate management reserves for these risks 19
Initiate Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Note: Register Updates in Amber 20
Perform Qualitative Risk Analysis Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 21
11.3 22
11.3 Perform Qualitative Risk Analysis Definitions EVENT – Something that happens, an occurrence, an outcome. PROBABILITY – How likely the event is to occur? IMPACT – The event’s impact on objectives should it occur. “POP QUIZ” Project Risk is greatest in the _____ phase of the project & why? Amount at stake is greater in the _____ phase of the project & why? 23
11.3 Perform Qualitative Risk Analysis Commentary QUALITATIVE approach expresses probability and/or impact using an ordinal rating system to denote order. Adjectives: high, medium, low Colors: red, yellow, green Ranking 1-10 Qualitative Approach: The Good, The Bad & The Ugly Good – it’s fast and easy to administer & understand Bad – it’s subjective, “invites” bias Ugly – it requires definitions, rules, standards, and process 24
Example of Ordinal Scale Rank Probability Impact High Risk event is very likely to occur, high probability If risk occurs, a significant impact to cost, schedule, quality, or customer satisfaction will occur Medium Risk event is likely to occur, medium probability If risk event occurs, a moderate impact to cost, schedule, quality or customer satisfaction will occur Low Risk event is unlikely to occur, low probability If risk event occurs, a small impact to cost, schedule, quality, or customer satisfaction will occur 25
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Signif impact to cost Note: Register Updates in Amber 26
Perform Quantitative Risk Analysis Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 27
11.4 28
11.4 Perform Quantitative Risk Analysis QUANTITATIVE risk analysis is a numerical analysis of the probability and/or impact of the highest risks. e.g.:  80% probability of occurrence  $10,000 impact or three week delay Helps to determine the most critical risks Less subjective than qualitative More time consuming; requires estimation Substantially more valuable in developing risk response strategies and reserves 29
The probability of Task E starting on time decreases as the number of parallel predecessors increases. Task A Start Task B Task C Task D Task E Finish Sensitivity Analysis Shows which risks have the most impact. 30
Risk Probability of X Impact = Expected Value Event Occurrence 1 10% $500,000 overrun $50,000 10 week delay 1 week delay 2 50% $100,000 overrun $50,000 16 week delay 8 week delay 3 75% $10,000 overrun $7,500 2 week delay 1.5 week delay EMV = Probability x Impact Expected Monetary Value (EMV) Analysis 31
Probability x Outcome = EMV Aggressive Uncertain P = .20 +100,000 = + $20,000 Schedule Outcome (EMV = $4,000) Decision P = .80 x - $20,000 = - $16,000 Uncertain P = .30 x - $20,000 = - $6,000 Outcome Conservative Schedule (EMV = $1,000) P = .70 x + $10,000 = + $7,000 X x Decision Tree Example 32
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Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signif impact to cost Note: Register Updates in Amber Update Risk Register 34
Plan Risk Responses Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 35
11.5 36
Secondary and Residual Risks Secondary Risks Risks that arise as a direct result of implementing a risk response. Example: Request new project resources to replace poor performers – what can happen? Residual Risks Risks that remain after risk responses have been implemented. Example: You execute a risk response strategy for a project during hurricane season but a hurricane may still occur. 37
Avoidance: Transference: Mitigation: Acceptance: Situation: Company’s data center is in a hurricane zone. Risk: Loss of data center after major storm. Options: What are they? Strategies for Negative Risks (Threats) 38
Avoidance: Move data center Secondary Risk: longer response times Transference: Insurance is only monetary it wont keep the data center up Outsource the data center & hold the contractor responsible Residual Risk: Outsourcer’s disaster recovery plan does not work Mitigation: Create disaster recovery plans (e.g.: spare hardware for the most critical elements of the data center, or backup data center located elsewhere) Acceptance: Passive: Do nothing now. Develop a workaround on the fly if it happens. Active: Do nothing now but have a contingency plan and the funding to implement it Situation: Company’s data center is in a hurricane zone. Risk: Loss of data center after major storm. Options: Strategies for Negative Risks (Threats) 39
Exploit: Share: Enhance: Accept: Situation: Define a situation Risk: Define Positive Risks (Opportunities) Options: Think about it - what are they? Strategies for Positive Risks or Opportunities Homework / Self Study 40
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff Note: Register Updates in Amber 41
Control Risks Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 42
43 11.6
Monitor Risks Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 44
11.7 45
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff Projct on sched Risk Closed 31 - Oct Tech Tasks Cmplt 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff Cont Cmplt Risk Closed 16 - Aug Cont Cmplt 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff No Chg 25 - Nov Proj within revised budget Note: Register Updates in Amber 46
Risk Fact Review Risk The most important item to cover at team meetings. Project Risk Response Audits Risk auditors examine and document the effectiveness of the risk response in avoiding, transferring, or mitigating risk occurrence as well as the effectiveness of the risk owner. Done throughout project life cycle. Earned Value Analysis Used for monitoring overall project performance against a baseline plan. Deviations from the project baseline may be risk triggers. Contingency Reserves Time and money for known unknowns. Added on top of the estimate. Made part of the cost baseline. Management Reserves Time and money for unknown unknowns. Added on top of the estimate. Made part of the project budget, not the baseline. Some organizations have policies on management reserves. Fallback Plans A plan of action if contingency plans are not effective. “Plan C” Workarounds Unplanned responses to emerging project risks that were previously accepted (passively) or unidentified. Must be documented and incorporated into the project plan and risk response plan. 47
When should risk management first take place? When is corrective action most costly? When is “scope” risk highest? When is “cost” risk highest? Are product defects a project risk? Who is responsible for risk? Who is accountable for risk? Risk Question Review 48
Sample Risk Documents 49
Cause & Effect Diagram 50
Risk Breakdown Structure (RBS) - Sample IT Project Business Competitors Suppliers Cash flow Technical Hardware Software Network Organizational Executive support User support Team support Project Management Estimates Communication Resources 51
52 Probability Impact Matrix - Sample 52
Expected Monetary Value (EMV) - Example 53
Risk Register Sample 54
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56 Project Charter SH s Requiremen ts Scope Statement WBS Risk Identificatio n Risk analysis Risk Responses Activities Resources CP Procuremen t Quality SH s/Comm. plan Cost Budget
Initiate Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Note: Register Updates in Amber 57
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Signif impact to cost Note: Register Updates in Amber 58
Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signif impact to cost Note: Register Updates in Amber Update Risk Register 59
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff Note: Register Updates in Amber 60
Update Risk Register Identify Risks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff Projct on sched Risk Closed 31 - Oct Tech Tasks Cmplt 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff Cont Cmplt Risk Closed 16 - Aug Cont Cmplt 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff No Chg 25 - Nov Proj within revised budget Note: Register Updates in Amber 61
0. Introduction 1. Plan Procurement Management 2. Conduct Procurements 3. Control Procurements 62
 Centralized Contracting:  Decentralized Contracting:  PM Roles:  Nondisclosure Agreement  Special Provisions:  Assignment:  Dispute resolution:  Indemnification ‫التعويض‬:  Breach :  Material Breach :  Intellectual Property:  Time is of the essence:  Waiver:  Privity :  Non competitive Procurement:  Seller Proposals:  Bidder Conferences:  Proposal Evaluation Techniques :  Independent Estimate :  Advertisement: 63 Terms  Contract Change Control System:  Procurement Performance Review:  Payment System:  Claims Administration:  Records Management System:  Procurement audits:
Contract Types 1- Fixed Price (FP) 1.1 Firm Fixed Price (FFP): 1.2 Fixed Price Incentive Fee (FPIF): 1.3 Fixed Price Economic Price Adjustment (FP-EPA) 2- Cost Reimbursable Contracts (CR) 2.1 Cost Plus Fixed Fee (CPFF): 2.2 Cost Plus Incentive Fee (CPIF): 2.3 Cost Plus Award Fee (CPAF) 3- Time and Material Contracts (T&M) 64
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TT Make-or-Buy Analysis: Reasons for Making: • Need of direct control over the product • Intellectual property concerns • Cost considerations • You have idle plant or workforce Reasons for Buying: • Lack of technical experience • Supplier's expertise on technical area • Cost considerations • Brand preferences 66
O Procurement Management Plan: • Types of contract to be used • Risk issues that need to be transferred or mitigated • Required performance bonds and insurance • Constrains and assumptions that could affect procurement • Time schedules and long lead times • Prequalified sellers O Source Selection Criteria: • Financial stability • Understanding needs • Technical ability • Price / lifecycle cost • Past performance • Ability to finish on time 67
O Procurement Statement of Work: Describes the work the seller is required to do. It must be clear & complete Procurement Statement of Work Types: 1. Performance: What the final product should be able to accomplish ‫مثال‬ : ‫يعيش‬ ‫مبنى‬ 100 ‫سنة‬ – ‫ل‬ ‫سرعتها‬ ‫تصل‬ ‫سيارة‬ 300 ‫كم‬ / ‫س‬ 2. Functional: Convey the end purpose / result ‫مثال‬ : ‫مبنى‬ 30 ‫دور‬ – ‫يسع‬ ‫مبنى‬ 250 ‫موظف‬ – ‫تنقل‬ ‫حافلة‬ 65 ‫راكب‬ 3. Design: Convey precisely what work is to be done ‫مثال‬ : ‫المخططات‬ ‫و‬ ‫المواصفات‬ ‫و‬ ‫بالتصميم‬ ‫مبنى‬ Note: Procurement statement of work can include drawings, specs, wording, quantities, quality level, work location, … etc. 68
O Procurement Documents: Request for Proposal (RFP): Invitation for bidding (IFB): Request for Quotation (RFQ): Other documents: • Terms & Conditions • Procurement statement of work • Instructions for sellers 69
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Negotiation: • Attack, • Personal insults ‫اهانة‬ ‫بأدب‬ • Good guy / bad guy, • Deadline ‫عندي‬ ‫موعد‬ ‫و‬ ‫ضروري‬ ‫ننهي‬ ‫التفاوض‬ ‫سريعا‬ ‫مثل‬ ‫موعد‬ ‫طائرة‬ • Limited authority ‫ال‬ ‫املك‬ ‫صالحية‬ ‫لذلك‬ • Missing man ‫هو‬ ‫غير‬ ‫موجود‬ ‫اآلن‬ , • Let’s be fair and reasonable ‫هذه‬ ‫الجملة‬ ‫مؤثرة‬ • Delay ‫دعنا‬ ‫نؤجل‬ ‫لالجتماع‬ ‫القادم‬ • Withdrawal emotional or physical (show less interest) • Extreme demand ‫تعلية‬ ‫سقف‬ ‫المطالب‬ 72 • Agreement document may include the following: • Statement of work or deliverables, Place of delivery • Roles and responsibilities, Limitation of liability • Inspection and acceptance criteria • Schedule baseline, Performance reporting, Period of performance • Pricing, Payment terms, Fees, Penalties, Incentives • Warranty, Insurance and performance bonds • Change request handling • Termination clause • Alternative dispute resolution (ADR) mechanisms
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1. For Fixed Price Contract: • Seller may cut scope or quality • Seller may overpriced change orders • check scope misunderstanding 2. For Time & Material Contract: • Provide day-to-day direction to seller • Be careful that project length not extended • No. of hours spent in work is reasonable 3. For Cost Reimbursable Contracts: • Audit each invoice • ensure that all costs are applicable and chargeable to your project. • Seller may bring less experienced resources • verify that work is progressing efficiently 74
Notes: • Closing procurements involves finalizing open claims, updating records to reflect final results, and archiving such information for future use. • Procurements are closed when completed or terminated. • Administrative closure (close project or phase) differs from procurement closure. There may be many procurements in one project. • All procurements must be closed before closing the project. • Procurement closing activities: • product verification, procurement audit • settlement of all negotiations and final payments • archiving procurement documents such as contract, changes, submittals, reports, inspection reports, …etc. 75
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Questions 77

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day 5 PMP.pptx

  • 1.
  • 2.
    Resources  PMBoK6  LongIsland PMI Chapter  Mohamed ElSaadany lecture notes  Rita 8  Agile Training, Iad Saadah  Others shown on slides 2
  • 3.
    Course structure Day Topics 1Introduction, Certification, Basics, Processes 2 Integration, Stakeholders, Scope 3 Schedule, Cost 4 Quality, Resources, Communications 5 Risk, Procurement 6 Ethics, Agile, MS Project, Exam, Tips, Real Exam 3
  • 4.
    Day 5 # Time(min) Topic 1 120 Risk 2 90 Procurement 3 120 Project 4
  • 5.
    Definitions RISK - anoccurrence that may affect the project for good or bad. UNCERTAINTY - the absence of any information related to a desired outcome. RISK APPETITE - the degree of uncertainty an entity is willing to accept in anticipation of a reward RISK TOLERANCES - the degree, amount, or volume of risk that an organization or individual will withstand RISK THRESHOLD - a measure of uncertainty or impact at which a stakeholder may have an interest CONTINGENCY RESERVES - time or money added to the plan to handle “known unknowns” MANAGEMENT RESERVES - time or money added to the plan to handle “unknown unknowns” 5
  • 6.
    Project Risk ManagementObjectives  Increase the probability & impact of opportunities  Decrease the probability & impact of threats Simple & Clear-cut goals! 6
  • 7.
    Why is RiskManagement Necessary? Projects are:  New, Unique  Under Time Pressures  Uncertain  Under Budget Constraints 7
  • 8.
    Six Step Approachto Handling Project Risk 1. Make a plan 2. Identify – Create a comprehensive list of risks 3. Screen or Qualify risks 4. Analyze only the screened risks and the overall project 5. Plan individual responses 6. Monitor the risks that have response plans and execute the responses. 8
  • 9.
    Knowledge Area Project ManagementProcess Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks Plan Risk Management Process 9
  • 10.
  • 11.
    Example Set ofRisk Categories Technical/Quality/Performance Unproven or complex technology Expected changes (standards, technology) Project Management Poor allocation of time and resources Inadequate project plan quality Organizational Inconsistent objectives (scope, cost, time) Lack of prioritization Inadequacy/Interruption of funding Resource conflicts External Shifting legal, regulatory, environmental requirements Labor issues Force Majeure (natural disasters, war, LOTTO) 11
  • 12.
    11.1 Plan RiskManagement Facts Fact: The Risk Management Plan does not address responses to individual risks – that is done in the Risk Response Plan. Fact: Organizational assets are improved by lessons learned updates. Fact: Good Risk Management depends on good communications. 12
  • 13.
    13 • Risk strategy. •Methodology. • Roles & Responsibilites. • Funding. • Timing. • Risk categories.
  • 14.
  • 15.
  • 16.
  • 17.
    Identify Risks Process KnowledgeArea Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 17
  • 18.
  • 19.
    Risk Types Business Normal riskof doing business. Includes threats and opportunities. Threat Risk that presents a possible loss. Opportunity Risk that presents a possible gain. Pure (Insurable) Risk Risk that presents a possible loss & no possible gain! Known Risk Risks that were identified. Can be handled in a variety of ways, including contingency reserve Unknown Risk Risks that were not identified These can not be handled proactively It is prudent to allocate management reserves for these risks 19
  • 20.
    Initiate Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Note: Register Updates in Amber 20
  • 21.
    Perform Qualitative RiskAnalysis Process Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 21
  • 22.
  • 23.
    11.3 Perform QualitativeRisk Analysis Definitions EVENT – Something that happens, an occurrence, an outcome. PROBABILITY – How likely the event is to occur? IMPACT – The event’s impact on objectives should it occur. “POP QUIZ” Project Risk is greatest in the _____ phase of the project & why? Amount at stake is greater in the _____ phase of the project & why? 23
  • 24.
    11.3 Perform QualitativeRisk Analysis Commentary QUALITATIVE approach expresses probability and/or impact using an ordinal rating system to denote order. Adjectives: high, medium, low Colors: red, yellow, green Ranking 1-10 Qualitative Approach: The Good, The Bad & The Ugly Good – it’s fast and easy to administer & understand Bad – it’s subjective, “invites” bias Ugly – it requires definitions, rules, standards, and process 24
  • 25.
    Example of OrdinalScale Rank Probability Impact High Risk event is very likely to occur, high probability If risk occurs, a significant impact to cost, schedule, quality, or customer satisfaction will occur Medium Risk event is likely to occur, medium probability If risk event occurs, a moderate impact to cost, schedule, quality or customer satisfaction will occur Low Risk event is unlikely to occur, low probability If risk event occurs, a small impact to cost, schedule, quality, or customer satisfaction will occur 25
  • 26.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Signif impact to cost Note: Register Updates in Amber 26
  • 27.
    Perform Quantitative RiskAnalysis Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 27
  • 28.
  • 29.
    11.4 Perform QuantitativeRisk Analysis QUANTITATIVE risk analysis is a numerical analysis of the probability and/or impact of the highest risks. e.g.:  80% probability of occurrence  $10,000 impact or three week delay Helps to determine the most critical risks Less subjective than qualitative More time consuming; requires estimation Substantially more valuable in developing risk response strategies and reserves 29
  • 30.
    The probability ofTask E starting on time decreases as the number of parallel predecessors increases. Task A Start Task B Task C Task D Task E Finish Sensitivity Analysis Shows which risks have the most impact. 30
  • 31.
    Risk Probability ofX Impact = Expected Value Event Occurrence 1 10% $500,000 overrun $50,000 10 week delay 1 week delay 2 50% $100,000 overrun $50,000 16 week delay 8 week delay 3 75% $10,000 overrun $7,500 2 week delay 1.5 week delay EMV = Probability x Impact Expected Monetary Value (EMV) Analysis 31
  • 32.
    Probability x Outcome= EMV Aggressive Uncertain P = .20 +100,000 = + $20,000 Schedule Outcome (EMV = $4,000) Decision P = .80 x - $20,000 = - $16,000 Uncertain P = .30 x - $20,000 = - $6,000 Outcome Conservative Schedule (EMV = $1,000) P = .70 x + $10,000 = + $7,000 X x Decision Tree Example 32
  • 33.
  • 34.
    Identify Risks PerformRisk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signif impact to cost Note: Register Updates in Amber Update Risk Register 34
  • 35.
    Plan Risk ResponsesProcess Knowledge Area Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 35
  • 36.
  • 37.
    Secondary and ResidualRisks Secondary Risks Risks that arise as a direct result of implementing a risk response. Example: Request new project resources to replace poor performers – what can happen? Residual Risks Risks that remain after risk responses have been implemented. Example: You execute a risk response strategy for a project during hurricane season but a hurricane may still occur. 37
  • 38.
    Avoidance: Transference: Mitigation: Acceptance: Situation: Company’s datacenter is in a hurricane zone. Risk: Loss of data center after major storm. Options: What are they? Strategies for Negative Risks (Threats) 38
  • 39.
    Avoidance: Move data center SecondaryRisk: longer response times Transference: Insurance is only monetary it wont keep the data center up Outsource the data center & hold the contractor responsible Residual Risk: Outsourcer’s disaster recovery plan does not work Mitigation: Create disaster recovery plans (e.g.: spare hardware for the most critical elements of the data center, or backup data center located elsewhere) Acceptance: Passive: Do nothing now. Develop a workaround on the fly if it happens. Active: Do nothing now but have a contingency plan and the funding to implement it Situation: Company’s data center is in a hurricane zone. Risk: Loss of data center after major storm. Options: Strategies for Negative Risks (Threats) 39
  • 40.
    Exploit: Share: Enhance: Accept: Situation: Define asituation Risk: Define Positive Risks (Opportunities) Options: Think about it - what are they? Strategies for Positive Risks or Opportunities Homework / Self Study 40
  • 41.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff Note: Register Updates in Amber 41
  • 42.
    Control Risks Process KnowledgeArea Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 42
  • 43.
  • 44.
    Monitor Risks Process KnowledgeArea Project Management Process Groups Initiating Planning Executing Controlling Closing 11. Project Risk Management 11.1 Plan Risk Management 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 11.4 Perform Quantitative Risk Analysis 11.5 Plan Risk Responses 11.6 Implement Risk Responses 11.7 Monitor Risks 44
  • 45.
  • 46.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff Projct on sched Risk Closed 31 - Oct Tech Tasks Cmplt 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff Cont Cmplt Risk Closed 16 - Aug Cont Cmplt 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff No Chg 25 - Nov Proj within revised budget Note: Register Updates in Amber 46
  • 47.
    Risk Fact Review RiskThe most important item to cover at team meetings. Project Risk Response Audits Risk auditors examine and document the effectiveness of the risk response in avoiding, transferring, or mitigating risk occurrence as well as the effectiveness of the risk owner. Done throughout project life cycle. Earned Value Analysis Used for monitoring overall project performance against a baseline plan. Deviations from the project baseline may be risk triggers. Contingency Reserves Time and money for known unknowns. Added on top of the estimate. Made part of the cost baseline. Management Reserves Time and money for unknown unknowns. Added on top of the estimate. Made part of the project budget, not the baseline. Some organizations have policies on management reserves. Fallback Plans A plan of action if contingency plans are not effective. “Plan C” Workarounds Unplanned responses to emerging project risks that were previously accepted (passively) or unidentified. Must be documented and incorporated into the project plan and risk response plan. 47
  • 48.
    When should riskmanagement first take place? When is corrective action most costly? When is “scope” risk highest? When is “cost” risk highest? Are product defects a project risk? Who is responsible for risk? Who is accountable for risk? Risk Question Review 48
  • 49.
  • 50.
    Cause & EffectDiagram 50
  • 51.
    Risk Breakdown Structure(RBS) - Sample IT Project Business Competitors Suppliers Cash flow Technical Hardware Software Network Organizational Executive support User support Team support Project Management Estimates Communication Resources 51
  • 52.
  • 53.
    Expected Monetary Value(EMV) - Example 53
  • 54.
  • 55.
  • 56.
  • 57.
    Initiate Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Note: Register Updates in Amber 57
  • 58.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availabilit y Unable to meet project schedule Brian 15-Jun Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun Signif impact to cost Note: Register Updates in Amber 58
  • 59.
    Identify Risks PerformRisk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signif impact to cost Note: Register Updates in Amber Update Risk Register 59
  • 60.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff Note: Register Updates in Amber 60
  • 61.
    Update Risk Register IdentifyRisks Perform Risk Analysis Plan Risk Responses Control Risks # Category Risk Potential Result Defined By Date Impact Prob Score Qualtve Impact Risk Strat Notes Owner Status Date Notes 1 Tech IT Resource Availability Unable to meet project schedule Brian 15- Jun 0.4 Y 0.6 0.24 Y Mod impact to sched Avoid, extend sched With Apprvd Sponsor Chg Rqst PM Jeff Projct on sched Risk Closed 31 - Oct Tech Tasks Cmplt 2 Contracts Project contract negotiate Inability to complete project goals Wendy 22- Jun 0.3 M 0.9 0.27 M Mod impact to goals Transf er risk with contrct Fixed Price Cont Limits Addtl Risk PM Jeff Cont Cmplt Risk Closed 16 - Aug Cont Cmplt 3 Cost Scope Creep Project Budget Overrun Jeff 30- Jun 0.8 M 0.7 0.56 M Signf impact to cost Accept use Cont Resrv With Apprvd Sponsor Chg Rqst PM Jeff No Chg 25 - Nov Proj within revised budget Note: Register Updates in Amber 61
  • 62.
    0. Introduction 1. PlanProcurement Management 2. Conduct Procurements 3. Control Procurements 62
  • 63.
     Centralized Contracting: Decentralized Contracting:  PM Roles:  Nondisclosure Agreement  Special Provisions:  Assignment:  Dispute resolution:  Indemnification ‫التعويض‬:  Breach :  Material Breach :  Intellectual Property:  Time is of the essence:  Waiver:  Privity :  Non competitive Procurement:  Seller Proposals:  Bidder Conferences:  Proposal Evaluation Techniques :  Independent Estimate :  Advertisement: 63 Terms  Contract Change Control System:  Procurement Performance Review:  Payment System:  Claims Administration:  Records Management System:  Procurement audits:
  • 64.
    Contract Types 1- FixedPrice (FP) 1.1 Firm Fixed Price (FFP): 1.2 Fixed Price Incentive Fee (FPIF): 1.3 Fixed Price Economic Price Adjustment (FP-EPA) 2- Cost Reimbursable Contracts (CR) 2.1 Cost Plus Fixed Fee (CPFF): 2.2 Cost Plus Incentive Fee (CPIF): 2.3 Cost Plus Award Fee (CPAF) 3- Time and Material Contracts (T&M) 64
  • 65.
  • 66.
    TT Make-or-Buy Analysis: Reasonsfor Making: • Need of direct control over the product • Intellectual property concerns • Cost considerations • You have idle plant or workforce Reasons for Buying: • Lack of technical experience • Supplier's expertise on technical area • Cost considerations • Brand preferences 66
  • 67.
    O Procurement ManagementPlan: • Types of contract to be used • Risk issues that need to be transferred or mitigated • Required performance bonds and insurance • Constrains and assumptions that could affect procurement • Time schedules and long lead times • Prequalified sellers O Source Selection Criteria: • Financial stability • Understanding needs • Technical ability • Price / lifecycle cost • Past performance • Ability to finish on time 67
  • 68.
    O Procurement Statementof Work: Describes the work the seller is required to do. It must be clear & complete Procurement Statement of Work Types: 1. Performance: What the final product should be able to accomplish ‫مثال‬ : ‫يعيش‬ ‫مبنى‬ 100 ‫سنة‬ – ‫ل‬ ‫سرعتها‬ ‫تصل‬ ‫سيارة‬ 300 ‫كم‬ / ‫س‬ 2. Functional: Convey the end purpose / result ‫مثال‬ : ‫مبنى‬ 30 ‫دور‬ – ‫يسع‬ ‫مبنى‬ 250 ‫موظف‬ – ‫تنقل‬ ‫حافلة‬ 65 ‫راكب‬ 3. Design: Convey precisely what work is to be done ‫مثال‬ : ‫المخططات‬ ‫و‬ ‫المواصفات‬ ‫و‬ ‫بالتصميم‬ ‫مبنى‬ Note: Procurement statement of work can include drawings, specs, wording, quantities, quality level, work location, … etc. 68
  • 69.
    O Procurement Documents: Requestfor Proposal (RFP): Invitation for bidding (IFB): Request for Quotation (RFQ): Other documents: • Terms & Conditions • Procurement statement of work • Instructions for sellers 69
  • 70.
  • 71.
  • 72.
    Negotiation: • Attack, • Personalinsults ‫اهانة‬ ‫بأدب‬ • Good guy / bad guy, • Deadline ‫عندي‬ ‫موعد‬ ‫و‬ ‫ضروري‬ ‫ننهي‬ ‫التفاوض‬ ‫سريعا‬ ‫مثل‬ ‫موعد‬ ‫طائرة‬ • Limited authority ‫ال‬ ‫املك‬ ‫صالحية‬ ‫لذلك‬ • Missing man ‫هو‬ ‫غير‬ ‫موجود‬ ‫اآلن‬ , • Let’s be fair and reasonable ‫هذه‬ ‫الجملة‬ ‫مؤثرة‬ • Delay ‫دعنا‬ ‫نؤجل‬ ‫لالجتماع‬ ‫القادم‬ • Withdrawal emotional or physical (show less interest) • Extreme demand ‫تعلية‬ ‫سقف‬ ‫المطالب‬ 72 • Agreement document may include the following: • Statement of work or deliverables, Place of delivery • Roles and responsibilities, Limitation of liability • Inspection and acceptance criteria • Schedule baseline, Performance reporting, Period of performance • Pricing, Payment terms, Fees, Penalties, Incentives • Warranty, Insurance and performance bonds • Change request handling • Termination clause • Alternative dispute resolution (ADR) mechanisms
  • 73.
  • 74.
    1. For FixedPrice Contract: • Seller may cut scope or quality • Seller may overpriced change orders • check scope misunderstanding 2. For Time & Material Contract: • Provide day-to-day direction to seller • Be careful that project length not extended • No. of hours spent in work is reasonable 3. For Cost Reimbursable Contracts: • Audit each invoice • ensure that all costs are applicable and chargeable to your project. • Seller may bring less experienced resources • verify that work is progressing efficiently 74
  • 75.
    Notes: • Closing procurementsinvolves finalizing open claims, updating records to reflect final results, and archiving such information for future use. • Procurements are closed when completed or terminated. • Administrative closure (close project or phase) differs from procurement closure. There may be many procurements in one project. • All procurements must be closed before closing the project. • Procurement closing activities: • product verification, procurement audit • settlement of all negotiations and final payments • archiving procurement documents such as contract, changes, submittals, reports, inspection reports, …etc. 75
  • 76.
  • 77.

Editor's Notes

  • #2 .5
  • #4 1
  • #6 Remember what Rita says: up to 90% of threats identified in the risk mgmt process can be eliminated – wow!!! A good risk = an opportunity. A bad risk = a threat. Contingency reserve - This is your fund for “known-unknowns“. That means you’ve already identified the risk; you just don’t know how much it will impact your project. This can be estimated based on the sum of all of your risks’ expected values. Management reserve - This is for the “unknown-unknowns“. Basically, you didn’t even identify the risk until it has occurred. This may be derived from using percentage of the overall project budget.
  • #7 Positive events = opportunities Negative events = threats Examples of Opportunities: “A” team (i.e. the best) resources are assigned to your project Conservative cost estimates are REALLY conservative Excess hardware is found! Examples of Threats: “D” team (i.e. the worst) resources are assigned to your project Cost estimates are not realistic and cannot cover actual costs Scope creep!
  • #8 This is time to emphasize that even on a moderately-sized project there are many risks. Some are significant and others are not. While it is important to address Risk, a PM could blow his funding and spend all our time chasing down all the uncertainties. By the way, over-zealous risk management is also a risk.
  • #9 This slide presents an algorithm that will allow project management to cover many risks and, more importantly, focus attention and recourses on the ones that have the most effect on project success. A Six Step Approach to Handling Project Risk is a pre-introduction to the six risk processes. Be aware of the progression of Identifying, Qualifying, Quantifying and Response Planning of risks. The goal is to reduce the number of Risks considered so that you can investigate the remainder in greater detail.
  • #11 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which of these is NOT an input to Plan Risk Management. Plan Risk Mgmt tells the stakeholders how risk will be managed. We are building a plan, to build a plan.
  • #12 Here are some Risk Category Examples … what others might you consider? Many risks can impact a project … including the possibility that your #1 resource hits LOTTO and leaves the project: Potential impact: HIGH Potential probability: LOW Should this be a major area of project focus: PROBABLY NOT
  • #19 Possible test question: what output of Plan Risk Management is an input for Identify Risks? Answer: Risk Management Plan From Rita’s book: when asked who should be involved in risk management, what’s the answer? EVERYONE, the more people the more perspectives you’ll get to identify threats and opportunities.
  • #20 Possible test question: which of these is not a type of risk (from above)? Management Reserve: is used to manage unknown risks or unknown unknowns Is not included in the baseline costs and often requires a change request May be estimated as a percentage of project budget Contingency reserve is used to manage known unknowns You already identified the risk, but you just don’t know how much it will impact your project. this can be estimated based on the sum of all of your risks’ expected values.
  • #23 Potential test question: what output of the Identify Risks process is an input to the Perform Qualitative Risk Analysis process? Answer: Risk Register. Remember: Risk mgmt is expensive not because PMs make too much but because it takes time and $$$ to complete risk mgmt Therefore we want to qualify (i.e. reduce) risks and only focus on those most likely to occur w/greatest impact!!!
  • #24 Project Risk is greatest in the early/planning phase of the project because… there are many unknowns. Amount at stake is greater in the closeout phase of the project because… there is little, if any, time to recover.
  • #26 Instructor can draw a sample Probability-Impact matrix to demonstrate how to rank risks qualitatively And to show how high probability, high impact risks should be attended to first …
  • #27 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which if these is NOT an input to Plan Risk Management.
  • #29 Summarize where we are at this step, we: developed our risk plan identified our risks qualified them Now we’re going to further analyze, measure the potential impact from them
  • #30 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which if these is NOT an input to Plan Risk Management.
  • #33 The positive outcomes represent opportunities: $100,000 bonus (e.g. for meeting the schedule) The negative outcomes represent threats: $20,000 penalty (e.g. for missing the schedule) An additional (airline fee) exercise is available on page 390 in Rita’s book.
  • #35 Notice that the value for IMPACT has been normalized into a value that can be mathematically combined with the probability of each risk, ina consistent manner, to develop a Risk Score.
  • #39 Present scenario to class and ask for responses After a few minutes show next slide for answers.
  • #41 Similar to example for threats – do for homework, self study.
  • #42 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which if these is NOT an input to Plan Risk Management.
  • #46 Note: new risks can still be identified here, although it’s not the primary phase to identify them Note: the risk register is an input and out to this process … could be a potential test question 
  • #48 A review of definitions to know for the test
  • #49 Answers: When should risk management first take place? – Project Planning When is corrective action most costly? – At the end/closeout phase When is “scope” risk highest? – At project start When is “cost” risk highest? – At project end Are product defects a project risk? – Yes, known unknowns. Who is responsible for risk? – Everyone. Who is accountable for risk? – The Project Manager.
  • #57 120
  • #59 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which if these is NOT an input to Plan Risk Management.
  • #60 Notice that the value for IMPACT has been normalized into a value that can be mathematically combined with the probability of each risk, ina consistent manner, to develop a Risk Score.
  • #61 Reiterate standard PMI format: Inputs, Tools & Techniques, Outputs You need to know all of these Also know that the outputs of some processes become the inputs of others A typical test question: which if these is NOT an input to Plan Risk Management.