Project Risk Management Past, Present & Future B. McGhee, PMP

Project Risk Management Past Why Use Project Risk Management? What is Project Risk Management? Present PMBOK Approach Current Tools & Techniques Future Knowledge-Based Risk Management

Past: Why Project Risk Management Required for successful business activity in today’s changing environment. Projects are launched in response to opportunities As opportunities increase, so do the associated risks Planning tends to focus on the past Uncertainty rarely addressed explicitly and formally Too many surprises

Past: Integrating Risk R. Max Wideman

Past: Project Risk Management Project risk Management is the art and science of identifying, assessing and responding to project risk throughout the life of a project and in the best interest of its objectives. Project Risk is the cumulative effect of the chances of uncertain occurrences adversely affecting project objectives. (R. Max Wideman)

Past: Risk has Three Components An event (an unwanted change), Probability of the occurrence of that event, and Impact of that event (or amount at stake) Uncertainty: the probability of the occurrence of an event ESI, 1993

Risk Management Capability Requires Human resources and training Risk Management Tools and Techniques Procedures ESI, 1993

Present: PMBOK Approach Risk Identification Risk Quantification Risk Response Development Risk Response Control

Present: Risk Identification Input WBS Contractual Requirements Field & Marketing information Lessons-learned files Corporate objectives Tools Idea-generation tools Interviews Group techniques Analogy comparisons Surveys Personal management tools Communications skills Leadership Team-building skills Coordination tools ESI

Present: Risk Quantification Input WBS Contractual Requirements Field & Marketing information Lessons-learned files Corporate objectives Rating system guidelines Categorized list of risk Tools Idea-generation tools Interviews Group techniques Analogy comparisons Surveys Decision-making tools Decision trees Life-cycle cost analysis Financial measures Probability functions Project management tools Milestone charts Gantt charts PERT ESI

Sample Risk List ESI

Present: Risk Response Development Input Project Plan Prioritized risk list Tools Idea-generation tools Interviews Group techniques Analogy comparisons Surveys Decision-making tools Decision trees Life-cycle cost analysis Financial measures Probability functions Personal management tools ESI

Sample Risk List & Mitigation Strategies ESI

Present: Risk Response Control Input Risk management plan/project plan Project resources Information about risk events Cost, schedule, and technical performance data Tools Risk mitigation strategies Personal management tools Communication Time management Tenacity Leadership Project management tools Networks Schedules Cost and schedule reporting process Team meetings ESI

Present: Other Tools & Techniques Brainstorming Sensitivity Analysis Probability Analysis Delphi Method Monte Carlo Decision Tree Analysis Utility Theory Decision Theory

Present Problems Limited time Limited experience Limited tools Limited resources Inconvenient Not Performed throughout the project

Future: Project Risk Management Knowledge-based Risk Management Based on the character of project risk, “knowledge transfer” among project managers is critical to project risk management. (K. Niwa, 1989) Successive Principle

Project Risk Management: Past, Present, & Future What’s Next?

Project Risk Management: Past, Present, & Future Ben McGhee, PMP 205-989-0497 Benjamin.McGhee@eds.com