SOFTWARE PROJECT MANAGEMENT Project Risk Management Dr. Ahmet TÜMAY, PMP

Risk Management includes the processes concerned with conducting risk management planning, identification, analysis, response planning, and controlling on a project. The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of negative events in the project.

Risk Mgmt Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on at least one project objective, such as time, cost, scope, or quality

Plan Risk Management process of defining how to conduct the risk management activities for a project. Planning ensures that the degree, type, and visibility of risk management are commensurate with both the risk and importance of the project to the organization. provides sufficient resources for risk management activities

Risk Management Plan Methodology. Defines the approaches, tools, and data sources that may be used Roles and responsibilities. Defines the lead, support, and risk management team membership for each type of activity in the risk management plan, and clarifies their responsibilities. Budgeting. estimates funds needed for risk management for inclusion in the project cost baseline. Timing. Defines when and how often the risk management process will be performed throughout the project life cycle. Risk categories. Provides a means for grouping potential causes of risk (like risk breakdeown structures).

Risk Management Plan Definitions of risk probability and impact. Probability and impact matrix. Risks are prioritized according to their potential implications for meeting the project’s objectives.

Risk Management Plan Revised stakeholders’ tolerances. Stakeholders’ tolerances may be revised in the Risk Management Planning process, as they apply to the specific project. Reporting formats. Describes the content and format of the risk register as well as any other risk reports required. Defines how the outcomes of the risk management processes will be documented, analyzed, and communicated. Tracking. Documents how all facets of risk activities will be recorded for the benefit of the current project, future needs, and lessons learned. Documents whether and how risk management processes will be audited.

Identify Risk Risk Identification determines which risks may affect the project and documenting their characteristics. Participants may be all of the stakeholders, subject matter experts and risk management experts.

Identify Risks Tools & Techniques Information Gathering Techniques Brainstorming Delphi Technique SWOT Analysis Diagramming Techniques Cause-and-effect diagrams System or process flowcharts Influence diagrams Strengths, weaknesses, oppurtunities, threats

Identify Risks Outputs Risk Register List of identified risks List of potantial responses

Perform Qualitative Risk Analysis Organizations can improve the project’s performance effectively by focusing on high-priority risks. Includes methods for prioritizing the identified risks using their probability of occurring, the corresponding impact on project objectives if occurs,

Perform Qualitative RA Output Risk Register (Updates): Relative ranking or priority list of project risks. The probability and impact matrix can be used to classify risks according to their individual significance. Risks grouped by categories. List of risks requiring response in the near-term. List of risks for additional analysis and response. Some risks might warrant more analysis, including Quantitative Risk Analysis, as well as response action. Watchlists of low priority risks. Risks that are not assessed as important in the QRA process can be placed on a watchlist for continued monitoring. Trends in qualitative risk analysis results. As the analysis is repeated, a trend for particular risks may become apparent, and can make risk response or further analysis more or less urgent/important.

Perform Quantitative Risk Analysis Quantitative Risk Analysis is performed on risks that have been prioritized by the Qualitative Risk Analysis process as potentially and substantially impacting the project’s competing demands. The Quantitative Risk Analysis produces quantitative risk information to support decision makingto reduce project uncertainty.

Perform Quantitative Risk Analysis TTs Data Gathering and Representation Techniques Interviewing using PERT Probability Distributions Quantitative RA and Modelling Techniques Decision Tree Analysis Modelling and Simulation

Quantitative Risk Analysis Monte Carlo simulation and decision tree analysis used to: Quantify the possible outcomes for the project and their probabilities Assess the probability of achieving specific project objectives Identify risks requiring the most attention by quantifying their relative contribution to overall project risk Identify realistic and achievable cost, schedule, or scope targets, given the project risks Determine the best project management decision when some conditions or outcomes are uncertain.

Quantitative RA Output Risk Register (Updates) Probabilistic analysis of the project ; Estimates are made of potential project schedule and cost outcomes listing the possible completion dates and costs with their associated confidence levels. Probability of achieving cost and time objectives Prioritized list of quantified risks Trends in quantitative risk analysis results

Plan Risk Responses Process of developing options, and actions to enhance opportunities and reduce threats to project’s objectives. Planned risk responses must be appropriate to the significance of the risk, cost effective in meeting the challenge, timely, realistic within the project context, agreed upon by all parties involved, and owned by a responsible person.

Plan Risk Responses TTs Several risk response strategies are available and should be selected for each risk. Risk analysis tools, such as decision tree analysis, can be used to choose the most appropriate ones. Then, specific actions are developed to implement that strategy. Primary and backup strategies may be selected. A fallback plan can be developed for implementation if the selected strategy turns out not to be fully effective, or if an accepted risk occurs. Secondary risks are expected. Often, a contingency reserve is allocated for time or cost. along with identification of the conditions that trigger their execution.

Risk Response Strategies For Negative Risks Avoid. changing the project management plan to eliminate the threats posed by an adverse risk. Transfer. requires shifting the negative impact of a threat, along with ownership of the response, to a third party. Mitigate. Risk mitigation implies a reduction in the probability and/or impact of an adverse risk event to an acceptable threshold. For Positive Risks Exploit. to ensure that the opportunity is realized Share. allocating ownership to a third party who is best able to capture the opportunity for the benefit of the project. Enhance. modifies the “size” of an opportunity by increasing probability and/or positive impacts, and by identifying and maximizing key drivers Both Positive and Negatives Acceptance: acknowledge the risk and do not take any action.

Control Risks Process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project. Process applies techniques, such as variance and trend analysis, which require the use of performance information generated during project execution.

Purposes of Control Risks Project assumptions are still valid Risk, as assessed, has changed from its prior state, with analysis of trends Proper risk management policies and procedures are being followed Contingency reserves of cost or schedule should be modified in line with the risks of the project.

Control Risks TTs .1 Risk Reassessment .2 Risk Audits ; examine and document the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process. .3 Variance and Trend Analysis ; Trends in the project’s execution should be reviewed using performance data. Deviation from the baseline plan may indicate the potential impact of threats or opportunities. .4 Technical Performance Measurement ; Technical performance measurement compares technical accomplishments during project execution to the project management plan’s schedule .5 Reserve Analysis ; Compares the amount of the contingency reserves remaining to the amount of risk remaining at any time in the project. .6 Status Meetings; Project risk management can be an agenda item at periodic status meetings.

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