This document provides an overview of project cost and schedule risk analysis. It discusses key terms like risk, uncertainty, and probability. It outlines the ISO 31000 risk management process, including steps like risk identification, analysis, evaluation, and treatment. Monte Carlo simulation is presented as a technique for modeling project schedule and cost uncertainty based on risk. The document emphasizes establishing the context, identifying risks and impacts, and using a risk matrix to evaluate and prioritize risks in order to inform project planning and management.
Episode 25 : Project Risk Management
Understand what risk is and the importance of good project risk management.
Discuss the elements involved in risk management planning and the contents of a risk management plan.
List common sources of risks in engineering and information technology projects.
Describe the risk identification process, tools, and techniques to help identify project risks, and the main output of risk identification, a risk register.
SAJJAD KHUDHUR ABBAS
Chemical Engineering , Al-Muthanna University, Iraq
Oil & Gas Safety and Health Professional – OSHACADEMY
Trainer of Trainers (TOT) - Canadian Center of Human
Development
Mitigation Plan PowerPoint Presentation SlidesSlideTeam
Select Mitigation Plan PowerPoint Presentation Slides to develop an action plan to mitigate business risk.. All the steps of risk management are well explained in this business presentation. Risk mitigation strategy PowerPoint complete deck comprises slides such as risk management plan, risk identification, risk register, risk assessment, risk analysis and response plan, risk response matrix, mitigation strategy, risk mitigation plan chart, risk control matrix, risk tracker, etc. The risk analysis PPT template helps you evaluate risk management plan and processes. With the help of PPT slide you can present your risk mitigation strategies. Risk control presentation slide allows you to execute risk assessment plan at organizational level. Additionally, this also goes well with the topics like risk mitigation planning, contingency plan, risk planning, mitigation strategy, hazards mitigation and many more. Download risk analysis PowerPoint template to conduct risk evaluation in a systematic manner. Identify the cause of a gridlock with our Mitigation Plan PowerPoint Presentation Slides. Come to grips with the deadlock.
The presentation about Project Risk Management conducted by Mr. Mohamad Boukhari for the project management community in Lebanon during PMI Lebanon Chapter monthly lecture.
Episode 25 : Project Risk Management
Understand what risk is and the importance of good project risk management.
Discuss the elements involved in risk management planning and the contents of a risk management plan.
List common sources of risks in engineering and information technology projects.
Describe the risk identification process, tools, and techniques to help identify project risks, and the main output of risk identification, a risk register.
SAJJAD KHUDHUR ABBAS
Chemical Engineering , Al-Muthanna University, Iraq
Oil & Gas Safety and Health Professional – OSHACADEMY
Trainer of Trainers (TOT) - Canadian Center of Human
Development
Mitigation Plan PowerPoint Presentation SlidesSlideTeam
Select Mitigation Plan PowerPoint Presentation Slides to develop an action plan to mitigate business risk.. All the steps of risk management are well explained in this business presentation. Risk mitigation strategy PowerPoint complete deck comprises slides such as risk management plan, risk identification, risk register, risk assessment, risk analysis and response plan, risk response matrix, mitigation strategy, risk mitigation plan chart, risk control matrix, risk tracker, etc. The risk analysis PPT template helps you evaluate risk management plan and processes. With the help of PPT slide you can present your risk mitigation strategies. Risk control presentation slide allows you to execute risk assessment plan at organizational level. Additionally, this also goes well with the topics like risk mitigation planning, contingency plan, risk planning, mitigation strategy, hazards mitigation and many more. Download risk analysis PowerPoint template to conduct risk evaluation in a systematic manner. Identify the cause of a gridlock with our Mitigation Plan PowerPoint Presentation Slides. Come to grips with the deadlock.
The presentation about Project Risk Management conducted by Mr. Mohamad Boukhari for the project management community in Lebanon during PMI Lebanon Chapter monthly lecture.
Risk management in simple terms with some humorKumar Kolaganti
Risk Management is serious work and the terminology used is very complicated. It takes time to understand the concepts and put them to work as a project management practitioner. Thinking of Risk managements makes me remember two old sayings "'A stitch in time saves nine', and 'An ounce of prevention is worth a pound of cure'."
In line with this subtle humor, this presentation is an effort to explain risk management terminology in simple terms with some humor. Some may say that this is a spoof on project risk management.
Laugh, Smile and Enjoy.
Embedding RCSA into Strategic Planning and Business StrategyAndrew Smart
Embedding RCSA into Strategic Planning and Business Strategy
This presentation was prepared for the New Generation Operational Risk: Risk Culture and Business Conduct Behaviour conference in Helsinki, Finland.
In this presentation, Ascendore CEO, Andrew Smart outlines how to integrate Risk & Control Self Assessment into the Strategic Planning and Business Strategy.
Based on the Risk-Based Performance Management approach, during this presentation an integrated approach to strategy and risk management is outlined, with risk appetite playing a central role.
Project risk analysis methodology and how RiskyProject software can be used for quantitative project risk analysis.
For more information how to perform schedule risk analysis using RiskyProject software please visit Intaver Institute web site: http://www.intaver.com.
About Intaver Institute.
Intaver Institute Inc. develops project risk management and project risk analysis software. Intaver's flagship product is RiskyProject: project risk management software. RiskyProject integrates with Microsoft Project, Oracle Primavera, other project management software or can run standalone. RiskyProject comes in three configurations: RiskyProject Lite, RiskyProject Professional, and RiskyProject Enterprise.
Presenting this set of slides with name - Risk Management Module PowerPoint Presentation Slides. The stages in this process are Risk Management Module, Risk Management Framework, Risk Management Structure.
Project Cost Management includes the processes involved in planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget.
A brief introduction of Project Time Management, covering the main concepts like Activities, Project Schedule, Activity dependencies, Critical Path, Lead and Lags etc.
APM event sponsored by the South Wales and West of England Branch.
Speaker: Dr David Hillson
Projects are risky and risk management is an integral part of managing projects. But for many projects, managing risk is a chore and it doesn’t seem to help much. In this session, David Hillson tackled some important aspects of risk management that are often overlooked or poorly understood, providing practical tips to make it work on your project. This event was held on 18 April 2023.
All projects are risky, and risk management is an important part of managing projects. But despite the existence of risk standards, guidelines, processes, tools and techniques, many project practitioners aren’t happy with the way they manage risk on their projects. It often seems to be a routine activity that has to be done, without really helping much.
In this practical session, Dr David Hillson (the Risk Doctor) tackled some of the important aspects of risk management that are not well understood, and consequently are not done well, drawing on his 35 years of risk management experience and expertise. These included answering the following questions:
How much risk management do I need to do? Small projects need a simpler risk process, whereas larger complex projects demand something more robust. How can I scale the risk process to meet the risk challenge of my particular project?
Do I have to deal with upside risk? Best-practice risk management covers both threats and opportunities in an integrated process. But why and how?
How much risk is too much risk? We usually prioritise risks based on their probability and impact, with scales ranging from High to Low. But how high is High for my project? Who decides, and how?
How do I keep my view of risk up to date? Risk exposure changes throughout the project, and we need to stay on top of it. Do I need to repeat the whole process every time, or is there a better way?
When can I stop managing risk on my project? Many risk processes are presented as never-ending cycles. What happens when the project ends?
These and other questions were addressed with proven practical tips and techniques, taken from David’s award-winning ATOM methodology. Attendees also had the chance to raise their own challenges and questions for rapid diagnosis and treatment by the Risk Doctor!
https://www.apm.org.uk/news/demystifying-project-risk-management-practical-tips-for-practitioners/
Strategic Risk Management as a CFO: Getting Risk Management RightProformative, Inc.
Video & Presentation: http://www.proformative.com/events/strategic-risk-management-cfo-getting-risk-management-right
Enterprise Risk Management should be simple. Unfortunately, companies are responding to regulators and business imperatives to improve their risk management practices, all the while aligning with business strategy and performance as well as capital allocation. Leading practitioners are seeking insight and value from risk management and are using risk management to focus audit and compliance activities. In fact independent research commissioned by SAP and others suggests many successful ERM initiatives still make little use of the increasingly sophisticated technology available. This session will summarize recent research by SAP and others on the state of ERM and will provide simple, practical strategies for how Finance can drive risk management practices that build success and add value.
Speakers:
Bob Tizio, GRC Officer-Americas, SAP America Inc.
Bruce McCuaig, Director, Solution Marketing for Governance Risk & Compliance, SAP
Presentation delivered at CFO Dimensions 2013 - http://www.cfodimensions.com
Track: Finance Technology | Session: 5
Case studies are a great way to test knowledge gained in trainings. This event risk management case study in written in two parts and addresses a number of potential risks. Developed by Allison B. Peters in 2011.
Risk management in simple terms with some humorKumar Kolaganti
Risk Management is serious work and the terminology used is very complicated. It takes time to understand the concepts and put them to work as a project management practitioner. Thinking of Risk managements makes me remember two old sayings "'A stitch in time saves nine', and 'An ounce of prevention is worth a pound of cure'."
In line with this subtle humor, this presentation is an effort to explain risk management terminology in simple terms with some humor. Some may say that this is a spoof on project risk management.
Laugh, Smile and Enjoy.
Embedding RCSA into Strategic Planning and Business StrategyAndrew Smart
Embedding RCSA into Strategic Planning and Business Strategy
This presentation was prepared for the New Generation Operational Risk: Risk Culture and Business Conduct Behaviour conference in Helsinki, Finland.
In this presentation, Ascendore CEO, Andrew Smart outlines how to integrate Risk & Control Self Assessment into the Strategic Planning and Business Strategy.
Based on the Risk-Based Performance Management approach, during this presentation an integrated approach to strategy and risk management is outlined, with risk appetite playing a central role.
Project risk analysis methodology and how RiskyProject software can be used for quantitative project risk analysis.
For more information how to perform schedule risk analysis using RiskyProject software please visit Intaver Institute web site: http://www.intaver.com.
About Intaver Institute.
Intaver Institute Inc. develops project risk management and project risk analysis software. Intaver's flagship product is RiskyProject: project risk management software. RiskyProject integrates with Microsoft Project, Oracle Primavera, other project management software or can run standalone. RiskyProject comes in three configurations: RiskyProject Lite, RiskyProject Professional, and RiskyProject Enterprise.
Presenting this set of slides with name - Risk Management Module PowerPoint Presentation Slides. The stages in this process are Risk Management Module, Risk Management Framework, Risk Management Structure.
Project Cost Management includes the processes involved in planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget.
A brief introduction of Project Time Management, covering the main concepts like Activities, Project Schedule, Activity dependencies, Critical Path, Lead and Lags etc.
APM event sponsored by the South Wales and West of England Branch.
Speaker: Dr David Hillson
Projects are risky and risk management is an integral part of managing projects. But for many projects, managing risk is a chore and it doesn’t seem to help much. In this session, David Hillson tackled some important aspects of risk management that are often overlooked or poorly understood, providing practical tips to make it work on your project. This event was held on 18 April 2023.
All projects are risky, and risk management is an important part of managing projects. But despite the existence of risk standards, guidelines, processes, tools and techniques, many project practitioners aren’t happy with the way they manage risk on their projects. It often seems to be a routine activity that has to be done, without really helping much.
In this practical session, Dr David Hillson (the Risk Doctor) tackled some of the important aspects of risk management that are not well understood, and consequently are not done well, drawing on his 35 years of risk management experience and expertise. These included answering the following questions:
How much risk management do I need to do? Small projects need a simpler risk process, whereas larger complex projects demand something more robust. How can I scale the risk process to meet the risk challenge of my particular project?
Do I have to deal with upside risk? Best-practice risk management covers both threats and opportunities in an integrated process. But why and how?
How much risk is too much risk? We usually prioritise risks based on their probability and impact, with scales ranging from High to Low. But how high is High for my project? Who decides, and how?
How do I keep my view of risk up to date? Risk exposure changes throughout the project, and we need to stay on top of it. Do I need to repeat the whole process every time, or is there a better way?
When can I stop managing risk on my project? Many risk processes are presented as never-ending cycles. What happens when the project ends?
These and other questions were addressed with proven practical tips and techniques, taken from David’s award-winning ATOM methodology. Attendees also had the chance to raise their own challenges and questions for rapid diagnosis and treatment by the Risk Doctor!
https://www.apm.org.uk/news/demystifying-project-risk-management-practical-tips-for-practitioners/
Strategic Risk Management as a CFO: Getting Risk Management RightProformative, Inc.
Video & Presentation: http://www.proformative.com/events/strategic-risk-management-cfo-getting-risk-management-right
Enterprise Risk Management should be simple. Unfortunately, companies are responding to regulators and business imperatives to improve their risk management practices, all the while aligning with business strategy and performance as well as capital allocation. Leading practitioners are seeking insight and value from risk management and are using risk management to focus audit and compliance activities. In fact independent research commissioned by SAP and others suggests many successful ERM initiatives still make little use of the increasingly sophisticated technology available. This session will summarize recent research by SAP and others on the state of ERM and will provide simple, practical strategies for how Finance can drive risk management practices that build success and add value.
Speakers:
Bob Tizio, GRC Officer-Americas, SAP America Inc.
Bruce McCuaig, Director, Solution Marketing for Governance Risk & Compliance, SAP
Presentation delivered at CFO Dimensions 2013 - http://www.cfodimensions.com
Track: Finance Technology | Session: 5
Case studies are a great way to test knowledge gained in trainings. This event risk management case study in written in two parts and addresses a number of potential risks. Developed by Allison B. Peters in 2011.
Workshop On Risk Assesment by Palash Ch DasPalash Das
Risk management principles are effectively utilized in many areas of business and government including finance, insurance, occupational safety, public health, pharmacovigilance, and by agencies regulating these industries. Although there are some examples of the use of quality risk management in the pharmaceutical industry today, they are limited and do not represent the full contributions that risk management has to offer. In addition, the importance of quality systems has been recognized in the pharmaceutical industry and it is becoming evident that quality risk management is a valuable component of an effective quality system.
Project Controls Expo - 31st Oct 2012 - Lessons Learned from an Interna.onal ...Project Controls Expo
BMT Hi-Q Sigma Overview
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Project Controls Expo 18th Nov 2014 - "Practical Applications of a Risk Manag...Project Controls Expo
As construction projects continue to increase in size and complexity, so does the inherent risk that organizations must take on to win work. As a result of globalization in the capital construction industry, organizations are faced with the challenge of executing projects under tighter budgets and highly compressed schedules. This has led to thinner profit margins and the increased need for competitive cost positioning. This presentation seeks to demonstrate the value of a robust risk management framework at all levels of an organization. This includes:
• Risk management for identifying corporate strategy and market opportunities
• Using risk assessment to establish corporate risk reserves
• Refining the estimate process at the bid stage by using risk analysis to eliminate the “compounding contingency” effect
• Analyzing and quantifying ongoing project risk exposure
• How to involve your client in the risk management process
2013 Geospatial Data and Project Management Track, Risk Management in Geospat...GIS in the Rockies
No matter how well we plan and organize our projects, the odds are something outside the plan will happen to throw our project off-track. This “something” could impact schedule, cost, quality or any combination of the triple constraints. If at the beginning of the project we can identify potential events or risks that will have project impact; categorize each by its magnitude of impact and likelihood to occur; and develop a risk management plan to mitigate or eliminate these impacts we can lead a much more successful project. In this presentation we will explore a simple and basic approach to risk management.
Risk and Procurement ManagementDr Paul BaguleyClass Slides.docxlillie234567
Risk and Procurement Management
Dr Paul Baguley
Class Slides
Contents
Definition of Risk
Context of Projects
Risk Management Process
Risk Id
Risk Assessment
Risk Evaluation
Cost Risk
Monte-Carlo Simulation
Management Reserve and Contingency
Risk Management by Procurement
Examples of Contracts to Manage Risk
Learning Objectives
Define Project Risk and identify stages of project risk management
Understand Risk Response Strategy Selection process using risk matrix
Identify characteristics of procurement routes and map risk allocation amongst project stakeholders
Appreciate a more risk informed procurement route selection
What makes project management a risky business
Organisations take risks to compete through projects making projects risky
Indeed risk appetite is the term used to describe the amount of risk an organisation is willing to take
And risk tolerance is the amount of risk an organisation can absorb
Risk is an important subject in APM BoK7 and PMBoK Guide (Chapter 11)
Institute of risk management; the Orange Book from the UK Gov
Communication between stakeholders in the project, suppliers and customer
VUCA (Volatility Uncertainty Complexity Ambiguity) environment
Risks in Projects
https://www.pmi.org/learning/library/top-50-projects-sydney-opera-house-11757
Lack of process and
Large budget over run
Safety regulations
O Ring
Safety disaster
Case: impact of culture on risk
The Nimrod Accident
Case: the conspiracy of optimism
Optimism bias is a known phenomenon which has been described as a psychological factor in estimators. In the defence industry it is recognised there is political pressure for projects to deliver more and cost less.
Activity: What projects do you know failed?
What projects do you know from your own experience which failed in some way and how did they fail? For example “Potters Bar safety disaster”
Definition of Risk and Uncertainty
Before ISO 31000 a working definition of risk was an event that may or may not happen
Uncertainty is variation in something that has happened
For example a machine breakdown may or may not happen
Schedule delay is variation in the delay schedule in terms of time
Risk is defined as an uncertain event or set of circumstances, that should it occur, will have an effect on achievement of one or more objectives, by APM Body of Knowledge 2012
ISO 31000 (2018) definition of risk
ISO 31000 defines risk as the effect of uncertainty on project objectives
Note 1 to entry: an effect is a deviation from the expected. It can be positive, negative or both, and can address, create or result in opportunities and threats
Note 2 to entry: Objectives can have different aspects and categories, and can be applied at different levels
Note 3 to entry: Risk is usually expressed in terms of risk sources, potential events, their consequences and their likelihood
Project objectives are influenced by the iron triangle and trade-off space between cost, quality and time
This means that cost ris.
Running head RISK MANAGEMENT PLAN 1RISK MANAGE.docxtoltonkendal
Running head: RISK MANAGEMENT PLAN 1
RISK MANAGEMENT PLAN 2
Risk Management Plan
Name
Institution
SCOPE
This risk management plan illustrates how risk management will be organized and carried out on the project to make sure risks are dealt with and controlled at acceptable levels. Risks in this project can be cannot be totally eradicated (Assessment, 2016).
Tasks
Costs ($)
Starting date
(2017)
End date
(2017)
Risk identification
10,000
August/ 1
August/31
Risk assessment
15000
September/1
September/30
Risk register
5000
October/1
October/ 30
Risk analysis
20000
November/1
November/14
Risk response planning
5000
November/15
November/30
Mitigation actions to consider
5000
December/ 1
December/14
Risk related to time, cost or scope
5000
December/ 15
December/ 31
Risk monitoring control
25000
January/1/018
January/14/ 018
Total
90000
January/ 15/018
January/31
Deliverables
· Risk Identification
· Analyzing the underlying causes of a risk
· Assign a probability of occurrence to every lowest level causes, and calculate the possibility of every next higher risk by continuing up the tree until the highest probability is calculated.
· Identify the possible loss
· Enter the Prob(UO) and Loss(UO) values on the Risk Log.
· Sort the spreadsheet by descending order of Risk Exposure.
Risk mitigation
OBJECTIVES
· To minimize the effect of unplanned incidents on the project by identifying as well as addressing possible risks before substantial negative results occur.
· The risk assessment is to become a subset of the Project Management Plan.
· To identify all activities based on the following five procedures to make sure they suit the functions in question
PROJECT SIZE
· Risk Reviews and Reporting
· Probability and Impacts of the Risk Management Plan
· The size of the project team 11 people
· The project will elapse after 6 months
· Variation in the timeframe to be tolerated-schedule is flexible
· Problem is easily understood and solution is readily attainable
· Total cost of the project less than $100,000
· Level of change to be implemented-impacts many business units
RISK TOOLS AND TECHNIQUES
Qualitative Risk Analysis
After possible risks have been detected and developed, the next phase is to assess them. This can be quite challenging if there are many risks (Assessment, 2016). Hence the first step is to filter the risks in order to determine which are the potential risks and which are important.
Qualitative risk techniques include the following:
The green-light or red-light rating is a subjective evaluation of whether risk will have key impact on the project. The risks are then divided into 3 groups, one is “green”, one is “yellow’ and finally one is “red.” The threshold for these classes can be predicated on the possibility of occurrence, the quality of impact, the time impact, the cost impact or the mixture of these (Assessment, 2016). Usually, red risks are the ones that are likely to happen ...
Project and Program Risk Management
Reasons to Manage Risks
ISO31000 for Risk Management
Risk Management in Project Lifescycle
Tools to manage Project Risks
Project Controls Expo, 18th Nov 2014 - "Schedule Risk Analysis for Complex Pr...Project Controls Expo
Schedule Risk Analysis is used on a wide range of projects as an established technique for identifying the uncertainties that threaten (or enhance) project success. However, applying the technique effectively to produce valid results on large and complex projects poses more of a challenge. This presentation summarises an approach to conducting schedule risk modelling for complex, long-term engineering projects, avoiding common pitfalls, and ensuring that outputs can be used to actively influence the project’s outcome.
Project Name Risk Management PlanVersion 1.0 Error! Unkno.docxwkyra78
<Project Name> Risk Management Plan
Version: 1.0 Error! Unknown document property name.<Project Name>Risk Management Plan
Version Number: 1.0
Version Date: <mm/dd/yyyy>
Notes to the Author
[This document is a template of a Risk Management Plan document for a project. The template includes instructions to the author, boilerplate text, and fields that should be replaced with the values specific to the project.
· Blue italicized text enclosed in square brackets ([text]) provides instructions to the document author, or describes the intent, assumptions and context for content included in this document.
· Blue italicized text enclosed in angle brackets (<text>) indicates a field that should be replaced with information specific to a particular project.
· Text and tables in black are provided as boilerplate examples of wording and formats that may be used or modified as appropriate to a specific project. These are offered only as suggestions to assist in developing project documents; they are not mandatory formats.
When using this template, the following steps are recommended:
1. Replace all text enclosed in angle brackets (e.g., <Project Name>) with the correct field document values. These angle brackets appear in both the body of the document and in headers and footers. To customize fields in Microsoft Word (which display a gray background when selected) select File->Properties->Summary and fill in the appropriate fields within the Summary and Custom tabs.
After clicking OK to close the dialog box, update all fields throughout the document selecting Edit>Select All (or Ctrl-A) and pressing F9. Or you can update each field individually by clicking on it and pressing F9.
These actions must be done separately for any fields contained with the document’s Header and Footer.
2. Modify boilerplate text as appropriate for the specific project.
3. To add any new sections to the document, ensure that the appropriate header and body text styles are maintained. Styles used for the Section Headings are Heading 1, Heading 2 and Heading 3. Style used for boilerplate text is Body Text.
4. To update the Table of Contents, right-click on it and select “Update field” and choose the option - “Update entire table”.
5. Before submission of the first draft of this document, delete this instruction section “Notes to the Author” and all instructions to the author throughout the entire document.VERSION HISTORY
[Provide information on how the development and distribution of the Risk Management Plan will be controlled and tracked. Use the table below to provide the version number, the author implementing the version, the date of the version, the name of the person approving the version, the date that particular version was approved, and a brief description of the reason for creating the revised version.]
Version
Number
Implemented
By
Revision
Date
Approved
By
Approval
Date
Description of
Change
1.0
<Author name>
<mm/dd/yyyy>
<name>
<mm/dd/yy>
<description of ...
Indian EPC companies really needs rise their bar in execution of EPC projects ,there is substantial risk involved in those projects, needs rise the bar in design , procurement ,safety and integrated project management to successful completion of the project.
Kuala Lumpur - PMI Global Congress 2009 - Risk ManagementTorsten Koerting
Presentation on Risk Management Tools, like Risk Register, Risk Profile Presentation Options, How to facilitate a Risk Assessment and effective Processes for day to day application of Risk Management in your Project
Project Controls Expo - 31st Oct 2012 - Cost Modelling: Integrated Cost and S...Project Controls Expo
This presentation will discuss the Confidence Limits that are used to aid decision making in projects. It will also explore some of the options for combining schedule and cost models to give a project the best chance of success.
Similar to Session B3 - Introduction to Project Cost and Schedule Risk Analysis (20)
National Grids Project Controls Journey – past, present and futureProject Controls Expo
National Grids Project Controls Journey – past, present and future By, Tim Fenemore - Head of Project Controls for National Grid, UK
Sanjay Lodhia - Head of Governance & Assurance for National Grid, UK
Tony Abiad - Head of Estimating & Cost for National Grid, UK
Balancing burdens of proof in dispute avoidance and resolution by "Ari Isaacs...Project Controls Expo
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Managing the risk of change by "Simon White - Risk Management Consultant for ...Project Controls Expo
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Economic Value Chains - costing the impact of risk by "Colin Sandall - Senior...Project Controls Expo
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What makes a good plan, and how do you know you’ve got one? by "Paul Kidston ...Project Controls Expo
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Next Generation Planning for Mega Projects by "Dr. Dan Patterson - CEO and Fo...Project Controls Expo
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Governance: An Enabler? by " Ian Beaumont - Delivery Partner Programme Direc...Project Controls Expo
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Governance and the art of decision making on Crossrail by "Walter Macharg - H...Project Controls Expo
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Adding Value through the Lower Thames Crossing project by "Iain Minns - Partn...Project Controls Expo
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Governance and Assurance for Nationally Significant Infrastructure Projects b...Project Controls Expo
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A review of whether interdependency exists in effective Project Control Metho...Project Controls Expo
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A Source of Project Cost Integration by "David Hurren - Technical Director fo...Project Controls Expo
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Session B3 - Introduction to Project Cost and Schedule Risk Analysis
1. Copyright @ 2011. All rights reserved
Introduction to Project Cost and Schedule
Risk Analysis
Keith Gray, Risk Performance Ltd
Project Controls Expo – 13th Oct 2015
Emirates Stadium, London
2. Copyright @ 2011. All rights reserved
About the Speaker: Keith Gray
Consultant and trainer on risk processes (Management _of_Risk) and
tools (Predict! Risk Controller, Predict! Risk Analyser, Primavera Risk
Analysis, Primavera P6 Risk Register)
Implementer of ISO 31000 process
Many sectors covered, including defence, energy, oil and gas,
telecomms, ICT, construction
Established quantitative risk analysis capability in an energy utility
Early experience in defence during Defence Procurement game
changing period
Committee Member of the APM Risk Specific Interest Group
keith@riskperformance.biz
+447879423242
3. Copyright @ 2011. All rights reserved
Agenda
A few questions
Processes
Definitions
Uncertainty
Risk discussion
ISO 31000 process steps
Recording risks
Configuring a risk matrix
Monte Carlo sampling
Integration
Typical outputs
Further discussion points
4. Copyright @ 2011. All rights reserved
Project Cost and Schedule Risk Analysis
A few familiar questions …
What?
Why?
When?
How?
Where?
Who?
5. Copyright @ 2011. All rights reserved
Project Cost and Schedule Risk Analysis–
What, Why and When
What – realistic, timely, accurate information on project duration and
costs taking account of uncertainties and risks
Why – projects are probabilistic in nature and risk analysis information
can help set realistic cost and timescales
When – as required through the project lifecycle, for setting budgets
and timescales and contingency before execution phase and to aid
project controls during execution
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Project Cost and Schedule Risk Analysis–
How, Where and Who
How – Monte Carlo sampling on estimates of project cost and task
duration with uncertainty; risks with estimates of probability and
impact linked to costs and tasks; qualitative level of risks from a
configured risk matrix, aggregated cost and duration from Monte Carlo
simulation
Where – cost and planning tools; risk database; Monte Carlo
simulation tool; import / export interfaces
Who – estimators, schedulers, risk analysts, project team, project
managers, decision-makers
7. Copyright @ 2011. All rights reserved
Risk Management Processes
Processes
ISO 31000 Risk management – Principles and Guidelines
plus ISO Guide 73:2009, Risk Management – Vocabulary and
ISO/IEC 31010, Risk Management – Risk Assessment
Techniques
Management_of_Risk: Guidance for Practitioners
PMBoK, Section 11, Project Risk Management
APM BoK, Section 2 .5 Project Risk Management
plus Project Risk Analysis & Management, (2004) 2nd edition
8. Copyright @ 2011. All rights reserved
Definitions - Risk
ISO 31000: “Effect of uncertainty on objectives”
M_o_R: “An uncertain event or set of events that, should it occur, will
have an effect on the achievement of objectives. A risk is measured by
a combination of the probability of a perceived threat or opportunity
occurring and the magnitude of its impact on objectives.”
PMBoK: ”An uncertain event or condition that , if it occurs, has a
positive effect on a project’s objectives.”
APM: (Risk event) “An uncertain event or set of circumstances that
should it or they occur would have an effect on the achievement of
one or more of the project objectives.”
APM: (Project risk) “The exposure of stakeholders to the consequences
of variation in outcome.”
9. Copyright @ 2011. All rights reserved
Discussion of terms in the definitions
Uncertainty
Objectives
Uncertain event
Probability (also known as likelihood or chance)
Perceived threat or opportunity
Magnitude of impact
Exposure
Variation in outcome
Stakeholders
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Illustration of uncertainty - journey to
work
Plan to go from same place to work every day
How long does it take? Best time? Worst time? Most likely?
Pattern over time might look like this -
35 40 45 50 55
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Uncertainty discussion points
Why the variation? Ask the audience!
Pattern is also known as: “frequency distribution shape” or
“probability distribution function”
Uncertainty in a project schedule relates to the variation in an
estimate of a task’s duration and / or cost so need skilled estimators
for quality
What drives the variation in a project? What assumptions are made?
How do we make use of this variation? Ask the audience!
Use three-point estimating for each task to define best, worst and
most likely durations with a defined distribution shape
Monte Carlo sampling to provide
Likelihood of achieving project finish date / duration &cost
Drivers of project duration and project cost
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Example of Monte Carlo sampling
Example – From morning alarm going off to arrival at desk at work
Iteration Number
Alarm goes off
Ablutions
Breakfast
Car journey
Parking
Walk to desk
Arrival at desk / Total time
4, 6, 10 mins
7, 8, 15 mins
35, 45, 55 mins
3, 5, 7 mins
2, 4, 7 mins
7
40
12
5
7
94
50
11
5
6
52
7
5
3
1 32
6
37
8
5
4
n
71 76 76 60
…
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Illustration of Monte Carlo sampling - duration
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Risk discussion points 1
Uncertain event – may or may not occur
Likelihood of occurrence is also known as probability, measured as a
decimal 0 to 1 or percentage 0% to 100%
If 0 or 0%, then there is no risk
If 1 or 100% there is no risk as has occurred & should be treated as an
issue
Threat – if risk occurs,
schedule could be extended, and / or
cost will be increased
Opportunity – if it occurs,
schedule could be reduced, and / or
cost will be reduced (if cost of managing less than benefit)
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Risk discussion points 2
Magnitude of impact: days added to (or subtracted from) task duration
and / or costs added to (or reduced from) task cost
There can be
one risk impacting several tasks
one task impacted by several risks
several risks impacting several tasks
To measure the full impact of a risk it must be linked to an appropriate
Work Breakdown Structure element(s) (Project, Task package, Task)
Impact may be uncertain (best, worst, most likely so need three-point
estimate) or certain (single value, such as a fee)
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Risk discussion points 3
Exposure is the full range of the variation of project outcomes over the
cumulative probability range from 0% to 100%, shown as ‘S’ curve in
earlier slide
Use can be made of ‘S’ curves for setting budgets and timescales,
including contingency
Stakeholders – “Any individual, group or organisation that can affect,
be affected by, or perceive itself to be affected by an initiative (project
or task).” Source Management_of_Risk
Task managers, project managers, decision-makers, investment
committee, residents, landowners, schools, emergency services,
etc etc
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ISO 31000: Risk management – Principles
and Guidelines, Process Steps
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ISO 31000 Risk process steps 1
Establish the context – everything you need to know about the project,
including objectives and stakeholders. Need to keep this under review
Project charter should define how risk are to be managed –
qualitatively, quantitatively or both
Identify the risks – what may happen. Use construct <Cause>, <Event>,
<Impact or consequence> for clarity
Analyse the risks - in terms of likelihood and impact on objectives,
taking account of current controls and their effectiveness
Impacts on objectives can be readily quantifiable (cost and
duration) or non-quantifiable (quality, reputation, legal and
compliance, health and safety, environment)
Ranges of likelihood and impacts and impact types should be
defined in project charter or organisation risk policy / standard
19. Copyright @ 2011. All rights reserved
ISO 31000 Risk process steps 2
For each risk, the highest of the impact types are combined with
likelihood to determine a risk level or score.
Evaluate the risks - sorted from highest likelihood and impact to
lowest likelihood and impact. Levels or scores can be used
Treat the risks - focuses attention on the prioritised risks and can use
one or more of these options:
Avoid (Enhance) – remove the risk by changing the plan or
circumstances
Treat – proactive action to reduce (increase) likelihood and / or
reduce (increase) impact
Share – with another party including contracts and insurance
Accept – an informed decision to do nothing but keep under
review
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The decision to proceed with treatment options should take into
account cost effectiveness, timing, resourcing
Effectiveness can be measured as the difference between the pre-
treatment and planned post-treatment levels or exposure for the cost
of the treatment actions and the cost of treating any secondary risks
introduced by the actions.
Communicate and consult - throughout the risk lifecycle
Monitor and review - throughout the risk lifecycle
Contingency can be recommended based on the difference between
the pre-treatment and planned post-treatment values at an agreed
confidence level
ISO 31000 Risk process steps 3
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Risk identification exercise
Exercise. Look at the journey to work example. Look at one of the tasks
and identify at least 2 risks.
Use the construct <cause>, <event>, <impact> to describe the risk
How likely is the risk to occur? How much will it impact on my journey?
What can you do about the risk?
What assumptions have you made?
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Practical aspects: Recording risks -
database or spreadsheet?
What do we need a risk database to be capable of?
Does a spreadsheet achieve these features?
What do you use?
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Practical aspects: Risk databases
What do we need a risk database to be capable of?
Accessible
User profiles
Controlled configuration to a process / standard / project /
organisation
Ease of use and secure
Handle pre-treatment and planned post-treatment assessments
Audit trail
Reporting
Roll back / backed up
Integrate with other tools and link risks to tasks / cost elements
Comply with IT policy
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Example configuration requirement for
risk matrix in database
Level of risk using a risk matrix by combining highest impact (or
consequence) with probability(or likelihood) (also known as heat map)
Project impact types from organisation standard (e.g. commonly 4, 5
or 6; cost, schedule delay, reputation, environment, people, legal)
Impact ranges - how many and how labeled
Examples: 1, 2, 3, 4. 5, 6; Very Low, Low, Medium, High, Very High;
Probability ranges from organisation standard
Probability - how many and how labeled (commonly 4, 5 or 6)
Examples: e.g. A, B, C, D; V Low, Low, Medium, High, V High;
Risk bands (or tolerance threshold) from organisation standard
Risk bands – how many, how labeled and field colours
Examples: Low, Medium, High; Levels I, II, III, IV
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Example configuration settings
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Example configured risk matrix
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Risk database vs Monte Carlo sampling
Risk matrix used for qualitative analysis so that risk levels can be
compared
What are the benefits and limitations?
Benefits: Intuitive; easy to understand and prioritise risks
Limitations: Difficult to aggregate; can be misleading if risk linked to
task in schedule, cannot distinguish between risks impacting in a
schedule
Monte Carlo sampling pinpoints drivers of uncertainty and risks, both
cost and schedule; aggregates all risks to provide total exposure
Let’s have a look at what else the Monte Carlo sampling tool should be
capable of
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Monte Carlo sampling
What do we need Monte Carlo sampling to be capable of?
Import schedule and cost plan if separate
Edit uncertainty values, distributions shapes and correlation
Import risks from risk database
Link risks to tasks and cost elements if not already linked in database
Edit cost and schedule impact values
Edit risk probability
Edit risk distribution shape
Select number of iterations
Show histograms and pre & post treated cumulative probability graphs
Show schedule and cost drivers with and without pre & post risks
Reports
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Integration with Quantitative Risk
Analysis tool
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Typical outputs – Tornado graph, schedule
duration drivers: duration sensitivity
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Typical outputs – Tornado graph, schedule
duration drivers: criticality index
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Typical outputs – Tornado graph, schedule
duration drivers: duration cruciality
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Typical outputs – schedule duration pre-
treated risk drivers: duration sensitivity
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Typical outputs – frequency histogram and
cumulative probability: duration uncertainty
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Further discussion points
Use of the analysis graph for contingency determination
Benefits – Ranges of outcomes address probabilistic nature of
projects; many what if scenarios and options can be explored; can
support earned value and cost to completion forecasts
Limitations – only modeling those risks identified; new risks will
emerge during execution so need to repeat frequently
Skills of everyone involved – Ask the audience!
Estimators and schedulers: do you use three-point estimating?
Risk practitioners: how thorough is risk identification
Do you or your projects use Monte Carlo sampling? Ask the audience!
Do project managers use qualitative and / or quantitative risk analysis?
42. Copyright @ 2011. All rights reserved
Thank you
keith@riskperformance.biz
+447879423242