PRM 702Project Risk Management

Lecture #28

PMI’s Project Risk Management Processes

II of II

Ghazala Amin

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• Risk management planning is the process of deciding how to approach and plan the risk management activities for a project.

• The process of developing and documenting an organized, comprehensive and interactive strategy and methods – for identifying and analyzing risks, – developing risk response plans, – and monitoring and controlling how risks have changed.

Plan Risk Management

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Plan Risk Management

• Inputs– Project scope statement– Cost management plan– Schedule management plan– Communications management plan– Enterprise environmental factors– Organizational process assets

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Plan Risk Management• Tools & techniques

– Planning meetings and analysis

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Plan Risk Management• Outputs

– Risk management plan

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Risk Identification• Involves determining which risks might affect the

project and documenting their characteristics.

• The process of examining – the program areas and each critical technical process – to identify and – document the associated risk.

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Risk Identification• Inputs

– Risk management plan– Activity cost estimates– Activity duration estimates– Scope baselines– Stake holder baseline– Cost management plan– Schedule management plan– Quality management plan– Project planning documents– Enterprise environmental factors– Organizational process assets

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Risk Identification• Tools & techniques

– Documentation reviews– Information gathering techniques– Checklists analysis– Assumption analysis– Diagramming techniques– Expert judgment– SWOT Analysis

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Risk Identification• Outputs

– Risks register

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Plan Risk Analysis• The process of examining each identified risk

to– Estimate the probability– And predict the impact on the project.

• It includes:– Qualitative Risk Analysis– Quantitative Risk Analysis

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Qualitative Risk Analysis• The process of assessing the impact and

likelihood of identified risks• Risk analysis includes

– Evaluating• Probability that a risk would occur• Impact of the risk if it occurs• Time frame in which it might occur• Frequency of risk occurrence

– Prioritizing• Prioritize to ensure right amount of

management attention

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Qualitative Risk Analysis• Inputs

– Risk register– Risk management plan– Project scope statement– Organizational process assets

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Qualitative Risk Analysis• Tools & Techniques

– Risk probability and impact– Probability and impact matrix– Risk data quality assessment– Risk categorization– Risk urgency assessment– Expert judgment

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Qualitative Risk Analysis• Outputs

– Risk register updates

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Risk Rating System• High

– Likely to cause significant disruption to schedule, increase in cost or degradation of performance

• Moderate– Has potential to cause some disruption as above, will probably overcome

difficulties

• Low– Has little potential to cause disruption to schedule, cost or degradation of

performance

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Quantitative Risk Analysis• Aims to analyze numerically the probability of

each risk and its consequence on project objectives

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Quantitative Risk Analysis

• Inputs– Risk management plan– Risk register– Cost management plan– Schedule management plan– Organizational process assets

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Quantitative Risk Analysis• Tools and Techniques

– Data gathering and representation techniques– Quantitative risk analysis and modeling techniques– Expert judgment

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Quantitative Risk Analysis• Outputs

– Risk register updates

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Risk Response Planning• Process of developing options and determining actions to

enhance opportunities and reduce threats to the project’s objectives

• The process that:– identifies, evaluates, selects and implements – one or more strategies,– in order to set risk at acceptable levels given program

constraints and objectives.

• This includes the specifics on – What should be done– When it should be accomplished– Who is responsible – And associated cost and schedule.

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Risk Response Planning• Risk response options include:

– Acceptance– Avoidance– Mitigation– Transfer

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Risk Response Planning• Opportunity response options include:

– Acceptance– Enhance– Exploit– Share

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Risk Response Planning• Inputs

– Risk management plan– Risk register

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Risk Response Planning

• Tools & Techniques– Strategies for negative risks or threats– Strategies for positive risks or opportunities– Contingent response strategies– Expert judgment

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Risk Response Planning• Outputs

– Risk register updates– Risk related contract decisions– Project management plan updates– Project document updates

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Reserves

• Contingency Reserve– A separately planned quantity used to allow for

future situations which may be planned for only in part

– Also known as “known unknowns”– May involve cost, schedule or both

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Reserves

• Management Reserve– A separately planned quantity used to allow for

future situations which are impossible to predict– Also known as “unknown unknowns”– May involve cost, schedule or both

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Insurance Strategies

• Direct Property Damage

• Indirect Consequential Loss

• Legal Liability

• Personnel

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Risk Monitoring and Control• Inputs

– Risk register– Project management plan– Work performance information– Performance reports

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Risk Monitoring and Control• Tools & Techniques

– Risk reassessment– Risk audits– Variance and trend analysis– Reserve analysis– Technical performance measurement– Status meetings

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Risk Monitoring and Control• Outputs

– Risk register updates– Organizational process assets updates– Change requests– Project management plan updates– Project document updates