Planning for Risk, Procurements, and Stakeholder Management Plan Risk Management Identify Risks Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan for Risk Response Plan Project Procurements Plan Stakeholder Management

Plan Risk Management A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 313

Risk Risk is an uncertain event that may have either a positive or negative effect on the project. Risk attitude is influenced by: Risk appetite Risk tolerance Risk threshold

What Is Project Risk Management? Includes conducting risk management planning, identification, and analysis; risk response planning; and controlling risk on a project.

The Risk Management Plan Methodology Roles and responsibilities Budget Timeline Risk categories Definition of risk probability and impact Probability and impact matrix Revised stakeholders’ tolerances Reporting formats Tracking documents

RBS

The Plan Risk Management Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 313

Plan Risk Management Inputs Project management plan Project charter Stakeholder register Enterprise environmental factors Organizational process assets

Plan Risk Management Tools and Techniques Analytical techniques Expert judgment Meetings

Plan Risk Management Outputs Risk management plan

Guidelines to Develop a Risk Management Plan Review the project management plan for all approved subsidiary plans of the project management plan and all baselines. Review the project charter for the high-level risks, high-level project descriptions, and high-level requirements. Review the stakeholder register for an overview of each stakeholder’s role on the project. Review any pertinent enterprise environmental factors. Review the organizational process assets, such as risk categories. Use tools and techniques, such as expert judgment. Use analytical techniques, such as stakeholder risk profile analysis or strategic risk scoring sheets. Hold meetings with selected team members and stakeholders to develop the risk management plan. Document the risk management plan for the project.

Identify Risks A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 320

Project Risks Uncertain events that may or may not occur within a project Can have either a positive or negative effect on a project Positive risks are opportunities

Triggers Early warning signs or indications that a risk may occur Can come from external sources or can be internal organizational events Have both negative and positive effects on a project

The Identify Risks Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 319

Identify Risks Inputs Risk management plan Cost management plan Schedule management plan Quality management plan (output of 8.1) Human resource management plan (output of 9.1) Scope baseline Activity cost estimates (output of 7.2) Activity duration estimates (output of 6.5) Stakeholder register Project documents Procurement documents Enterprise environmental factors Organizational process assets

Identify Risks Tools and Techniques Documentation reviews Information gathering techniques Checklist analysis Assumptions analysis Diagramming techniques SWOT analysis

Information Gathering Techniques Brainstorming Delphi technique Interviewing Root cause analysis

Checklist Analysis Involves reviewing and analyzing previous project documents and checklists Checklists are generally created from historical information, knowledge, and lessons learned from previous projects

Diagramming Techniques Cause and effect System or process flowcharts Influence diagrams

SWOT Analysis

Identify Risks Outputs Risk register

Sample Risk Register ID Risk Consequence Likelihood Rating Current Target Level of Risk 1 Loss of IT (data) Major Insignificant Moderate Unlikely Extreme 2 Loss of precinct Minor Rare High 3 Loss of building 4 Denial of access to building 5 Loss of key dependencies 6 Loss of vital records 7 Loss of key staff Low 8 Loss of IT (voice)

Guidelines to Identify Risk Perform a structured review of appropriate documentation from other planning processes with key project stakeholders to ensure an understanding of each. Use one or more risk identification techniques to identify risks and their possible triggers. Be consistent. Whatever method you adopt, apply it systematically across your project. Before the project begins, identify risks in every project segment and work package. Apply your method consistently, but be on the lookout for special circumstances that might arise in any project segment. Consult relevant historical information, such as risk response plans and final reports from previous, similar projects that may include lessons learned describing problems and their resolutions. Once risks have been identified, group them into categories that reflect common sources of risk for your industry or application area. Use the results of your analysis to initiate the risk register.

Perform Qualitative Risk Analysis A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 328

Qualitative Risk Analysis Determines the probability of occurrence and the impact of identified risk Determines the risk exposure of the project by multiplying the probability and impact Provides the list of prioritized risks for further actions

Perform Qualitative Risk Analysis Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 328

Perform Qualitative Risk Analysis Inputs Risk management plan Scope baseline Risk register Enterprise environmental factors Organizational process assets

Perform Qualitative Risk Analysis Tools and Techniques Risk probability and impact assessment Probability and impact matrix Risk data quality assessment Risk categorization Risk urgency assessment Expert judgment

Probability and Impact Matrix A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 331

Perform Qualitative Risk Analysis Outputs Project document updates

Guidelines to Perform Qualitative Risk Analysis Review the risk management plan. Review the scope baseline. Examine the list of identified risks. Analyze the data available for each risk to assign a data precision ranking score. Determine the organization’s risk threshold for this project. Analyze the assumptions identified during risk identification as potential risks against the validity of the assumption and the impact on the project if false. Analyze the probability and impact of each identified risk by using well-defined probability and impact scales. Determine the risk factor scores by using a probability and impact risk matrix. Prioritize the risks according to the risk management plan. Update the risk register and other project documents for the project.

Perform Quantitative Risk Analysis A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 334

Quantitative Risk Analysis Used to assess the risk exposure events to overall project objectives Determines the confidence levels of achieving the project objectives Helps to identify time and cost contingencies of a project Refines and enhances the prioritization and scoring of risks

The Perform Quantitative Risk Analysis Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 334

Perform Quantitative Risk Analysis Inputs Risk management plan Cost management plan Schedule management plan Enterprise environmental factors Organizational process assets

Perform Quantitative Risk Analysis Tools and Techniques Data gathering and representation techniques Quantitative risk analysis and modeling techniques Expert judgment

Data Gathering and Representation Techniques Interviewing A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 336

Data Gathering and Representation Techniques (Cont.) Probability Distributions A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 337

Project Risk Ranking Ranking for producing the final deliverable Allows for comparisons among other projects Can assist in project initiation Assists with budget and resource allocation, and other decisions.

Basics of Probability Sum of probabilities Probability of single event Dependent joint events Independent joint events Mean Median Average Standard deviation

Quantitative Analysis Methods Sensitivity analysis Expected Monetary Value (EMV) Modeling and simulation

Sample Tornado Diagram A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 338

Monte Carlo Analysis Used to make predictions about the optimistic, most likely, and pessimistic estimates for variables in the model Simulates various outcomes of the project schedule Provides a statistical distribution of the calculated results

Perform Quantitative Risk Analysis Outputs Project documents updates: Probabilistic analysis Probability of achieving cost and time objectives Prioritized list of quantified risks Trends in quantitative risk analysis results

Guidelines to Perform Quantitative Risk Analysis Begin with your original estimate of time or cost. Determine the variable that you wish to investigate and identify its likely range of variation. Calculate and assess the impact of changing the range of results on the overall project estimate for each value in the range. Consult historical information. Use the appropriate interviewing technique and obtain probability distributions. Depict the distributions in a PDF. Perform a sensitivity analysis. Conduct a project simulation by using a model.

Plan for Risk Response A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 342

Plan Risk Responses Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 342

Plan Risk Responses Inputs Risk management plan Risk register

Plan Risk Responses Tools and Techniques Strategies for negative risks or threats Strategies for positive risks or opportunities Contingent response strategies Expert judgment

Negative Risks Strategies (Threats) Avoid Transfer Mitigate Accept

Positive Risk Strategies (Opportunities) Exploit Enhance Share Accept

Contingency Plans A risk response strategy developed in advance, before things go wrong; it is meant to be used if and when identified risks become reality. Allows a project manager to react quickly and appropriately to the risk event, mitigating its negative impact or increasing its potential benefits. May include a fallback plan for risks with high impact.

Plan Risk Responses Outputs Project management plan updates Project documents updates

Project Management Plan Updates Updates can include: Schedule management plan Cost management plan Quality management plan Procurement management plan Human resource management plan Scope, schedule, and cost baselines

Guidelines to Plan Risk Responses Examine each identified risk to determine its causes and how it may affect project objectives. Brainstorm possible strategies for each risk. Choose the response strategy that is most likely to be effective for each identified risk. If you are unable to bring a risk’s rating below the organization’s risk threshold, ask your sponsor for help. Identify backup strategies for risks with high risk factor scores. Determine the amount of contingency reserves necessary to deal with accepted risks. Determine how much of a contingency reserve you should set aside for unknown risks. Consult the risk management plan for the description of the content and format of the risk response plan. Incorporate the risk response plan into the overall project plan so the strategies can be implemented and monitored.

Plan Project Procurements A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 359

What Is a Procurement Management Plan? Outlines the specifications for procuring work from outside sources Specifies the types of contracts that will be used Describes the process for obtaining and evaluating bids Mandates the standardized procurement documents that must be used Describes how multiple providers will be managed

The Plan Procurement Management Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 358

Plan Procurement Management Inputs Project management plan Requirements documentation Risk register Activity resource requirements Project schedule Activity cost estimates Stakeholder register Enterprise environmental factors Organizational process assets

Contracts Mutually binding agreements that detail the obligations of both parties in terms of procuring work. Customized for each agreement. Contract types: Fixed-price Cost-reimbursable Time-and-material (T&M) Example: A fixed-price contract used by the project team procuring the manufacturing unit for its new line of footwear

Plan Procurement Management Tools and Techniques Make-or-buy analysis Expert judgment Market research Meetings

Make-or-Buy Analysis A technique used to determine whether it is more cost-effective to produce a product or service in-house or to procure it from an outside seller. Impacts project time, cost, and quality. Consider if a product needs to be purchased, leased, or rented, in case of a buy decision.

Plan Procurement Management Outputs Procurements management plan Procurement statement of work Procurement documents Source selection criteria Make-or-buy decisions Change requests Project documents updates

Procurement SOW

Procurement Documents Documents that are submitted to prospective sellers and service providers to solicit their proposals for the work needed Document type used will depend on the type of project and the product or service being procured Types include: RFI IFB RFP RFQ Invitation for Negotiation

Source Selection Criteria Overall or life-cycle cost Understanding of need Technical capability Management approach Technical approach Warranty Financial capacity Production capacity and interest Business size and type Past performance of sellers References Intellectual property rights Proprietary rights

Guidelines to Develop a Procurement Management Plan Identify the project needs that can be fulfilled by acquiring products, services, or results. Study the various plan procurement input documents to determine information related to the procurement requirements. Consult technical experts to define specifications for the project needs clearly, concisely, and completely. Perform a make-or-buy analysis to determine whether particular work can be accomplished by the project team or must be procured from outside the organization. Determine the contract types to be used for the specific procurement needs of the project. Document the plan procurement information you have identified so far in the procurement management plan. After the procurement management plan is created, you will also generate other relevant plan procurement outputs.

Plan Stakeholder Management Alex – please recreate A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 399

What Is a Stakeholder Management Plan? Subsidiary plan of the project management plan Defines the processes, procedures, tools, and techniques to effectively engage stakeholders in project decisions and execution Identifies the management strategies required to effectively engage stakeholders

Contents of the Stakeholder Management Plan Desired and current engagement level of key stakeholders Scope and impact of change to stakeholders Identified interrelationships and potential overlap between stakeholders Stakeholder communication requirements Information to be distributed to stakeholders Reason for the distribution of that information and the expected impact to stakeholder engagement Timeframe and frequency for the distribution of required information Method for updating and refining the stakeholder management plan

The Plan Stakeholder Management Process A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 399

Stakeholder Management Inputs Project management plan Stakeholder register Enterprise environmental factors Organizational process assets

Stakeholder Management Tools and Techniques Expert judgment Meetings Analytical techniques

Stakeholders Engagement Assessment Matrix C = Current engagement level D = Desired engagement level A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Project Management Institute, Inc., 2013, p. 403

Stakeholder Management Outputs The stakeholder management plan Project documents

Guidelines to Develop a Stakeholder Management Plan Review the project management. Review the stakeholder register. Review enterprise environmental factors. Review organizational process assets. Use tools and techniques such as expert judgment. Hold meetings with experts and the project team. Use analytical techniques to classify the level of engagement for stakeholders. Document the stakeholder management plan.

Reflective Questions How could your organization benefit from comprehensive risk planning? How could your organization benefit from more effective procurement planning?