OPER 576 Project Management : OPER 576 Project Management Project Risk Management
Greg Magnan, Ph.D.
May 13, 2004
Last Time…Resourcing Plans : Last Time…Resourcing Plans People, Materials, Equipment, Capital
May result in new Critical Path!
Time Constrained vs. Resource Constrained
Time: Imposed Date
Resource: Cannot exceed level of Resource
Resource Constrained
Parallel Method
Project Life Cycle Stages : Project Life Cycle Stages
II. Project Planning : II. Project Planning Risk Management / Protect the Plan
To help ensure that we meet or exceed the project objectives
Spot areas of concern ahead of time (risks)
Brainstorming / Mindmapping
Critical path / Complex tasks / Unreliable resources
Estimate probabilities and impact!
Rank Order
Create contingency plans
B and C
Project Risk Management (PRM) : Project Risk Management (PRM) The more you plan the luckier you get.
A little risk management saves a lot of fan cleaning.
The sooner you get behind schedule, the more time you have to make it up.
Schedule high risk activities earlier (Ron M.)
The first 90% of a project takes 90% of the time the last 10% takes the other 90%
A project gets a year late one day at a time.
Planning without action is futile, action without planning is fatal.
Good control reveals problems early - which only means you'll have longer to worry about them.
PRM: What is it? : PRM: What is it? Risk:
is the possibility of suffering loss.
“An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.” [PMI]
Risk Management is a software engineering practice with processes, methods, and tools for managing risks in a project. It provides a disciplined environment for proactive decision-making to:
assess continuously what can go wrong (risks).
determine what risks are important to deal with.
implement strategies to deal with those risks.
[Software Engineering Institute]
Project Risk Books : Project Risk Books
PRM: What is it? : PRM: What is it? A process whereby decisions are made to accept known or assessed risks and/or the implementation of actions to reduce the consequences or probability of occurrence
Association of Project Management (UK) APMP Syllabus 2nd Edition, January 2000, Abridged Glossary of Project Management Terms (Rev. 4)
The systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives
Guide to the Project Management Body of Knowledge, 2000 Edition, p127
PRM: What is it? : PRM: What is it? Different than “normal” lateness.
Poor Estimating
Risk types & sources
Link to www.risksig.com
Corporate, customer, project mgt., technical, suppliers, environmental, regulatory, business, etc.
Cost, schedule, scope, quality, function
Risk Event: manifestation of the risk
PRM Steps : PRM Steps Identify
Categorize (by source)
Analyze (effect)
Prioritize
Plan/Resolve
Prevention/Mitigation
Avoidance/Transfer
Contingencies
Track and Control
Continuous process Smith and Merritt, 2002
PRM Steps : PRM Steps Identification
Which
Drivers
Analysis
Estimation
Likelihood
Impact
Prioritization Smith, 2003 Click diagram for link to article
Analysis Formula : Analysis Formula Expected Loss (Le) = Pe x Pi x Lt
Pe : probability of event
Pi : probability of impact
Lt : total loss (days or weeks)
Drivers: facts that lead you to believe event or impact could occur
Slide 13 :
Response to Risk (Hillson, 2003) : Response to Risk (Hillson, 2003) Appropriate
Affordable
Actionable (window)
Achievable
Assessed (effective?)
Agreed
Allocated & Accepted