Project Management
By:
Dr Madhu Fernando
Project Risk Management
Project Risk Management
Project Plans are based on many assumptions and previous
experiences.
Every project is unique, so changes and risks expected in
projects can always be different.
Be proactive in identifying and managing risks to avoid:
unplanned project cost, project delays and poor project
performance.
Project Risk Management
Conduct a Risk Analysis and identify all the risks at the
beginning of every project, and carefully monitor them
throughout the project.
PMI PMBoK defines Project Risk management as “the
systematic process of identifying, analyzing and responding to
project risks”.
Importance of Project Risk
Management
PMBoK suggests, it maximize the probability and
consequences of positive events and minimize the probability
and consequences of adverse effects on the project objectives.
Benefits of Project Risk
Management
Improved project quality
Minimization of financial loss and project delays through
contingency planning
Risk Management culture and proactive strategies
Plan Risk Management and Identify
Project Risks
Typical Risk Categories:
Technical, Quality or Performance Risks
Project Management Risks: Lack of PM skills and competence,
PM process.
Organizational Risks : Prioritization of projects, organizational
structural changes.
External Risks : Government, Regulatory risks, weather
changes, natural disasters.
Project Risk Management Processes
Project Risk Management involves following processes.
1. Plan Risk Management
2. Identify Risk
3. Perform Qualitative Risk Analysis
4. Perform Quantitative Risk Analysis
5. Plan Risk Responses
6. Monitor and control project risks
Plan Risk Management –
Process Summary
Required Input:
Project Scope statement
Cost Management Plan
Schedule Management plan
Communication Management plan
Enterprise environmental factors
Organisational process assets
Tools and Techniques:
Planning meetings and analysis
Output:
Risk Management Plan
Project Risk Management Processes
Project Risk Management involves following processes.
1.
Plan Risk Management
2.
Identify Risk
3.
Perform Qualitative Risk Analysis
4.
Perform Quantitative Risk Analysis
5.
Plan Risk Responses
6.
Monitor and control project risks
Risk Register Template
List of Identified Risks
List of Potential Responses
Responsible
PI Matrix Template
Risk
Probability
Impact
PI (risk ranking)
Plan Risk Responses
Risk can be positive or negative. There are three ways to respond to a
negative project risk:
Avoidance : Changing the project plan or conditions to eliminate the
risk.
Transference : Shifting the consequences of a risk to a third party with
responsibility for responding to that risk.
Mitigation : Take early actions to reduce the probability and
consequences of risks, or its impact on the project.
Acceptance : When there is no other alternative, risks will be
accepted. Can be Active (having a contingency plan) or Passive
Plan Risk Responses
There are three response strategies for a positive project risk:
Exploit
Enhance
Share
Acceptance
Contingency response strategy : Contingency response plan is designed
to use only if certain event occur. Eg: missing an intermediate milestone can
be a trigger that requires a contingency response.
Project Monitoring and
Controlling Process - Risk
Project Risk Management
Monitor and Control Project Risks :
◦ Risks are monitored through out the project, with risk
reviews/audits to ensure they will make no or minimal
impact to the project, if they occur.
◦ It confirms that some of the risks will no longer be valid,
and also new risks might also be identified during this
process.
Risk Management Exercise
Conduct a Risk Analysis for ‘the selected project’
Identify, prioritize, and document project risks.
Develop a Risk Response plan with response
strategies. Nominate the risk Owner for each
prioritized risk.