Project Management Gaafar 2007 / 1 This Presentation is uses information from PMBOK Guide 2000 Project Management Risk Management* Dr. Lotfi Gaafar
Project Management Gaafar 2007 / 2 The Importance of Project Risk Management n Project risk management is the art and science of identifying, assigning, and responding to risk throughout the life of a project and in the best interests of meeting project objectives n Risk management is often overlooked on projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates n KPMG study found that 55 percent of runaway projects did no risk management at all
Project Management Gaafar 2007 / 3 What is Project Risk Management? The goal of project risk management is to minimize potential risks while maximizing potential opportunities. Major processes include –Risk management planning: deciding how to approach and plan the risk management activities for the project –Risk identification: determining which risks are likely to affect a project and documenting their characteristics –Qualitative risk analysis: characterizing and analyzing risks and prioritizing their effects on project objectives –Quantitative risk analysis: measuring the probability and consequences of risks –Risk response planning: taking steps to enhance opportunities and reduce threats to meeting project objectives –Risk monitoring and control: monitoring known risks, identifying new risks, reducing risks, and evaluating the effectiveness of risk reduction
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Project Management Gaafar 2007 / 6 Forming a Risk Management Plan n Responsibility n Objectives n Risk Identification n Risk Quantification n Risk Response n Risk Control n Disaster Recovery Planning
Project Management Gaafar 2007 / 7 Risk Identification n Analyzing historical records n Structured questionnaires n Structured interviews n Brainstorming n Structured checklists n Flow charts n Judgement based on knowledge and experience n System analysis n Scenario analysis
Project Management Gaafar 2007 / 8 Quantitative Risk Analysis n Assess the likelihood and impact of identified risks to determine their magnitude and priority n Risk quantification tools and techniques include –Probability/Impact matrixes –The Top 10 Risk Item Tracking technique –Expert judgment
Project Management Gaafar 2007 / 9 Probability/Impact Matrix
Project Management Gaafar 2007 / 10 Risk Impact
Project Management Gaafar 2007 / 11 Top 10 Risk Item Tracking n Top 10 Risk Item Tracking is a tool for maintaining an awareness of risk throughout the life of a project n Establish a periodic review of the top 10 project risk items n List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item
Project Management Gaafar 2007 / 12 Example of Top 10 Risk Item Tracking
Project Management Gaafar 2007 / 13 Risk Response n Eliminate Risk n Reduce Risk n Deflect Risk n Accept Risk
Project Management Gaafar 2007 / 14 Cost Benefit of Reducing Risk Costs Level of Risk Eliminate Risk Reduce Risk Deflect Risk Accept Risk
Project Management Gaafar 2007 / 15 Project Management Maturity by Industry Group and Knowledge Area
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Project Management Gaafar 2007 / 17 Contingency and Fallback Plans, Contingency Reserves n Contingency plans are predefined actions that the project team will take if an identified risk event occurs n Fallback plans are developed for risks that have a high impact on meeting project objectives n Contingency reserve or allowances are provisions held by the project sponsor that can be used to mitigate cost or schedule risk if changes in scope or quality occur