This document provides the questions and answers to Liberty University's BUSI 313 Quiz 3. It covers key concepts in project risk management and project scheduling including: defining risks, the risk management process, risk assessment tools, risk responses, resource constraints, time constraints, resource leveling, and time-phasing project budgets. Some multiple choice questions assess understanding of these concepts, such as defining different types of constraints, steps in the risk process, and responses to address identified risks.
Increasing the Probability of Project SuccessGlen Alleman
Risk Management is essential for development and production programs. Information about key cost, performance and schedule attributes are often uncertain or unknown until late in the program.
Risk issues that can be identified early in the program, which may potentially impact the program, termed Known Unknowns, can be alleviated with good risk management. -- Effective Risk Management 2nd Edition, Page 1, Edmund Conrow, American Institute of Aeronautics and Astronautics, 2003
The role of Risk Assessment and Risk Management is to continuously Identify, Analyze, Plan, Track, Control, and Communicate the risks associated with a project.
The Webster’s definition of risk is the possibility of suffering a loss. Risk in itself is not bad. Risk is essential to progress and failure is often a key part of learning. Managing risk is a key part of success.
This document describes the foundations for conducting a risk assessment of a large-scale system development project. Such a project will likely include the procurement of Commercial Off The Shelf (COTS) products as well as their integration with legacy systems.
Increasing the Probability of Success with Continuous Risk ManagementGlen Alleman
Cost and schedule growth is created when unrealistic technical performance expectations, unrealistic cost and schedule estimates, unanticipated technical issues, and poorly performed and ineffective risk management contribute to program technical and programmatic shortfalls
Probabilistic Cost, Schedule, and Risk managementGlen Alleman
All variables on projects are random variables. Cost, Schedule, and Technical performance interact with each other is statistical ways to produce probabilistic outcomes for their values.
Managing a project to a successful outcomes requires not only understanding the underlying statistics, but forecasting outcomes from these interactions in enough time to take corrective actions.
The basis of decision making for software development started in the 1980's with the application of classical discounted cash flow analysis.
This paper speaks to the extension of those principles to the development of Agile software
Increasing the Probability of Project SuccessGlen Alleman
Risk Management is essential for development and production programs. Information about key cost, performance and schedule attributes are often uncertain or unknown until late in the program.
Risk issues that can be identified early in the program, which may potentially impact the program, termed Known Unknowns, can be alleviated with good risk management. -- Effective Risk Management 2nd Edition, Page 1, Edmund Conrow, American Institute of Aeronautics and Astronautics, 2003
The role of Risk Assessment and Risk Management is to continuously Identify, Analyze, Plan, Track, Control, and Communicate the risks associated with a project.
The Webster’s definition of risk is the possibility of suffering a loss. Risk in itself is not bad. Risk is essential to progress and failure is often a key part of learning. Managing risk is a key part of success.
This document describes the foundations for conducting a risk assessment of a large-scale system development project. Such a project will likely include the procurement of Commercial Off The Shelf (COTS) products as well as their integration with legacy systems.
Increasing the Probability of Success with Continuous Risk ManagementGlen Alleman
Cost and schedule growth is created when unrealistic technical performance expectations, unrealistic cost and schedule estimates, unanticipated technical issues, and poorly performed and ineffective risk management contribute to program technical and programmatic shortfalls
Probabilistic Cost, Schedule, and Risk managementGlen Alleman
All variables on projects are random variables. Cost, Schedule, and Technical performance interact with each other is statistical ways to produce probabilistic outcomes for their values.
Managing a project to a successful outcomes requires not only understanding the underlying statistics, but forecasting outcomes from these interactions in enough time to take corrective actions.
The basis of decision making for software development started in the 1980's with the application of classical discounted cash flow analysis.
This paper speaks to the extension of those principles to the development of Agile software
Technical and programmatic disruptions in project plans don’t need to negatively impact cost, performance or schedule metrics. But traditional approaches to planning are not an adequate defense. This white paper outlines the six steps for building a risk-tolerant schedule using a field proven approach.
Managing Risk in Agile Development: It Isn’t MagicTechWell
Has the adoption of agile techniques magically erased risk from software projects? When we change the project and product environment by adopting agile, have we tricked ourselves into thinking that risk has been abolished—when it hasn’t? Agile risk management is a continuous process that makes risk management part of how the team works so they get value from the activity. Thomas Cagley suggests that we develop user stories that specifically address risk so it is prioritized, planned, and executed as part of the normal agile cadence. Agile techniques—daily standups, demonstrations, retrospectives, and sprint-planning activities—provide a platform for monitoring and controlling risks. The built-in feedback loops act as a safety net to ensure eyes are continuously looking at what is happening and what could be happening. By constantly evaluating risk, agile processes avoid spending significant time analyzing risks that are not on the horizon, while making it very difficult for an unseen risk to sneak up on your project.
Managing in the presence of uncertaintyGlen Alleman
Uncertainty is the source of risk. Uncertainty comes in two types, aleatory and epistemic. It is important to understand both and deal with both in distinct ways, in order to produce a credible risk handling strategy.
Risk Management is essential to the success of all project work. Information about key project cost, performance, and schedule attributes are often unknown until the project is underway and changes are occurring during execution.
NCV 4 Project Management Hands-On Support Slide Show - Module5Future Managers
This slide show complements the Learner Guide NCV 4 Project Management Hands-On Training by Bert Eksteen, published by Future Managers. For more information visit our website www.futuremanagers.net
Risk Management is essential for the success of any significant project. Information about key project cost, performance, and schedule attributes is often unknown until the project is underway.
Risk Management is a critical success factor for all project work.
Risk identification, quantitative and qualitative analysis, and risk response planning and execution is provided in this presentation
Agile project management and normativeGlen Alleman
Reform of the traditional approaches to managing software development projects is driven by several factors, not the least of which is some spectacular failures of soft-ware projects. Ranging from the IRS, to the FAA, to large e–commerce systems, we all have some “war story” of a major failure that can be traced to non–technical causes.
The role of Risk Assessment and Risk Management is to continuously Identify, Analyze, Plan, Track, Control, and Communicate the risks associated with a project.
The Webster’s definition of risk is the possibility of suffering a loss. Risk in itself is not bad. Risk is essential to progress and failure is often a key part of learning. Managing risk is a key part of
success.
This document describes the foundations for conducting a risk assessment of a large-scale system
development project. Such a project will likely include the procurement of Commercial Off The
Shelf (COTS) products as well as their integration with legacy systems.
Niwot Ridge
When contractually required, DOD acquisition contractors are obligated to submit IPMR's electronically IAW DID 81861. This data is necessary but not sufficient for successfully managing a program. This presentation is the overview of the Essential Views needed for that success
This document provides “notional” questions and answers for Control Account Managers (CAM) during CAM interviews, IBR interviews and DCMA validation and surveillance interviews. The sections are common to all DCMA style programs.
The question – what does Done Look Like? – was asked every week on the program that changed my life as a Program Manager. Rocky Flats Environmental Technology Site (RFETS) was the marketing term for the 3rd worst toxic waste site on the planet. RFETS was a nuclear bomb manufacturing plant, built in 1951, operating until 1989, and closed in 2005. I served as the VP of Program Management of the ITC (Information Technology and Communications) group, providing ERP, purpose built IT, voice, and data systems for 5,000 employees and contractors of the Bomb Factory.
Event and Non-Event Risk - PMP/CAPM from PMIMudassir Iqbal
https://www.mudassiriqbal.net/project-management-terms-and-concepts
There are many concepts and definitions which require special attention by all PMP Aspirants as the terminologies are largely used interchangeably in the real world.
Technical and programmatic disruptions in project plans don’t need to negatively impact cost, performance or schedule metrics. But traditional approaches to planning are not an adequate defense. This white paper outlines the six steps for building a risk-tolerant schedule using a field proven approach.
Managing Risk in Agile Development: It Isn’t MagicTechWell
Has the adoption of agile techniques magically erased risk from software projects? When we change the project and product environment by adopting agile, have we tricked ourselves into thinking that risk has been abolished—when it hasn’t? Agile risk management is a continuous process that makes risk management part of how the team works so they get value from the activity. Thomas Cagley suggests that we develop user stories that specifically address risk so it is prioritized, planned, and executed as part of the normal agile cadence. Agile techniques—daily standups, demonstrations, retrospectives, and sprint-planning activities—provide a platform for monitoring and controlling risks. The built-in feedback loops act as a safety net to ensure eyes are continuously looking at what is happening and what could be happening. By constantly evaluating risk, agile processes avoid spending significant time analyzing risks that are not on the horizon, while making it very difficult for an unseen risk to sneak up on your project.
Managing in the presence of uncertaintyGlen Alleman
Uncertainty is the source of risk. Uncertainty comes in two types, aleatory and epistemic. It is important to understand both and deal with both in distinct ways, in order to produce a credible risk handling strategy.
Risk Management is essential to the success of all project work. Information about key project cost, performance, and schedule attributes are often unknown until the project is underway and changes are occurring during execution.
NCV 4 Project Management Hands-On Support Slide Show - Module5Future Managers
This slide show complements the Learner Guide NCV 4 Project Management Hands-On Training by Bert Eksteen, published by Future Managers. For more information visit our website www.futuremanagers.net
Risk Management is essential for the success of any significant project. Information about key project cost, performance, and schedule attributes is often unknown until the project is underway.
Risk Management is a critical success factor for all project work.
Risk identification, quantitative and qualitative analysis, and risk response planning and execution is provided in this presentation
Agile project management and normativeGlen Alleman
Reform of the traditional approaches to managing software development projects is driven by several factors, not the least of which is some spectacular failures of soft-ware projects. Ranging from the IRS, to the FAA, to large e–commerce systems, we all have some “war story” of a major failure that can be traced to non–technical causes.
The role of Risk Assessment and Risk Management is to continuously Identify, Analyze, Plan, Track, Control, and Communicate the risks associated with a project.
The Webster’s definition of risk is the possibility of suffering a loss. Risk in itself is not bad. Risk is essential to progress and failure is often a key part of learning. Managing risk is a key part of
success.
This document describes the foundations for conducting a risk assessment of a large-scale system
development project. Such a project will likely include the procurement of Commercial Off The
Shelf (COTS) products as well as their integration with legacy systems.
Niwot Ridge
When contractually required, DOD acquisition contractors are obligated to submit IPMR's electronically IAW DID 81861. This data is necessary but not sufficient for successfully managing a program. This presentation is the overview of the Essential Views needed for that success
This document provides “notional” questions and answers for Control Account Managers (CAM) during CAM interviews, IBR interviews and DCMA validation and surveillance interviews. The sections are common to all DCMA style programs.
The question – what does Done Look Like? – was asked every week on the program that changed my life as a Program Manager. Rocky Flats Environmental Technology Site (RFETS) was the marketing term for the 3rd worst toxic waste site on the planet. RFETS was a nuclear bomb manufacturing plant, built in 1951, operating until 1989, and closed in 2005. I served as the VP of Program Management of the ITC (Information Technology and Communications) group, providing ERP, purpose built IT, voice, and data systems for 5,000 employees and contractors of the Bomb Factory.
Event and Non-Event Risk - PMP/CAPM from PMIMudassir Iqbal
https://www.mudassiriqbal.net/project-management-terms-and-concepts
There are many concepts and definitions which require special attention by all PMP Aspirants as the terminologies are largely used interchangeably in the real world.
The risk management for projects attempts to recognize and manage potential and unforeseen trouble spots which may occur when the project is implemented. It identifies as many risk events as possible. Further classification of risk factors help in resolving it either by mitigation, avoiding, transferring or retaining .Methods of handling risk.
130 MASTERING RISK AND PROCUREMENT IN PROJECT MANAGEMENTre.docxjesusamckone
130 MASTERING RISK AND PROCUREMENT IN PROJECT MANAGEMENT
response plans. This proactive approach enables the project manager
time to think through responses and, in some cases, identify more
than one response where the project manager can use strategy as to
the best course of action. Proactive response planning also allows the
project manager time to document best responses and assign owner-
ship of particular risks to individuals who can carry out the response.
This is an efficient way the project manager can oversee risk response,
as preapproved responses can be assigned to individuals to be carried
out in the occurrence of a risk event and do not require subject matter
experts to use a cumbersome, last-minute decision process. Proactive
planning in risk responses is truly the best way to manage risk for
project activities; it gives the project manager much more control of
not only how to respond to risk, but who can assist in risk responses
being carried out correctly.
Both reactive and proactive response modes are the general
condition the project manager and project staff will be in based on
pre-project planning. In most cases, the assumption in risk response
planning is to address problems that will have a negative effect on
work activities and the project. Although in most cases this is true,
occasionally an issue can result in a positive outcome that was unex-
pected and will also need a response. Projects, then, have the poten-
tial of both negative and positive risks.
Negative Risks
Any influence that has a negative effect on a work activity is con-
sidered to be a negative risk and results in problems that will have to
be addressed. The project manager and other project staff evaluating
work activities for potential risks can generally spot areas that may
have a potential for a problem and will need a response plan to address
the risk, should it occur. There are four typical strategies the project
manager can use in addressing a risk event, which typically would take
into consideration the overall risk tolerance of the project and organi-
zation as well as options that might be available for response planning
and strategy project manager might use in a response that may affect
other work activities within the project.
05/20/2020 - RS0000000000000000000002125614 (Shantelle
Hildred) - Mastering Risk and Procurement in Project
Management
CHAPTER 5 • RISK RESPONSE STRATEGIES 131
• Avoid risk— Identify the root cause of a risk event and elimi-
nate or alter the conditions of the activity to create a new sce-
nario without the potential risk. This is simply eliminating the
risk before it happens and should be the best-case action in
response to a risk. The caution to the project manager and proj-
ect team for eliminating a risk is what actions have to be taken
to eliminate or alter a condition and what effects that could
have on the output deliverable for that work activity.
130 MASTERING RISK AND PROCUREMENT IN PROJECT MANAGEMENTre.docxRAJU852744
130 MASTERING RISK AND PROCUREMENT IN PROJECT MANAGEMENT
response plans. This proactive approach enables the project manager
time to think through responses and, in some cases, identify more
than one response where the project manager can use strategy as to
the best course of action. Proactive response planning also allows the
project manager time to document best responses and assign owner-
ship of particular risks to individuals who can carry out the response.
This is an efficient way the project manager can oversee risk response,
as preapproved responses can be assigned to individuals to be carried
out in the occurrence of a risk event and do not require subject matter
experts to use a cumbersome, last-minute decision process. Proactive
planning in risk responses is truly the best way to manage risk for
project activities; it gives the project manager much more control of
not only how to respond to risk, but who can assist in risk responses
being carried out correctly.
Both reactive and proactive response modes are the general
condition the project manager and project staff will be in based on
pre-project planning. In most cases, the assumption in risk response
planning is to address problems that will have a negative effect on
work activities and the project. Although in most cases this is true,
occasionally an issue can result in a positive outcome that was unex-
pected and will also need a response. Projects, then, have the poten-
tial of both negative and positive risks.
Negative Risks
Any influence that has a negative effect on a work activity is con-
sidered to be a negative risk and results in problems that will have to
be addressed. The project manager and other project staff evaluating
work activities for potential risks can generally spot areas that may
have a potential for a problem and will need a response plan to address
the risk, should it occur. There are four typical strategies the project
manager can use in addressing a risk event, which typically would take
into consideration the overall risk tolerance of the project and organi-
zation as well as options that might be available for response planning
and strategy project manager might use in a response that may affect
other work activities within the project.
05/20/2020 - RS0000000000000000000002125614 (Shantelle
Hildred) - Mastering Risk and Procurement in Project
Management
CHAPTER 5 • RISK RESPONSE STRATEGIES 131
• Avoid risk— Identify the root cause of a risk event and elimi-
nate or alter the conditions of the activity to create a new sce-
nario without the potential risk. This is simply eliminating the
risk before it happens and should be the best-case action in
response to a risk. The caution to the project manager and proj-
ect team for eliminating a risk is what actions have to be taken
to eliminate or alter a condition and what effects that could
have on the output deliverable for that work activity.
With uncertainty comes opportunity. But if a project manager is consumed with managing the risks, there is little time to manage the opportunities. Good risk management is not about fear of failure; it is about removing barriers to success. This is when opportunity management emerges.
372the risk report described in . The risk report will be .docxBHANU281672
372
the risk report described in . The risk report will be updated to reflect the results ofSection 11.2.3.2
the quantitative risk analysis. This will typically include:
Assessment of overall project risk exposure. Overall project risk is reflected in two key
measures:
Chances of project success, indicated by the probability that the project will achieve its
key objectives (e.g., required end date or interim milestones, required cost target, etc.)
given the identified individual project risks and other sources of uncertainty; and
Degree of inherent variability remaining within the project at the time the analysis was
conducted, indicated by the range of possible project outcomes.
Detailed probabilistic analysis of the project. Key outputs from the quantitative risk
analysis are presented, such as S-curves, tornado diagrams, and criticality analysis, together
with a narrative interpretation of the results. Possible detailed results of a quantitative risk
analysis may include:
Amount of contingency reserve needed to provide a specified level of confidence;
Identification of individual project risks or other sources of uncertainty that have the
greatest effect on the project critical path; and
Major drivers of overall project risk, with the greatest influence on uncertainty in project
outcomes.
Prioritized list of individual project risks. This list includes those individual project risks
that pose the greatest threat or present the greatest opportunity to the project, as indicated by
sensitivity analysis.
Trends in quantitative risk analysis results. As the analysis is repeated at different times
during the project life cycle, trends may become apparent that inform the planning of risk
responses.
Recommended risk responses. The risk report may present suggested responses to the level
of overall project risk exposure or key individual project risks, based on the results of the
quantitative risk analysis. These recommendations will form inputs to the Plan Risk
Responses process.
11.5 PLAN RISK RESPONSES
Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on
actions to address overall project risk exposure, as well as to treat individual project risks. The key
benefit of this process is that it identifies appropriate ways to address overall project risk and
individual project risks. This process also allocates resources and inserts activities into project
documents and the project management plan as needed. This process is performed throughout the
project. The inputs, tools and techniques, and outputs of the process are depicted in . Figure 11-16
depicts the data flow diagram for the process.Figure 11-17
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372the risk report described in . The risk report will be .docxpriestmanmable
372
the risk report described in . The risk report will be updated to reflect the results ofSection 11.2.3.2
the quantitative risk analysis. This will typically include:
Assessment of overall project risk exposure. Overall project risk is reflected in two key
measures:
Chances of project success, indicated by the probability that the project will achieve its
key objectives (e.g., required end date or interim milestones, required cost target, etc.)
given the identified individual project risks and other sources of uncertainty; and
Degree of inherent variability remaining within the project at the time the analysis was
conducted, indicated by the range of possible project outcomes.
Detailed probabilistic analysis of the project. Key outputs from the quantitative risk
analysis are presented, such as S-curves, tornado diagrams, and criticality analysis, together
with a narrative interpretation of the results. Possible detailed results of a quantitative risk
analysis may include:
Amount of contingency reserve needed to provide a specified level of confidence;
Identification of individual project risks or other sources of uncertainty that have the
greatest effect on the project critical path; and
Major drivers of overall project risk, with the greatest influence on uncertainty in project
outcomes.
Prioritized list of individual project risks. This list includes those individual project risks
that pose the greatest threat or present the greatest opportunity to the project, as indicated by
sensitivity analysis.
Trends in quantitative risk analysis results. As the analysis is repeated at different times
during the project life cycle, trends may become apparent that inform the planning of risk
responses.
Recommended risk responses. The risk report may present suggested responses to the level
of overall project risk exposure or key individual project risks, based on the results of the
quantitative risk analysis. These recommendations will form inputs to the Plan Risk
Responses process.
11.5 PLAN RISK RESPONSES
Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on
actions to address overall project risk exposure, as well as to treat individual project risks. The key
benefit of this process is that it identifies appropriate ways to address overall project risk and
individual project risks. This process also allocates resources and inserts activities into project
documents and the project management plan as needed. This process is performed throughout the
project. The inputs, tools and techniques, and outputs of the process are depicted in . Figure 11-16
depicts the data flow diagram for the process.Figure 11-17
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Embedding risk management as an integral part of the project framework is an essential and fundamental part of any project, programme or portfolio as a way of keeping costs down, benefits high, and increasing the probability of successful delivery.
Table of Contents Project Outline. …………………………………………………………………….docxMARRY7
Table of Contents
Project Outline. ……………………………………………………………………..…………………………………………… 3
Risk Management Justification……………………………………………………………………………………….…….…5
Project Risks Identification……………………………..……………………….……………………………………….…….7
Project Risks Assessment…………….…………………………………………………………….………………………….12
Project Risks Response Strategy…………………………………………………………………………………………... 15
Project Risks Responsibility Plan..…………………………….………..………………………………………………….19
Project Risks Monitoring &Control Plan………….…………………………………….………………………………..20
Project Risks WBS & Budget Updates……………………………………………………………………………………21
Project Risks Communication Plan…………………………………………………………………………………………22
References…………………………………………………………………………………………………………………………….20
Project Outline
The institution that I will be focusing my individual project on is that of the Scotia Bank Institution. Scotia Bank is a world-renowned banking institution founded over fifty years ago. The company whose headquarters are in California has many divisions of business, the most profitable being banking, insurance and stocks. The company features over one hundred and seventy branches that are all connected to one platform and database. The institution has sought to give their clients some degree of unlimited access focusing on alternate means of updating and accessing multiple accounts at once regardless of location.
The information technology department of the scotia bank group has recently launched the development of a mobile application that will increase client relations through the use of improved mediums and levels of access for everyday business transactions. It has come to the attention of the business segment of the. The board of directors that the level of productivity within the organization is rapidly depreciating and as such reevaluation of both software and employee
Personnel have been put in place to identify the reason, risk and solution for the dip in productivity following the implementation of the latest software tactic.
The department of information technology software and development protocols currently uses an agile methodological approach in developing all software. The pros and cons of this approach have long been preferred based on the ever-changing needs of the company. However stakeholders involved would prefer a complete overview of this approach to determine the degree of success or possible need for change as such the a project manager has been selected to provide through detailing on the process of evaluating human and software elements affecting the cooperation as it regards to production.
The company has one branch in every state of the United States as well as twenty branches in the Caribbean and the remaining branches are located in Europe and Asia. The branches hold a little over three hundred employees total with an Information technology of two per branch .The information technology department is focused on developing software and maintaining existing software needed for the ...
MBA 6941, Managing Project Teams 1 Course Learning Ou.docxaryan532920
MBA 6941, Managing Project Teams 1
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
4. Explore the dynamics of project teams.
4.1 Describe the positive and negative risks of a project and how they can affect the project team.
4.2 Identify risk response plans based on the key processes of project risk management and how
team members can play a role in these plans.
Reading Assignment
Chapter 14:
Risk
Unit Lesson
Project risk is an uncertain event in the future, and if it occurs, it will have a positive or negative impact on one
or more project objectives, including scope, schedule, cost, and quality. Risk may have one or more causes
such as requirement, assumption, and constraints or conditions that create the possibility of negative or
positive outcomes.
It is normal even for the extremely organized and most carefully planned project to run into unexpected
troubles. Several factors such as inadequate resources, the project environment, the project management
processes, and other facets can contribute to project risks. We will be able to anticipate some risks in
advance and come up with response plans; other risk events will occur unannounced during the project.
Team members can get sick or quit unexpectedly, sudden weather change can drastically limit your options,
and even resources that you are depending on may become unavailable. The purpose of risk management is
to identify potential problems that could cause concern for your project, analyze how likely and at what
frequency they will occur, take preventive actions for the ones you can avoid, and minimize the impacts and
probability for the ones you cannot avoid. There are two generalized types of risk:
business risk (risk of loss/threat or gain/opportunity) and
pure risk (only a risk of loss/threat)—are sometimes also called insurable risks and can include
events like fire, theft, personal injury, and other elements.
Opportunity (Positive Risk): These are the risks with positive effects. It is a favorable situation in the
organizational environment. Some examples include the arrival of new technology or the removal of an
international trade barrier. In addition, the fulfillment of a previously unfulfilled customer need may have a
significant positive impact on your project.
Threats (Negative Risk): These are external elements in the environment that arise from political, economic,
social, and technological (PEST) forces and can cause trouble for the business. Some examples can include
new regulations, increased trade barriers, or the emergence of substitute products.
A few additional threats include the following:
anything external that might cause problems, damage, or injury;
technological developments that may make your offerings obsolete;
market changes that may result from changes in customer needs, competitor’s moves, or
demographic shifts; or
the ...
5 Project Risk Management
adrian825/iStock/Thinkstock
Learning Objectives
By the end of this chapter, you will be able to:
• Define and describe project risk.
• Understand the risk management process.
• Discuss the risk identification process.
• Explain the risk analysis process.
• Describe the risk response process.
• Explain the role of risk monitoring and control.
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Introduction
Pretest
1. Brainstorming is a good initial approach for identifying risks to a project.
a. True
b. False
2. The risk management process is a three-step process.
a. True
b. False
3. When risks are identified later in the project process, the cost to address these issues
will increase.
a. True
b. False
4. A risk that has a high probability of occurring might have little impact on a project.
a. True
b. False
5. A project manager who has not created a documented risk response plan has not
considered risks fully enough.
a. True
b. False
6. An output of risk monitoring and control includes updating the risk database.
a. True
b. False
Answers can be found at the end of the chapter.
Introduction
Have you ever visited a public park facility and seen an observation tower with a sign reading
“Climb at your own risk?” That is a good example of risk, the chance that something could go
wrong. The park is not only warning you about the risks of climbing the tower, but also saying
that it is not liable should something happen during the climb. In other words, the park is not
willing to share in the risk—it is all yours. In project management there are similar risks that
something will go wrong. The best way to handle anticipated risks is to document and analyze
them beforehand and decide what to do about them should they occur.
Good managers look for risks throughout the project cycle, know what the risks are before they
occur, and work to communicate, prevent, and offset them in their daily decisions and routines.
For instance, if the project manager is aware that a supplier of a key product component might
not keep an adequate inventory of that component on hand and could potentially delay the
project when it is due, the manager may adjust the relevant supply contract to include a penalty
clause for late delivery or make other changes in the way the supplier’s inventory is handled.
The principle is that project managers should be able to identify what might happen, what
the probabilities are that a risk event might occur, what the impacts will be, and how to
prevent or mitigate risks. This principle assumes that failure can be attributed to key events
or circumstances.
H1
sec_n sec_t
bar81677_05_c05_149-172.indd 150 9/9/14 10:49 AM
Section 5.1 The Risk Problem
Risk management is the process of recognizing risks and dealing with them in a project. This
means that risks are identified, ana.
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Question 1 The attempt to recognize and manage potential and unforeseen trouble spots that
may occur when a project is implemented is known as
Question 2 Enhancing a risk is a tactic that seeks to eliminate the uncertainty associated with an
opportunity to ensure that it definitely happens.
Question 3 Fixedprice contracts are an example of transferring risk from an owner to a contractor.
Question 4 Which of the following is NOT included in a Failure Mode and Effects Analysis?
Question 5 After your team has successfully identified potential risks that could affect the project,
what is the next step?
Question 6 Adopting proven technology instead of experimental technology is an example of
mitigating a risk.
Question 7 If, during risk response development, you successfully identify how you will respond to
a risk, contingency planning is unnecessary.
Question 8 The probability that a risk event will occur is higher during the initial stages of a
project.
Question 9 Regina's boss has told her that her project is very important. If the critical path is
delayed, she will be given whatever she needs to get it back on schedule. Her project is classified
as ________ constrained.
Question 10 Gene is trying to order the concrete needed to continue his project. However, the
supplier will not be able to deliver it until next week. This is an example of what kind of resource
constraint?
Question 11 Rachel is working on a project that technically allows three activities to be done at
the same time. If they were to be implemented at the same time, she would need 5 contractors in
order for the activities to be completed on time. There are only 3 available for her to use. This is
2. an example of what type of constraint?
Question 12 Project budgets are developed by timephasing which of the following?
Question 13 If resources are truly limited and activity time estimates are accurate, the
resourceconstrained schedule will materialize as the project is implemented, not the
timeconstrained schedule.
Question 14 When resource constraints are added to technical constraints the original project
network may change as well as the completion date.
Question 15 In a resourceconstrained project, the first priority in assigning resources is usually
given to activities with the
Question 16 Sequential activities hold just as much potential for resource conflicts as parallel
activities.
Question 17 These are all guidelines a project manager should consider when assigning project
work EXCEPT
Question 18 The higher the cost slope of an activity the lower the cost to reduce its duration.
Question 19 One of the advantages of using a Project CostDuration Graph is that it keeps the
importance of indirect costs in the forefront of decision making.
Question 20 When reducing project duration, there will always be an optimum cost time point
where the total cost of the project is less than it was when the project was initially planned under
normal conditions.
Question 21 When reducing project duration, the crash cost per unit has to be calculated and the
maximum units each activity can be reduced must be known. After this, the critical path must be
identified. What is the next step?
Question 22 The cost slope of an activity is calculated by dividing the run by the rise.
Question 23 According to Brooks' Law, adding more people to a late project is most likely to have
which of the following impacts?
Question 24 Reducing project duration
Question 25 As a project is crashed and project duration is reduced, direct costs typically
3. An uncertain event or condition that, if it occurs, has a positive or negative effect on
project objectives is termed a
The chances of a risk event occurring as a project proceeds through its life cycle tend
to
The cost impact of a risk event occurring as a project proceeds through its life cycle
tends to
The attempt to recognize and manage potential and unforeseen trouble spots that may
occur when a project is implemented is known as
Which of the following is NOT one of the steps in the risk management process
The initial step in the risk management process is to
One common mistake made early in the risk identification process is to
Organizations use ____ in conjunction with work breakdown structures to help
management teams identify and eventually analyze risk
Which of the following groups should NOT be a part of the risk identification process?
After your team has successfully identified potential risks that could affect the project,
what is the next step
A list of questions that address traditional areas of uncertainty on a project is termed a
____ focuses on how to respond to events that have a positive impact on a project
Tools such as a risk assessment form and a risk severity matrix are used to
Based on the following, which event should you be most concerned about
____ is a measure of how easy it would be to notice that a risk event was going to
occur in time to take mitigating action, that is, how much warning you would have
Purchasing an accident insurance policy would be an example of responding to a risk
by ____ it
The risk management tool that is divided into three color-coded zones representing
major, moderate, and minor risks is the risk
The risk assessment form contains all of the following EXCEPT
Risks are evaluated in terms of
Adopting proven technology instead of experimental technology in order to eliminate
technical failure would be an example of which risk response
Which of the following activities might you consider adding a time buffer to
Which of the following is NOT included in a Failure Mode and Effects Analysis
A fixed price contract is an example of
Which of the following is NOT one of the potential responses to a specific risk event
A Risk Response Matrix contains all of the following EXCEPT
A key distinction between a risk response and a contingency plan is
The risk associated with the unlikelihood that one of the key members will be struck by
lightning would most likely be handled by which of the following
Funds that are for identified risks that have a low probability of occurring and that
decrease as the project progresses are called ______ reserves
Risks that can result in a system or process that will not work are known as
Which of the following is NOT involved in risk control
Which of the following is identified to cover major unforeseen risks and, hence, are
applied to the total project
Change management systems are designed to accomplish all of the following EXCEPT
An uncertain event or condition that, if it occurs, has a positive or negative effect on
project objectives is known as a ____
The likelihood of a risk event occurring ____ as a project goes through its life cycle
The first step in the risk management process is ____
4. The significance of a risk is assessed in terms of the ____ and the impact of the event
A list of questions that address traditional areas of uncertainty on a project is known as
a
The measurement of how easy it would be to detect that the event was going to occur
in time to take mitigating action is known as
The ____ form identifies each risk event, the likelihood of it occurring, the potential
impact, when it may occur, and the degree of difficulty in detecting it
The ____ matrix is divided into red, yellow, and green zones representing major,
moderate, and minor risks
According to the Failure Mode and Effects Analysis (FMEA), Impact x Probability x
Detection = ____
When considering risk response development, reducing the likelihood that an event will
occur and/or reducing the impact that an adverse event would have on a project is
known as ____ the risk
When considering risk response development, changing the plan to eliminate the risk or
condition is known as ____ the risk
When considering risk response development, passing risk to another party instead of
changing it is known as ____ the risk
When considering risk response development, assuming the risk because the chance
of such an event is slim is known as ____ the risk
Testing a new project on a smaller isolated area prior to installing it for the entire
organization is an example of ____ a risk
Performance bonds, warranties, and insurance are examples of ____ a risk
Choosing to move a concert indoors to eliminate the threat of bad weather is an
example of ____ a risk.
Flooding would be devastating to the project; however, it is very unlikely. The project
manager is most likely to ____ this risk
The event or point in time when a contingency plan will be implemented is called a
____
____ reserves are identified for specific work packages and are distributed by the
project manager and the team members.
____ reserves are controlled by the project manager and the owner of the project and
are used to cover major unforeseen risks to the entire project
A ____ is an alternative that will be used if a possible foreseen risk event becomes a
reality
____ systems involve reporting, controlling, and recording changes to the project
baseline
The probability that a risk event will occur is higher during the initial stages of a project
Risk events that occur in the early stages of a project will have a greater cost impact
than those that occur in later stages
Risk management is a reactive approach that is designed to ensure that surprises are
reduced and that negative consequences associated with undesirable events are
minimized
One common mistake that is made early on in the risk identification process is to focus
on consequences and not on the events that could produce consequences
The project being delayed is an example of a major risk that should be assessed
The first step in the risk management process is risk assessment
A risk profile is a list of questions that have been developed and refined from previous,
similar projects
The risk identification process should be limited to just the core project team.
5. While a "can do" attitude is essential during implementation, project managers have to
encourage critical thinking when it comes to risk identification
Responses to all identifiable risks should be a top priority for the project manager
When considering risk value, the lower the value, the higher the level of risk
If, during risk response development, you successfully identify how you will respond to
a risk, contingency planning is unnecessary
Adopting proven technology instead of experimental technology is an example of
mitigating a risk
A risk is an uncertain event that, if it occurs, can have a positive or negative effect on
project objectives
Performance bonds, warranties, and guarantees are financial instruments used to
share risk.
Fixed-price contracts are an example of transferring risk from an owner to a contractor
When developing a response to a risk by scheduling outdoor work in the summer,
investing in up-front safety training, or choosing high-quality materials, these are
examples of retaining a risk
Budget reserves are set up to cover identified risks associated with specific segments
of a project while management reserves are set up to cover unidentified risks
associated with the total project
Change management systems involve reporting, controlling, and recording changes to
the project baseline
Enhancing a risk is a tactic that seeks to eliminate the uncertainty associated with an
opportunity to ensure that it definitely happens
Contingency funding is made up of budget reserves and management reserves
Resources are adequate, but demand varies widely over the life of the project. Delaying
noncritical activities to lower peak demand on resources is known as resource
If resources are not adequate to meet peak demands, the resulting reschedule is
termed
Which of the following is NOT a potential consequence of failing to identify limited
resources before project implementation
When developing a new software package, logically, the software must be designed
before the code is written, and the code must be written before it is tested. These
activities are dependent on each other by ______ constraints
When considering the sequence and timing of activities, which of the following is NOT
one of the types of project network constraints
Sam, the project engineer, has been scheduled to run the product system test at the
same time he is to build a marketing prototype. This is an example of what type of
resource constraint
Susan is to conduct environmental testing but the chamber cannot hold all the
equipment that she wants to test. This is an example of a constraint that could impact
the sequence and timing of activities in a project network. What type of constraint is it
All of the following are types of resource constraints EXCEPT
Gene is trying to order the concrete needed to continue his project. However, the
supplier will not be able to deliver it until next week. This is an example of what kind of
resource constraint
A special truck that George needs on his project has been scheduled on another
project. This is an example of what type of resource constraint?
Most of the scheduling methods available today require the project manager to classify
the project as either _____ constrained or ______ constrained
6. Regina's boss has told her that her project is very important. If the critical path is
delayed, she will be given whatever she needs to get it back on schedule. Her project is
classified as ______ constrained
In reviewing the status of her project with top management, Shirley was told that there
are only two programmers that she can use for her project. Her project is classified as
_______ constrained
All resource leveling techniques involve
Technical constraints have been carefully considered when developing a project
network. Which of the following is true at this point
Rachel is working on a project that technically allows three activities to be done at the
same time. If they were to be implemented at the same time, she would need 5
contractors in order for the activities to be completed on time. There are only 3
available for her to use. This is an example of what type of constraint
Resource leveling or smoothing can have all the following results on a project EXCEPT
Jan is trying to reallocate resources in a time-constrained project to create smoother
resource utilization. She should first identify activities with the
In a resource-constrained project, which of the following is most likely to be changed
In a resource-constrained project, the first priority in assigning resources is usually
given to activities with the
In a resource-constrained project the second priority in assigning resources is usually
given to activities with the
Tony has realized that two activities in his project cannot be done at the same time
because not enough resources are available. Activity 3 is critical and has a duration of
5 days. Activity 4 has 2 days of slack and a duration of 2 days. How will he decide
which activity should be scheduled first
Splitting an activity can result in all of the following EXCEPT
All of the following are benefits of scheduling resources before project implementation
EXCEPT
These are all guidelines a project manager should consider when assigning project
work EXCEPT
When a company will reduce the number of projects they have to manage internally to
only core projects and send noncritical projects to contractors and consulting firms this
is called
Which of the following is NOT one of the more common problems associated with
scheduling multiproject resources
In a resource-constrained project the third priority in assigning resources is usually
given to activities with the
Why is it necessary to have a time-phased budget baseline
Project budgets are developed by time-phasing which of the following
A project budget report is showing our project as spending $35,000 against a budgeted
amount of $40,000. Which of the following is true
Delaying noncritical activities to lower peak demand and, thus, increase resource
utilization is called resource ____
A(n) ________ constraint addresses the sequence in which project activities must
occur even after considering resource constraints
Having one person responsible for performing several activities, all due at the same
time, is an example of a(n) _____ constraint
Trying to renovate a ship compartment that is too small for more than one person is an
example of a(n) _____ resource constraint
A shortage of programmers to write software is an example of a(n) _____ type of
resource constraint
7. The shortage of computer chips to produce a circuit board is an example of a(n)
______ type of resource constraint
If three copiers are needed to produce a final report on time and only two are available,
the project is facing a(n) ________ type of resource constraint
Resource dependency takes priority over the technological dependency but does not
violate _____ dependencies
In order that the new product is on the shelf for the Christmas buying season, the
development of the new product would be classified as a(n) ________ -constrained
project
Beth has two engineers assigned to her project and does not have access to more
even if the result means extending the completion date on her project. She is managing
a(n) ________ -constrained project
All leveling techniques delay noncritical activities by using ________ to reduce peak
demand
When scheduling activities in a resource-constrained project, typically the activity
scheduled first has the ______ amount of slack
Since resource leveling or smoothing delays noncritical activities, a common result is an
increase in network _____
When the work in an activity is interrupted to work on another activity and is then
resumed at a later point in time, it is called ____
In scheduling resource-constrained projects, _____ are typically used rather than
optimum mathematical solutions
When classifying projects, ________ constrained means that project duration is fixed
and resources are flexible
When classifying projects, ________ constrained means that a specific resource is
fixed and the duration of the project is flexible
Start-up and shutdown costs are major considerations when using the ______
scheduling technique
After resource leveling or smoothing one goal is that the amount of resources needed
over the life of the project will be
Many companies are ______ project work to contractors and consultants as a means of
dealing with the peaks and valleys of resource allocation among projects
When a project is classified as resource-constrained and a resource constraint exists,
the project duration is typically ____
In reality resource allocation generally occurs in a(n) ______ environment where the
demands of one project have to be reconciled with the needs of other projects
Without a ____ budget a good project schedule and cost control are impossible
A project cost baseline is also called ____
The fact that you must pour foundation before you frame the house and that you have
to frame the house before you can put on the roof demonstrates scheduling constraints
Too many parallel activities for one individual is an example of a resource constraint
The level of resources each activity will need to be completed in the given amount of
time has been estimated; therefore, there are no resource constraints
Resource leveling or smoothing is only used on projects which are resource
constrained
Resource bottlenecks are one of the three more common problems encountered in
managing multiproject resource schedules
The inability to fit more than two earth movers on a construction site at the same time
when more are needed to complete the activity on time is an example of a physical
constraint
In a resource-constrained project, the completion date is most likely to change.
8. Having too few programmers and too many engineers is an example of a people
resource constraint
If a project needs one earth mover six months from now in order to complete one
activity, and the organization has four such machines, there is no equipment resource
constraint
A lack of readily available engineers is a technical constraint
Resource dependency takes priority over technological dependency but it does not
violate it
To determine if a project is time-constrained or resource-constrained you would consult
the project priority matrix
Sequential activities hold just as much potential for resource conflicts as parallel
activities.
All leveling techniques delay noncritical activities by using positive slack to smooth out
the resource requirements
Since resource leveling or smoothing delays noncritical activities, a common result is a
decrease in network sensitivity
Scheduling projects classified as resource-constrained focuses on completing the
project as soon as possible under the given resource constraints
When resource constraints are added to technical constraints the original project
network may change as well as the completion date
When scheduling activities in a resource-constrained project typically the activity
scheduled first has the most amount of slack
A project budget report is showing our project as spending $35,000 against a budgeted
amount of $40,000. We can assume that everything is going as planned and that we
are under budget
Splitting is a scheduling technique used to get a better schedule or better resource
utilization and should be used without hesitation
Without a time-phased budget a good project schedule and cost control are impossible
If resources are truly limited and activity time estimates are accurate, the resource-
constrained schedule will materialize as the project is implemented, not the time-
constrained schedule
Project managers should always assign the best people to the most difficult tasks
1. The president of a software company remarks in a speech that new technologically advanced
software will be available in one year. This is an example of reducing project duration caused by:
2. Intense global competition and rapid technological advances create pressure on developing
projects rapidly. This is an example of reducing project duration caused by:
3. A contractor finished a bridge across a lake 18 months early and received more than $6 million
for the early completion. This is an example of reducing project duration caused by:
4. Adverse weather, design flaws, and equipment breakdown can create negative slack. This is an
example of reducing project duration caused by:
5. Total project costs include all of the following except:
6. Which of the following is not considered a project indirect cost?
9. 7. Project costs are generally classified as ____ costs.
8. Low-cost, realistic, efficient methods for completing an activity under normal conditions are
supported by ____ time.
9. The shortest possible time an activity can be completed realistically is called ___ time.
10. The most common response for meeting unattainable deadlines is to
11. ____ costs are incurred when completing an activity in its realistically shortest time.
12. An activity's crash costs include ____ costs.
13. Cost slope can be determined by dividing the
14. The less steep the cost slope of an activity, the
15. Which of the following correctly calculates an activity's cost slope?
16. An activity's cost slope represents an activity's
17. In selecting the best activity to reduce you would first select the activity with the
18. The optimum duration for a project is at the point where:
19. Creating a Project Cost-Duration graph is useful:
20. Crashing a project should occur:
21. If a network has several critical or near-critical paths it is deemed to be:
22. The project direct-cost line near the normal point is usually:
23. The relationship between cost and time for various durations is assumed to be:
24. A common method for shortening the project time is to:
25. A positive situation where moving toward the optimum time can result in very real, large
savings—this occurs when the network is:
26. Which of the following is/are included in a Project Cost-Duration Graph?
27. One way of reducing project costs is identifying tasks that _________ can do themselves.
28. The most common method for shortening project time is to
29. Which of the following is not one of the more commonly used options for cutting project
10. costs?
30. Which of the following is the most common method for shortening project time?
31. According to Brooks' Law, adding more people to a late project is most likely to have which
of the following impact?
32. Which of the following is the easiest method for shortening project time?
33. Which of the following is not one of the techniques for accelerating project completion?
34. When the project team is salaried, which of the following is the preferred choice for
accelerating project completion?
35. The Snapshot from Practice "Cell-Phone Wars" is an excellent example of reducing project
duration due to:
36. When a politician makes a public statement that a new building will be available in two years,
a(n) ________ duration has reduced the project duration.
37. Intense global competition and rapid technological advances combine to create a(n) ________
imposed project duration date.
38. The Snapshot from Practice which detailed the Northridge earthquake demonstrated the
importance of reducing a project's ______.
39. Sometimes very high ________ costs are recognized before a project begins and reducing
these costs through shorter project durations becomes a high priority.
40. The ________ project cost is the sum of the indirect and direct costs.
41. Costs such as supervision, administration, consultants, and interest are examples of ________
project costs.
42. Costs such as labor, materials, equipment, or contractors are examples of ________ project
costs.
43. Direct costs are assignable directly to a project ________.
44. Because direct costs are assumed to be developed from normal methods and time, any
reduction in activity time should ________ the cost of the activity.
45. To shorten the duration of a project the project manager should limit the choices of activities
to just those which ________.
46. The ________ time for an activity represents low-costs, realistic, efficient methods for
completing the activity under typical conditions.
11. 47. Shortening an activity is called ________.
48. The direct costs for completing an activity as early as possible is called its ________.
49. An activity's ________ is calculated by dividing the rise by the run.
50. Subtracting an activity's normal cost from the crash cost will calculate an activity's ________.
51. Subtracting an activity's crash time from the normal time will calculate an activity's ________.
52. When considering whether to move the project to its optimum cost-time position, the manager
should also consider ________.
53. A network is considered to be ________ if it has a predominate critical path with no other
path close in terms of slack.
54. The easiest way to add more resources to a project is not to add more people, but to schedule
________.
55. According to ________,adding more manpower to a late software project makes it later.
56. The easiest way to add more labor to a project is not to add more people, but to add
___________.
57. ____________ is the rearranging of the project network logic so that critical activities are
done in parallel rather than sequentially.
58. ___________ is probably the most common response for meeting unattainable deadlines.
59. In the "I'll Bet You..." Snapshot from Practice, the draftsman won ___________ for making a
very difficult deadline.
60. A rule of thumb for moderate- to high-technology firms is that a six-month delay in bringing
a product to market can result in a gross profit loss of about 35 percent.
61. Imposed project durations almost always leads to a higher-cost project than one planned with
detailed scheduling of all the project's activities.
62. Managers have several effective methods for crashing specific project activities when
resources are not constrained.
63. Indirect costs generally represent overhead costs such as supervision, administration,
consultants, and interest.
64. The total cost for each possible duration of a project is the sum of labor, materials, and
equipment.
65. Direct costs are so named because they can be assigned directly to a work package and
12. activity.
66. Because direct costs are assumed to be developed from normal methods and time, any
reduction in activity time should add to the costs of the activity.
67. The sum of the costs of all the work packages represents the total direct costs for the project.
68. Incentive contracts can make reduction of project time rewarding—usually for both the
project contractor and owner.
69. Shortening an activity's duration is termed crashing.
70. Expected time for an activity represents low-cost, realistic, efficient methods for completing
the activity under anticipated conditions.
71. Crash cost is the incremental cost incurred when an activity is reduced in duration.
72. The cost slope of an activity is calculated by dividing the run by the rise.
73. Crash time is the greatest time reduction possible under realistic conditions.
74. The higher the slope of an activity the greater the cost to reduce its duration.
75. Creating a Project Cost-Duration Graph in the pre-project planning phase without an imposed
duration is the best time to use this tool.
76. Crashing a more expensive activity may be wise if fewer inherent risks are involved.
77. A project network is classified as sensitive if it has a large number of interacting paths.
78. Collecting crash times for a moderate-size project is relatively easy.
79. While the relationship between normal and crash times is really curvilinear, the assumption
that it is linear is seldom a concern for practicing managers.
80. The accuracy of crash times and costs is frequently rough at best, when compared with
normal time and cost.
81. One of the advantages of using a Project Cost-Duration Graph is that it keeps the importance
of indirect costs in the forefront of decision making.