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Project Risk Management
The document discusses risk management for projects. It defines risk as an uncertain event that can positively or negatively impact project duration, cost, scope, or quality. The purposes of risk management are to identify, analyze, and respond to risks in order to increase the likelihood of positive events and decrease the likelihood of negative events. The key components of risk management are planning, identification, analysis, response planning, and monitoring and control. Risk management should be incorporated into the overall project plan.
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Project Risk Management
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- 2. Risk Definition An uncertainevent or condition that, if occurs has a positive or negative effect on project duration, cost, scope or quality www.projektor.ee/pm/#risk
- 3. Purpose of theRisk Management • Identification, analysis, responses, monitoring and control of risks • Increase the probability and impact of positive events • Decrease the probability and impact of negative events www.projektor.ee/pm/#risk
- 4. Risk Management • Riskmanagement planning • Risk identification • Qualitative risk analysis • Quantitative risk analysis • Risk response planning • Risk monitoring and control www.projektor.ee/pm/#risk
- 5. Project Phases andProcesses Initiation Planning Execution Control Closing www.projektor.ee/pm/#risk
- 6. Risk Management inthe Project Plan Scope definition Quality planning Activity definition Activity sequencing Duration estimation Schedule development Organization planning Resource planning Communica- tion planning Procurement planning Plan contracting Select sellers Seller responses Risk management Risk identification Qualitative analysis Quantitative analysis Response planning Budgeting Project plan Initiation Execution WBS www.projektor.ee/pm/#risk
- 7. Inputs: - Environment factors -Organization assets - Stakeholders risk tolerance - Project Scope - WBS - Project documentation - Risk management plan - Probability and impact scales Methods: - Identification methods - Probability and impact matrix - Risk categorization - Risk urgency assessment - Data gathering techniques - Quantitative analysis techniques - Response strategies Outputs - Risk register - Risk rankings - General risk rating - Risk response plans - Project plan updates - Contractual agreements Risk Management Planning www.projektor.ee/pm/#risk
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- 9. Risk Management Plan •Methodology • Roles and responsibilities • Budget • Schedule • Risk categories • Evaluation and interpretation • Risk thresholds • Reporting format • Monitoring www.projektor.ee/pm/#risk
- 10. RBS – RiskBreakdown Structure BMBOK Guide 2009
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- 12. Risk Identification Methods •Project documentation reviewing • Information gathering techniques • Checklist analysis • Assumption analysis • Diagramming techniques ? www.projektor.ee/pm/#risk
- 13. SWOT Analysis Positive Negative InternalStrengths Weaknesses External Opportunities Threats www.projektor.ee/pm/#risk
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- 16. Qualitative Assessment methods •Probability and impact assessment • Probability and impact matrix • Risk data quality assessment • Risk categorisation • Risk urgency assessment www.projektor.ee/pm/#risk
- 17. Risk Probability andImpact Matrix 1 Probability: Impact: Big 0,7 Average 0,5 Small 0,3 Big 0,7 0,49 0,35 0,21 Average 0,5 0,35 0,25 0,15 Small 0,3 0,21 0,15 0,09 www.projektor.ee/pm/#risk
- 18. Risk Qualitative AnalysisMatrix 2 Impact: Objective: Very Low Low Moderate High Very High Cost Insignificant cost increase <5% cost increase 5 ... 10% cost increase 10 ... 20% cost increase >20% cost increase Duration Insignificant delay <5% delay 5 ... 10% delay 10 ... 20% delay >20% delay Scope Insignificant scope decrease Minor areas of scope affected Major areas of scope affected Scope reduction not acceptable to client Outcome is useless Quality Insignificant quality decrease Impact to small number of aspects Quality changes require client’s approval Quality change is not acceptable Outcome is useless BMBOK Guide 2009
- 19. Exercise Probability and impactmatrix of project risks www.projektor.ee/pm/#risk
- 20. Qualitative Risk AnalysisExample Probability: Impact: Big Average Small Big • Not possible to find a skilful programmer • Project duration is too short compared to work load • Graphical design takes too much time • Game challenges are not engaging • Teachers don’t need this kind of game Average • Too much graphics makes game slow • Writing game specification takes too much time Small www.projektor.ee/pm/#risk
- 21. Quantitative Analysis Methods •Probability analysis • Sensitivity analysis • Decision tree • Simulations and modelling www.projektor.ee/pm/#risk
- 22. E.G: Three PointEstimation BMBOK Guide 2009
- 23. Risk Response Strategies •Avoiding – additional planning • Mitigation – additional planning • Transferring – e.g. insurance, subcontracting • Accepting: – Plan B – Fallback plan www.projektor.ee/pm/#risk
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- 25. Risk Identification Results •Outlined list of risks with triggers www.projektor.ee/pm/#risk
- 26. Outcomes of QualitativeRisk Analysis • Ordered list of risks • General risk rating • List of risks that require additional investigation • Trends of risk analysis www.projektor.ee/pm/#risk
- 27. Outcomes of QuantitativeRisk Analysis • Updated ordered list of risks • Probability analysis results – possible durations and costs with confidence intervals • General probability for duration and cost estimation accuracy • Updated risk analysis trends www.projektor.ee/pm/#risk
- 28. Risk Response PlanningResults • Risk responses • Residual risk • Secondary risks • Contractual agreements • Project plan updates www.projektor.ee/pm/#risk
- 29. Risk Response Plan •List of risks • Risk takers and supervisors • Risk analysis results • Response per every risk • Residual risk level • Schedule and budget • Alternative and backup plans www.projektor.ee/pm/#risk
- 30. Exercise Plan response forcritical risks www.projektor.ee/pm/#risk
- 31. Risk Monitoring andControl www.projektor.ee/pm/#risk
- 32. Project Phases andProcesses Initiation Planning Execution Control Closing www.projektor.ee/pm/#risk
- 33. Risk Monitoring andControl Information distribution Project execution Procurement management Reporting Team development Schedule control Scope verification Cost control Quality control Risk monitoring Change management Planning Closing www.projektor.ee/pm/#risk
- 34. Purpose of RiskMonitoring and Control • Keeping track on identified risks • Monitor new risks • Executing risk response plans • Evaluating risk response effectiveness • Variance and trend analysis www.projektor.ee/pm/#risk
- 35. Inputs: - Project plan -Risk management plan - Risk register - Performance information Methods: - Risk audits - Risk reassessment - Variance and trend analysis - Technical and performance measurement - Reserve analysis - Status meetings Outputs - Risk register updates - Change requests - Corrective actions - Preventive actions - Plan changes - Lessons learned Risk Monitoring and Control www.projektor.ee/pm/#risk
- 36. Risk Register • Listof identified risks • Risk owners • Risk response plans • Symptom and warning signs • Residual and secondary risks • Watch list of small risks • Time and cost www.projektor.ee/pm/#risk
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- 39. The end ofthe Risk martinsillaots@gmail.com
Editor's Notes
- #11 Categories
- #13 What information gathering techniques you know? Creative techniques: brainstorming, Delphi, SWOT Classical: Questionnaire, Interview, …
- #21 Progeja - Võib olal ei tasuks sellist projekti tehagi Graafika – vähendada Õpetajad – osalusdisain, vajaduste analüüs Spec – pole oluline
- #22 Quantify the possible outcomes for the project and probability Assess the probability to achieve objectives Identify biggest risks Identify cost and schedule for in order to avoid the risk Determine best solutions Modeling: Sensitivity analysis Expected monetary value analysis
- #24 Positive risks and opportunities: Exploitation – make opportunity definitely happen Sharing – ownership to a 3d party who is best Enhance - increasing probability and impact
- #36 SOW - Statement of Work