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RISK AND UNCERTAINTY IN PROJECT MANAGEMENT

. That is, the probability that the expected result will not be achieved. From conception or identification to implementation, risks issues arise and do affect the project in a number of ways. risks may be due to environmental or managerial factors . Types of Risk. Completion RisksPermitting Risk

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RISK AND UNCERTAINTY IN PROJECT MANAGEMENT

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    1. RISK AND UNCERTAINTY IN PROJECT MANAGEMENT

    2. That is, the probability that the expected result will not be achieved. From conception or identification to implementation, risks issues arise and do affect the project in a number of ways. risks may be due to environmental or managerial factors

    3. Types of Risk Completion Risks Permitting Risks Price Risks Resource Risks Operating Risks Casualty Risks Technology Risks

    4. Classification of risks Measurable Risks Immeasurable Risks Manageable Risks Insurable Risks Investment Risks

    5. Risk Management Plan Risk Identification Risks Quantification Risk Response Risk Monitoring and Control

    6. Risk Identification Risk identification determines what might happen that could affect the objectives of the project, and how those things might happen. identification process must be comprehensive

    7. The process should be structured using the key elements to examine risks systematically, in each area of the project to be addressed Techniques brainstorming

    8. Info for Risk Identification Historical Data, Theoretical Analysis, Empirical Data And Analysis, Informed Opinions Of The Project Team And Other Experts, And The Concerns Of Stakeholders To identify and name the risks

    9. Risk Quantification Risk need to be quantified in two dimensions

    12. The Range The Standard Deviation

    17. Sensitivity Analysis scenario analysis or simulation analysis examination of possible cash flows and returns on an investment when one uncertain element is altered "what if?" analysis Sensitivity analysis illustrates the effects of changes in assumptions

    18. Sensitivity Analysis can be used to get an idea of a project's possible future cash flows and their risk.

    19. Sales Cost of goods sold and gross profit Operating expenses Interest rates Accounts receivable days Inventory days Accounts payable days on hand Major fixed asset purchases or reductions Acquisitions or closings

    20. Risk Response Strategies Avoid the risk. Do something to remove it. Use another supplier for example. Transfer the risk. Make someone else responsible. Perhaps a supplier can be made responsible for a particularly risky part of the project.

    21. Mitigate the risk. Take actions to lessen the impact or chance of the risk occurring. If the risk relates to availability of resources, draw up an agreement and get sign-off for the resource to be available. Accept the risk. The risk might be so small the effort to do anything is not worth while.

    22. A risk response plan Strategy action items to address the strategy. what needs to be done, who is doing it, when it should be completed.

    23. Risk Control continually monitor risks to identify any change in the status, or if they turn into an issue. best to hold regular risk reviews to : identify actions outstanding, identify risk probability and impact, remove risks that have passed, new risks.

    24. Incorporating Risk into Discount Rate The discount rate itself has an element of risk To take account of additional risk; increase the discount rate Refer to theories guiding choice of discount rate

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