Post on 18-Nov-2014
description
Project Risk Management
“Those who cannot remember the past are condemned to repeat it” – George Santayana
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Understand Project Risk Project Risk Awareness Mitigating Project Risk Risk Management
Agenda
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Understanding Project Risk
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Project is a temporary endeavor undertaken to create a unique product, service or result.
Risk is “Loss” multiplied by “Likelihood” Major Risk Types: Macro-‐risk & Micro-‐risk
Project Risk -‐ Definitions
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Aware of lessons learned from prior projects Plan the work thoroughly
to understand challenges ahead to anticipate potential problems
Make team understand sources of variation minimize where ever possible
Successful Project Leaders
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They are impossible Objectives lies outside of capabilities Possible deliverable but other objectives are unrealistic
Feasible deliverable, plausible objectives but insufficient effort put into planning
Reasons for Project Failures
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Lower cost/less chaos Project priority/management support Project portfolio management Tuning plans to reduce risks Project communication and control Establish management reserve
Use of Risk Data
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Project and Risk
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Proper mix of risk and benefits consistent with business objectives
Frequent reviews Revisit assumptions Re-‐balance project load
Project Selection
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Solicitation: RFP - One resource for planning and procurement - Clear scope definition in RFP - Clear criteria to evaluate responses
Risk indicators - non contacting suppliers - bidders asking trivial questions
Project Procurement
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Risks during - decision making - negotiations - contracting process
Turnover due to outsourcing Relationship with outsourcing partners
Source Selection
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Clear definition of scope of work Measurable deliverables Payments with achievements of results Process to be used for any change Should specify responsibilities Should include “not to exceed” limitation Terms that aligns with goals
Contract
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Change & defects - Creep in scope - Gaps - Dependencies
Minimized by - planning and WBS - Scope documentation using IS/IS NOT technique - Scope with sufficient details & limits
Project Scope
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Scope risks can bring out - Market risks - Confidentiality risks
Project Scope
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Without planning no one knows whether something is going wrong
Regular review of methods and processes Adopt and use a project management process
Project Planning
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WBS: any section resisting breakdown is risky
WBS: Lack of ownership is risky WBS: size of more than 200 entries is risky - Sequence or collection of projects
Project Planning
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Critical Path Methodology (CPM) Multiple Critical Paths Interfaces Scheduling risky work
Project Activity Sequencing
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Sources of schedule risks - Delays - Dependency - Estimation
Project Schedule
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Staff Equipment Outsourcing Travel Other costs (e.g. communication)
Cost Estimation
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Pitfalls - Avoidance - Optimism - Lack of information - Granularity
Cost Estimation
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Resource requirements Holidays Vacations Time-‐offs Non-‐project activities Distributed resources - consumes 60% more
Resource Planning
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People - Attrition - late joining - Not dedicated
Outsourcing Budget
Resource Planning
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Skills requirements Staff availability - 2 projects is optimal
Outside of project responsibility is a risk
Staff Acquisition
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Team building - Forming - Storming - Norming - Performing
20 minutes to get back to concentration Delegating to dedicated staff is low risk Outside dependency delay > 7 weeks
Project Team Environment
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Documented deliverable definition process Use a straw man definition document Adopt a rigorous evolutionary methodology
Project Deliverables
Quantifying & Analyzing Risk
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Separate parts that are well understood from that are not
Making a project impossible to possible is to isolate and schedule most risky work early
Qualitative and quantitative risk assessment Qualitative is less effort but quantitative assessment strives for precision
Quantifying & Analyzing Risk
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“loss” in time, money etc “likelihood” based on statistics, probability Risk probability is 0 or 1 at project end Uncertainty in the beginning Qualitative assessment divides choices into ranges
Quantitative assessment assigns each risk a specific fraction
Quantifying & Analyzing Risk
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Probability - Experiments e.g. tossing a coin - Historical and empirical data - Guessing or gut feel
Most of the project risks are in this category
Illusion of precision can be a risk Measurement based probabilities can help trend analysis
Quantifying & Analyzing Risk
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Can be expressed as a single value or a histogram of possibilities - High – project objective at risk - Medium – objectives are OK, significant re-‐planning - Low – No major plan changes, risk is a inconvenience
Quantitative Risk Assessment
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Unit of impact and max value are risk specific
More ranges the better the precision but harder to achieve agreement
Cost impact is easier compared to effort/schedule
Increase in effort may not translate directly into schedule impact
Quantitative Risk Assessment
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Minimum outcome - risk list ordered by severity - simple sort, Delphi technique
Shows only the relative risk and not the project exposure each risk represent
Qualitative Risk Assessment
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Risk assessment table
Risk assessment matrices Alternate assumption testing Data precision ranking Decide list of risks that require further attention
Qualitative Risk Assessment
Risk Probability Impact Overall Risk
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Sensitivity Analysis Risk assessment tables - Select one type of impact - Several tables for each type of impact
Two dimensional qualitative analysis - X axis probability - Y axis impact
Qualitative Risk Assessment
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Index = (Tech+Arch+System) * Scale Assessment against experience and capability - 0 = only existing technology required - 1 = minor extension - 2 = significant extension - 3 = possible with innovation - 4 = probably feasible - 5 = new, feasibility in doubt
Risk Complexity Index
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Scale signifies the number of people - 0.8 for up to 12 - 2.4 for 13 to 40 - 4.3 for 41 to 100 - 6.6 for greater than 100
Index - < 20 low risk - < 40 medium risk - > 40 high risk
Risk Complexity Index (cont)
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Project Estimation
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Using historical data Experts and expert judgment Experience based rules and functions Delphi group estimation
Estimation Techniques
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Estimation Process
History Base Effort Estimate
Duration Estimate
Calendar Estimate
Project Factors
Other Factors
Resource Factors
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Program Evaluation and Review Technique
PERT te = (to + 4tm + tp)/6 Standard deviation = (tp -‐ to)/6
Estimation for Un-‐certainity
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Risk Management
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“ Good, Fast, Cheap : Pick two”
Managing Project Constraints
Scope Schedule
Resources
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Project assumptions Stakeholder risk tolerance Project planning data Templates and metrics Risk management plan
Inputs for Project Risk Management
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Define scope and identify challenges Set limits based on value of deliverable Decompose work into small pieces Identify work not well understood Assign ownership and look into reason for reluctance
Note risks from expected project duration or complexity
Risk Documentation
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Long duration activities Significant worst case estimation High uncertainity estimation Overly optimistic estimate All critical & near critical path activities Multiple critical paths Convergence points in logical network External dependencies and interfaces
Risk Documentation
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Activities with unknown staffing Un-‐staffed activities Work that is outsourced Contract risks Activities requiring a unique resource Part time and remote team members Impact of work environment Budget exceeding project objectives Over committed staff
Document Resource Risk
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Deadlines further out than the planning horizon
Cross functional and subcontractor work
Risk Documentation
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