Risk Management

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Risk management

Deadlines
Initiation Feasibility Organisation Execution Transfer
DeliverableLessons learnedRisk
• Project Charter
• Stakeholder
Analysis
• Requirements
• Service/Produc
t
• Risque
Analysis
• WBS
• PERT
• GANTT
• Project Plan
• Kanban Chart
• Dashboard
• Reporting
• Test
• Lessons
learned
• Workbreak-
downchart/ Estimation
23/03
• Sequencing Tactic/Strategy
• Project Plan 30/03
• Project Control
11/04
• Meeting
• Project Status
• Scope Change
• Test
• Requirements
• 16/03
• Risk
• 21/03
• Project
initiation
19/01 16/02
• Stakeholder
• 09/03
• Transfer 20/04
• Lessons learned
Gate Review Gate Review Gate Review Gate ReviewGate Review
Topics
? What’s the project ?
What are the
needs ? What’s the
best solution ?
How do we organise
the project ?
How can i keep
the project on track ?
How can i make sure
that the client will take
over the project ?

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What risks would you take ?

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What risks would you take ?
Exclude – Avoid - Transfer – Reduce - Accept

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What is project risk ?

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Risk process

+Risk management process
Identify risks
Assign impact/
probability
Prioritize risk
(risk ranking/ tolerance)
Develop strategies
(mitigate, transfer, …)
Determine who’s responsible
for the risk
Manage your risk
during the project !

+What you know and don’t know

+What you know and don’t know
Something which has
NEVER HAPPENED
before and thus cannot be
anticipated
Something we know
EXISTS but we don‘t know
when it will happen and
how severe the
consequences will be

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Ignorance Map

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Requirements
Stakeholder
Project charter
Planning
Skills
Soil
Strategy

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How to find the risks ?
 Uniqueness
 Project Documents
 Skills
 Organisational Culture
 Timeline before during after

+ How to find risks ?
• What is unique about your project ?
• What are you not used to deal with ?
• What are typical risks linked to your business
?
• What are typical risks linked to the
product/service you want to provide ?
• What will be out of your management range ?
• What kind of risks arises from the
stakeholders ?
• What’s going to change in the next month in
your environment, your organization, your
country ?
« Project risk management is not about gathering all the possible risks,
the project manager needs to identify the risks that are linked
to the uniqueness of the project, the product and the way
of managing the project »

+ Sources of risques in international
projects
 Distributed teams
 Various languages
 Different measures - Different technical standards
 Reliability of infrastructure (technology, transport,
etc.)
 Ethnical and religious differences
 Social violence and instability
 Prejudice and nationalism
 Different business practices and rules
 Different feeling for time and punctuality
 Different attitude towards risk in general
 Divergent competency profiles and certificates
 Government involvement and control
Cost
Risk !
Quality
Risk !
Time
Risk !

+ Sources of risques in construction
projects
 Bureaucracy of government
 Design variations
 Excessive approval procedures in administrative
 General safety accident occurrence
 High performance or quality expectations
 Inadequate or insufficient site information
 Inadequate program scheduling
 Incomplete or inaccurate cost estimate
 Lack of coordination between project participants
 Low management competency of subcontractors
 Price inflation of construction materials
 Serious noise pollution caused by construction
 Tight project schedule
Cost
Risk !
Quality
Risk !
Time
Risk !

+

+
Prioritize

What’s the impact of risks on your project ?
Uniqueness Risk !
Cost
Risk !
Quality
Risk !
Time
Risk !
Scope
Risk !
generate

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New Tool to be introduced
 Context : You first get some knowledge of how to use it. You
then work with it using this basic knowledge. After some time
you decide you need to learn more. Over an extended time you
gain proficiency and it becomes part of your toolkit.
 Impact : Too difficult to use, find problems in the tool,
management thinks you will be more productive. Old tools are
still used. Productivity drops.
 Prevention : Requirements, training, guidelines, …

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Informal and wrong methods
 Context : falling in habits. 5% usage of functionalities of a tool.
First usage of a method slows down the work.
 Impact : Confusion – Isolation – People divide the work into
smaller chungs to avoid the « big method »
 Prevention : Train method and then find out how people adapt
the method to the culture of the organisation

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Project manager lacks experience
 Context : quick promotion after having taken a few basic
courses. Left to themselves. Failure. Standardised methods.
Lack of sharing experience.
 Impact : unrealistic and uncomplete project plan – pm does not
recognise the severity and effect of issues that arise.
 Prevention : Sharing experience – Rotate project leaders -
Mentor

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Lack of teamwork
 Context: the only time for teamwok is at a meeting – get the
work done but don’t plan the work – don’t take into account the
cultural factor – Understanding : if two people work together
work is slowed down
 Impact : Lack of knowledge and method sharing – Keep the
problem to him/her self. Manager assumes things are fine –
Last minute bad surprise
 Prevention : Reward joint working from the start – move the
ownership of an idea to the staff

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How to use the risk matrix ?
Probability
Severness
b) Verify that your team is aware of these risk
and that they can handle them
d) It’s up to your organisation
to handle these risks
d) Manage these risks
closely yourself
a) Forget about theses risks
High
High
Low

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How to manage risks ?
Risk (linked
to the
specificity of
the project?)
Impact on the
project
(Cost, Delay,
Quality, Scope)
Probability
(that this risk
occurs)
Event =
Probabilit
y x Impact
Action
(avoid,miti
gate,
transfer,
accept)
Status
(disappeared,
appeared,
latent)
Trend
(is it getting
better or
worse)

+Risk Form
Ref:
Version:
Programme: Project:
RISK IDENTIFIER: Description and Impact: Risk Category:
Probability: Severness: Current Status:
Countermeasures:
Owner: Date Identified: Date of Last Update:

+Hints for risk management ?
• Identify and qualify the risks in groups gathering people with
different backgrounds
• Risk management is an on going process, so you need to put rules
about meetings and outcomes in your project management plan
• Always check if the countermeasures you take are really working
• Risk breakdown structure is useful to build but it’s not a guarantee
for finding all the relevant risks
• Working together with your team on risk management increases
awareness and it’s a way to share responsibility
• Feedback is very important when a risk occurs your reporting
system and your management should encourage feedback
• Concentrate on relevant risk specific to the uniqueness of your
project

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Respond
 Consider alternative courses and remedy
Have a plan B for important risks (contingency plan) Install
project buffer (extra time and money)
 Continuously monitor the project‘s main risks!
 RESPOND
 Any feasible action to minimize or eliminate the risk, intensively
involving all available technological, human and organizational
resources
 Reasonable for highly critical solutions!

+Eclude
• Avoid major risks by excluding those from your project
• Hand the riskful task over to another project
• Has to happen in the scoping phase
• Down-scaling a project has limitations!

+Transfer
(risk response)
Shift risk consequences to another party
Do it if the other party
is used
to deal with the risk
Choose the right contract type
in order to cover yourself
Pay insurance
Externalize responsibility for potential
damages by purchasing insurance,
external consultants/experts, etc. Hiring
externals has it‘s own risks (legal stuff,
liability, etc.)
Transferring risks is expensive!

+Mitigation
(risk response)
reduce impact or probability of the risk
Do more testing
Use more qualified
resources
Improve your communication
With the subcontractor
Mange closely the resources
Working on the risky deliverable

+Avoidance
(risk response)
avoid cause/source of the risk
Don’t let your subcontractor
do the work, do it yourself
Reduce scope to
deliverables you are
sure to produce
Change the way you
do your project
Work with technologies/products
you know very well
Don’t do it yourself,
get someone who is specialized

+Acceptance
(risk response)
When you can’t find another response
1. Develop a contingency plan
2. Establish amount of reserve
based on probability and severness
Understand the risk but take no preparations
React, if it occurs (if costs are small, solve the
problem) Alternatively, just live with the
damage
Applicable only for minor risks!

+Risk opportunity or threat?
Threat Opportunity
Find a way to avoid the risk
Find a way to transfer to another party
Find a way to mitigate the risk reducing
Probability or Severness
Exploit
Share with another party
Enhance by increasing the effect
or the probability
Or accept and do nothing !
Risk

+How to handle the risk ?
Scope / WBS
Tactic (Sequencing)
What (new) task will mitigate,
transfer, … the risk ?
Risk
Performance

Risk Management

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