Project Risk Management 2

Project Risk Management 2

اسلاید 1: Project Risk Management A Preparation Guide for the PMI-RMP ExamScott Reynolds MBA, PMP, PMI-RMP

اسلاید 2: What is Project Risk Management?Project risk management is actively managing the risks on your projectThe goal of risk management is to be more proactive and less reactive

اسلاید 3: What is a Risk?A risk is an uncertain event that could have a positive or negative effect on your project* This means there is a probability between 1-99% that the event could occurIf there is a 0% chance of an event occurring, there is no risk (example; there is a 0% chance your project will be adequately funded, this is not a risk, it is a reality)If there is a 100% chance of an event occurring, this would be an issue, not a riskRisks with negative consequences are called threatsRisks with positive consequences are called opportunities (Yes, risk can be good! Stop thinking of risk as bad, and start thinking of it in terms of probabilities!)

اسلاید 4: Types of RiskRisks can be broken out into two primary typesPure Risk (hazard)– risk with potential loss onlyex. Fire, theft, personal injuryBusiness Risk (speculative risk) – risk with potential loss or gainex. A highly skilled employee becomes available to work on your project, reducing your schedule time, the tax rate changes, a new server costs less (or more) than you budgeted for

اسلاید 5: Risk Management ProcessesThere are six project risk management processes * Go ahead and learn them now (in order), this is the only knowledge area in the Project Management Body of Knowledge (PKBOK) that must be completed in successive orderPlan Risk Management Identify Risks Perform Qualitative Analysis Perform Quantitative AnalysisPlan Risk ResponseMonitor & Control Risks

اسلاید 6: Risk Management ProcessesRisk Planning – this is how you plan on conducting risk management. You wouldn’t start managing your project without a plan, so why would you approach risk management that way?* Remember ‘Plan the work, and work the plan’? Applies to risk management as well.Identify Risks – this is the phase where you attempt to identify most of your risksQualitative analysis – this is a subjective analysis of your risks that produces a risk ranking, usually in the order of high, medium, low, or on an ordinal scale. Rankings are by agreement of your project team, sponsors and key stakeholders.

اسلاید 7: Risk Management ProcessesQuantitative Analysis – a numerical analysis of the probability and impact of the risk on your projectPlan Risk Response– a course of action you will take to deal with your risks should they go from risk to issueMonitor & Control Risks – monitoring your lists (there are two lists which I will discuss later) of risks to enact a risk response plan, to move a risk from one list to the other, or to remove a risk because it is no longer a risk

اسلاید 8: Risk Management PlanningBefore you start dealing with risks, you should first plan on how you will handle risk on your projectThings to consider when creating your Risk Management planThe risk tolerance of your project sponsors and stakeholders – In order to gain buy-in, you need to create a plan your sponsors can support. It is not likely they will support a plan that is in opposition to their agenda or is out of their comfort zoneThe size and value of your project – there is a cost to risk management, you shouldn’t spend more on preventing the risk than the cost of the risk occurringThe methodology you will use – the methodology you use is not as important as gaining agreement and buy-in on the methodology chosenSources of risk – risk categories; think of all possible areas or events that could introduce risk to your project

اسلاید 9: Plan Risk ManagementInputs to Risk Management PlanningEnterprise environmental factors – company culture or existing systems the project will have to deal with or can make use ofOrganizational process assets – processes, procedures, and historical informationProject scope statement – statement of what the project shall deliver and what it should not deliver (if you don’t know what the scope of your project is, can you really identify all areas of risk?)Project management plan – the guide on how you will manage your project

اسلاید 10: Plan Risk ManagementInputs to Risk Management PlanningCost Management Plan – The guide on how you and your team will control costs on the project to try to stay within budgetSchedule Management Plan – The guide on how you and your team will manage the schedule of the projectCommunications Management Plan -The guide on who you need to communicate to, what information, how it needs to be communicated and how often

اسلاید 11: Plan Risk ManagementOutputs of Risk Management PlanningRisk Management Plan- Methodology- Roles & Responsibilities- Budgeting- Timing- Risk Categories- Definitions of risk & impact- Stakeholder tolerances- Reporting formats- Tracking

اسلاید 12: Identify RisksThis is the phase where you work with your team to identify as many risks as possibleThings to rememberIdentify Risks can’t be completed without the project scope statement and Work Breakdown Structure (WBS)Identify Risks happens at the onset of the project and throughout the projectRisks can be identified at any time and during any phase of the projectRisk management is an iterative process, you should work to identify risk during any changes to the project, working with resources, and when dealing with issues

اسلاید 13: Identify RisksTechniques to identify riskBrainstorming - the free-flow of ideas on risk, done with the project team, stakeholders, subject matter experts, and experienced resourcesDelphi technique – an anonymous surveying of experts in which information is sent to a group of experts on the risk. The experts each provide input, the responses are compiled and then sent back to all of the experts for further review; the process is repeated until consensus is reached. Interviewing – interviews of experts, project stakeholders, or associates who have worked on similar projects in order to discover risks

اسلاید 14: Identify RisksTechniques to identify riskRoot Cause Analysis – Determining the cause of the risk; you might be able to identify more risks this way or you might be able to eliminate the risk by eliminating the causeSWOT Analysis – An analysis of the strengths, weaknesses, opportunities and threats on your projectChecklist Analysis – after you have identified your categories of potential risks on your project, you create a checklist of these categories to make sure you’re not neglecting any area where risk can hide

اسلاید 15: Identify RisksAssumptions Analysis – what assumptions have you made or been given about your project? Are they valid? If not, you could have riskDiagramming Techniques – diagramming techniques can show cause and effect. The effect would be your risk, would it be helpful to know what could cause that risk? - Cause-&-Effect diagram- System process flowcharts- Influence diagrams* Whenever possible, deal with the cause, not the effect

اسلاید 16: Risk FactorsWhen analyzing your risk, you should be aware of the following risk factorsThe probability the risk will occurThe range of possible outcomesWhen in the project lifecycle the risk is likely to occur (the timing); * once the expected timeframe of the risk has passed and it is no longer a risk, it can be removed from the risk listHow often the risk is expected to occur on the project (frequency)

اسلاید 17: Identify RisksOutputs of Identify RisksRisk Register- List of risks- List of potential responses- Root causes of risks- Updated risk categories

اسلاید 18: Perform Qualitative Risk AnalysisThis is the phase where you rank the risks you’ve identified from Identify Risks to come up with a list of risks you will create plans for dealing withThings to rememberPerform Qualitative Risk Analysis is subjectiveWhat is the probability of the risk occurring? High, medium, low? 1-10?What is the impact if the risk does occur? High, medium, low? 1-10? What is the financial impact, are the consequences positive or negative? * the earlier you know about risk, the better prepared you will be

اسلاید 19: Perform Qualitative Risk AnalysisTools and Techniques of Qualitative AnalysisProbability & Impact Matrix – a matrix that creates a consistent evaluation of high, medium, or low for your projects. This helps to make the risk rating process more repeatable between projects.Risk Data Quality Assessment – What is the quality of the data used to determine or assess the risk? Think about the followingExtent of the understanding of the riskData available about the riskQuality of the dataReliability & Integrity of the data

اسلاید 20: Perform Qualitative Risk AnalysisTools and Techniques of Qualitative AnalysisRisk Categorization – Which of your categories has more risk than others? Which of your work packages could be most affected by risk?Risk Urgency Assessment – Which of your risks could occur soon, or require a longer planning time? Risk urgency assessment helps move these risks more quickly through the rest of the project management process* Perform Qualitative Risk Analysis is subjective

اسلاید 21: Perform Qualitative Risk AnalysisOutputs of Perform Qualitative Risk AnalysisRisk Register UpdatesRisk ranking for the project compared to other projectsList of prioritized risks and their probability and impact ratingsRisks grouped by categoriesList of risks requiring additional analysis in the near termList of risks for additional analysis and responseWatchlist (non-critical risks) Trends

اسلاید 22: Perform Qualitative Risk AnalysisPerform Qualitative Risk Analysis can help you determine the followingWhich risks need to move on to Perform Quantitative Risk Analysis?Which of your projects should be selected when compared with other projects? * You have two projects available and you can only complete one of them, both projects are projected to have the same benefit, but the qualitative risk score for one of the projects is higher than the other, would you want to know this before you decided which project you would work on?

اسلاید 23: Perform Quantitative Risk AnalysisThis is the phase of risk management where you conduct a numerical analysis of the probability and impact of the risks with the highest risk rating score determined from qualitative analysisThings to rememberQuantitative analysis is used to….Determine which of your risks should have a response planDetermine overall project riskDetermine the probability of delivering your project objectives

اسلاید 24: Perform Quantitative Risk AnalysisThings to rememberDetermine cost and schedule reservesIdentify risks that will require more planningCreate more realistic and achievable cost, schedule, or scope goals

اسلاید 25: Perform Quantitative Risk AnalysisTools and Techniques of Quantitative AnalysisSensitivity Analysis – Which risks will have the most impact on the project?Monte Carlo Analysis – A technique that uses simulation to show the probability of completing your project on time and within budget. Determines the overall risk of the project, not the taskDetermines the probability of completing the project on a specific day and for a specific costTakes into account path convergence (places in the network diagram where many paths converge into one activity)Used to evaluate the impact to your schedule and budgetDue to the complicated mathematical computations used, Monte Carlo analysis is usually done with a computer programCreates a probability distribution – triangular, normal, beta, uniform or lognormal (learn these)* Perform Quantitative Risk Analysis is a numerical analysis

اسلاید 26: Perform Quantitative Risk AnalysisTools and Techniques of Quantitative AnalysisEMV – Expected Monetary Value – What is the probability of the risk occurring multiplied by the impact if the risk does occur? If the risk occurs, what could the financial or time loss be to your project?In the example below, this project has an EMV of ($58,250), this means that you need to put aside $58,250 in your risk reserve account for potential risks

اسلاید 27: Perform Quantitative Risk AnalysisTools and Techniques of Quantitative AnalysisDecision Tree – used for planning on individual risks instead of planning for the whole projectTakes into account future events to make a decision todayCan calculate the EMV in more complex situationsInvolves mutual exclusivity

اسلاید 28: Perform Quantitative Risk Analysis

اسلاید 29: Perform Quantitative Risk AnalysisDecision Tree* It is cheaper to make the units rather than buying them

اسلاید 30: Perform Quantitative Risk AnalysisOutputs of Perform Quantitative Risk AnalysisRisk Register UpdatesPrioritized list of quantified risksAmount needed for contingency reserves for time and costConfidence levels of completing the project on a certain date for a certain amount of moneyThe probability of delivering the project objectivesTrends - risk management is an iterative process; as you repeat the process you can track your overall project risk and determine the trend (if you are decreasing or increasing the level of risk on your project)

اسلاید 31: Plan Risk ResponseThis is the phase of risk management where you decide how you will respond to your most important risks Risk Response Strategies ThreatsAvoid – remove the cause of the risk so that it never materializes Mitigate – reduce the probability and or impact of the riskTransfer – transfer the risk to another party; usually done with insurance, performance bonds, warranties, guarantees or outsourcing the work.OpportunitiesExploit – make sure the opportunity occurs, you can add work or make a change to the projectEnhance – increase the probability and or positive impact of the riskShare – share the opportunity with a third party to be able to take advantage of the opportunity

اسلاید 32: Plan Risk ResponseRisk Response StrategiesFor both Threats & OpportunitiesAccept – Active acceptance – preparing a contingency reserve of cost or time reserves in case the risk does happenPassive acceptance – preparing for the dealing with the effects of the risk after the risk has occurred

اسلاید 33: Plan Risk ResponseOutputs of Risk Response PlanningProject Management Plan Updates – Changes made due to risk management will be changes made to the project and should be updated in the project management planUpdates to Risk RegisterResidual Risks – risks that are left over after Plan Risk ResponseContingency Plans – plans of action in case the risk does occurRisk Response Owners – the person on the team responsible for monitoring the risk, risk triggers, developing a response strategy, and implementing the strategy should the risk occurSecondary Risks – new risks that result from the implementation of the contingency plans for the primary risks

اسلاید 34: Plan Risk ResponseOutputs of Risk Response PlanningUpdates to Risk RegisterRisk Triggers – early warning signs that there is a high probability the risk will occurFallback Plans – a secondary contingency plan, in case the contingency plan does not work or is not effectiveReserves Contingency reserves - covers the cost for ‘known unknowns’ discovered during risk management; covers the residual risks. The contingency reserve is calculated and made part of the baseline.Management reserves – these are estimated and made part of the project budget, not the baseline. Management approval is needed to use the management reserve.

اسلاید 35: Monitor and Control RisksThis is the phase of risk management where you monitor the risk list for risks that have a higher probability of affecting your project, and the risk watchlist for risks that could change and should either be added to the risk list or removed from the watchlistInputs to Monitor & Control RisksRisk Management PlanRisk RegisterApproved Change RequestsWork performance information- Deliverable status- Schedule progress- Costs incurredPerformance reports

اسلاید 36: Monitor and Control RisksThings to KnowWorkaround – a response to a risk that has occurred when no contingency plan existsRisk audit – a team of experienced project team members reviews the risk management process and response strategies to see if you’ve effectively identified the major risks on the project and developed effective strategies for dealing with themRisk Reassessment – Risk management is iterative, you should review the risks on your project throughout the project to update their qualitative and quantitative values* the earlier you know about risk, the better prepared you will be

اسلاید 37: Monitor and Control RisksThings to KnowStatus meetings – status meetings should be used to identify new risks or changes to existing risks. This is a great opportunity to discuss with your team and stakeholders existing risks and new risks Reserve analysis – has the reserve kept up with changes to the risk list? Does the reserve still cover the costs of these risks should they occur?Closing of risks – Risks are expected to happen during a particular phase of the project. When that phase has passed and the risk is no longer probable, the risk should be removed from the risk list and any reserve associated should be freed up

اسلاید 38: Monitor and Control RisksOutputs of Monitor & Control RisksUpdates to Risk RegisterOutcomes of the risk reassessments and risk auditsUpdates to previous parts of risk managementClosing of risks that are no longer applicableDetails of what happened when risks occurred Lessons learnedRequested Changes Recommended Corrective & Preventive ActionsUpdates to the Project Management PlanOrganizational Process Assets Updates

اسلاید 39: Project Risk Management ReviewPlan Risk ManagementInputsProject Scope StatementCost Management PlanSchedule Management PlanCommunications Management PlanEnterprise Environmental FactorsOrganizational Process AssetsTools & TechniquesPlanning Meetings and AnalysisOutputRisk Management Plan

اسلاید 40: Project Risk Management ReviewIdentify RisksInputsRisk Management PlanActivity Cost EstimatesActivity Duration EstimatesScope BaselineStakeholder RegisterCost Management PlanSchedule Management PlanQuality Management PlanProject DocumentsEnterprise Environmental FactorsOrganizational Process Assets

اسلاید 41: Project Risk Management ReviewIdentify RisksTools & TechniquesDocumentation ReviewsInformation Gathering TechniquesChecklist AnalysisAssumptions AnalysisDiagramming TechniquesSWOT AnalysisExpert JudgmentOutputsRisk Register

اسلاید 42: Project Risk Management ReviewPerform Qualitative Risk AnalysisInputsRisk RegisterRisk Management PlanProject Scope StatementOrganizational Process AssetsTools & TechniquesRisk Probability and Impact AssessmentProbability and Impact MatrixRisk Data Quality AssessmentRisk CategorizationRisk Urgency AssessmentExpert Judgment

اسلاید 43: Project Risk Management ReviewPerform Qualitative Risk AnalysisOutputsRisk Register Updates

اسلاید 44: Project Risk Management ReviewPerform Quantitative Risk AnalysisInputsRisk RegisterRisk Management PlanCost Management PlanSchedule Management PlanOrganizational Process AssetsTools & TechniquesData Gathering and Representation TechniquesQuantitative Risk Analysis and Modeling TechniquesExpert Judgment OutputsRisk Register Updates

اسلاید 45: Project Risk Management ReviewPlan Risk ResponsesInputsRisk RegisterRisk Management PlanTools & TechniquesStrategies for negative risks or threatsStrategies for positive risks or opportunitiesContingent Response StrategiesExpert Judgment

اسلاید 46: Project Risk Management ReviewPlan Risk ResponsesOutputsRisk Register UpdatesRisk-Related Contract DecisionsProject Management Plan UpdatesProject Document Updates

اسلاید 47: Project Risk Management ReviewMonitor & Control RisksInputsRisk RegisterProject Management PlanWork Performance InformationPerformance ReportsTools & TechniquesRisk ReassessmentRisk AuditsVariance and Trend AnalysisTechnical Performance MeasurementReserve AnalysisStatus Meetings

اسلاید 48: Project Risk Management ReviewMonitor & Control RisksOutputsRisk Register UpdatesOrganizational Process Assets UpdatesChange RequestsProject Management Plan UpdatesProject Document Updates

اسلاید 49: Project Risk ManagementOther Sources of InformationA Guide to the Project Management Body of Knowledge (PMBOK® Guide) PMP Exam Prep – Rita MulcahyProject Management: A Systems Approach to Planning, Scheduling, and Controlling – Harold KerznerHot Topics: Flashcards for Passing the PMP® and CAPM® Exams – Rita Mulcahy

اسلاید 50: ContactScott Reynoldsscottdreynolds@hotmail.comPlease send me comments, questions, or anything else, Thanks Everyone for your time!