PMBOK, Risk Management, project Management, Agile

1. Risk Management essentials by eugene.veselov@magento.com

2. Goal To reinforce Magento team with base knowledge about Risk Management To share positive knowledge

3. Plan 1. Base knowledge about risks 2. How to identify risks 3. Risk analysis 4. Plan risk response

4. Introduction Risk is always future ! Risk is an uncertain event that, if occurs, has an effect on at least one project objective. (this means to scope, schedule, quality, cost) Project risk has its origins in the uncertainly present in all projects

5. Introduction

6. Risk identification When should you identify project risks ?

7. Risk identification Who should identify risks ?

8. Risk identification. Risk categories

9. Risk identification. Methods Brainstorming Delphi technique

10. Risk identification. Methods Interviewing Root cause analysis

11. Risk identification. Methods Check list analysis

12. Risk identification. Risk registry List of identified risks ( EVENT can occur and cause IMPACB) List of potential responses (if possible and is efficient)

13. Risk identification. Risk registry example

14. Risk identification. Qualitative Analysis Qualitative analysis is the process of prioritizing risks for further analysis 2. Outputs of the process can either inputs to quantitative Risk Analysis or Plan Risk response

15. Risk identification. Qualitative Analysis

16. Risk identification. Qualitative Analysis Risk Rating = Relative scale * Probability

17. Risk identification. Qualitative Analysis. Updated Risk Registry

18. Risk identification. Quantitative Analysis Goal : risk numerical analysis to the project objectives

19. Risk identification. Quantitative Analysis. Methods Expected Monetary Value (EMV) = probability * impact EMV is also used for building decision trees

20. Quantitative Analysis. Decision tree From TV news you were told that many people (40%) could become sick in a few month because of a new type of fever. One sick person means 1 day of delay for your project, and your team consists of 10 people. Unfortunately, you should pay $1000 per delay day to you customer. However, Ministry of Health recommends two vaccines to help you: Vaccine A sets the risk of getting sick on 30% level. Price of the vaccine is $1500. Vaccine B sets the risk of getting sick on 5% level. Price of the vaccine is $2500. What will you do ? Do nothing. Cost $0 EMV = $0+ $1000 *(10*0.4)=$4000 Use Vaccine A Cost$1500 EMV =$1500+ $1000 *(10*0.3)=$4500 Fever. What should I do ? Use Vaccine B Cost$2500 EMV = $2500+ $1000 *(10*0.05)=$3000

21. Risk identification. Quantitative Analysis. Methods Example (for audience) A software company needs to develop a feature for very important customer from automobile industry for 2 month. This feature is very specific and the Company do not have enough experience to develop it. The best team from this company say that probability to deliver this feature is 40%, the team price is 1000 per moth. They also say that if they do not develop it within month they won’t develop it at all. There also is a well known company that is experienced enough in such features so that they deliver this feature within 2 weeks for 5000 with 100% probability. It is also possible do buy existing component (1500) and adopt it. Probability to customize it by the best team for 1.5 month is 70%. What is the best strategy for PM ?

22. Risk identification. Quantitative Analysis. Methods Success (30%) Loss : $0 A) Develop by our Best team Cost: $1000 Fail. (70%) , external company involvement Loss: $5000 B) Develop by external Company Cost: $5000 Very important feature Success (80%) Loss : $0 Buy existing component Cost: $1500 + $1500 Fail. (20%) , external company involvement Loss: $5000 Very important feature EMV = $1000+0.7*$5000 = $4500 EMV= $5000 EMV = $1500+$1500+0.2*$5000 = $4000

23. Risk Management . Risk response Avoid Transfer Mitigate Accept

24. Risk identification. Qualitative Analysis. Updated Risk Registry

25. Risk Management . Risk response. Cases Lets develop responses for following risks Your key people can leave your Company Your office can be destroyed by fire The customer changes requirements too often

26. Risk Management . Risk response. Deadlines Your project consists of two 3 day tasks which must be done sequentially. There is a 50% probability that each task can be delayed for 3 extra days because of some reasons. We must accept these risks. What will be optimistic and pessimistic dates for this project if we start it today ?

27. Risk Management ready ? Can we manage our risks ? What risks will we get from risk management ?

28. The end. Questions ? Literature Tom DeMarco, “Waltzing with Bears: Managing Risk on Software Projects” PMBOK eugene.veselov@magento.com