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PMI – Project Risk Management

PMI – Project Risk Management. Sanjeev, Vivek, Manju. Agenda. Risk Management Knowledge Sharing session Introductions and Overview 05 mins – Manju Risk Management Planning 10 mins – Manju Risk Identification 10 mins – Manju Qualitative Risk Analysis 10 mins – Vivek

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PMI – Project Risk Management

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  1. PMI – Project Risk Management Sanjeev, Vivek, Manju

  2. Agenda • Risk Management Knowledge Sharing session • Introductions and Overview 05 mins – Manju • Risk Management Planning 10 mins – Manju • Risk Identification 10 mins – Manju • Qualitative Risk Analysis 10 mins – Vivek • Quantitative Risk Analysis 10 mins – Sanjeev • Risk Response Planning 10 mins – Vivek • Risk Monitoring & Control 10 mins – Manju • Sample Questions 20 mins • Open Discussions 10 mins

  3. Project Risk Management - Overview The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of events adverse to the project. Key Process Areas • Risk Management Planning – deciding how to approach, plan, and execute the risk management activities for a project • Risk Identification – determining which risks might affect the project and documenting their characteristics • Qualitative Risk Analysis– prioritizing risks for subsequent further analysis or action by assessing and combining their probability of occurrence and impact • Quantitative Risk Analysis – numerically analyzing the effect on overall project objectives of identified risks • Risk Response Planning – developing options and actions to enhance opportunities, and to reduce threats to project objectives • Risk Monitoring & Control – tracking identified risks, monitoring residual risks, identifying new risks, executing risk response plan, and evaluating their effectiveness throughout the project life cycle

  4. Risk Management Planning

  5. Risk Management Planning Risk Management Planning : Inputs, Tools & Techniques, and Outputs

  6. Risk Management Planning Objectives • How to approach and conduct Risk Management activities • Prepare Risk Management Plan

  7. Risk Management Planning : Inputs • Enterprise Environmental Factors • Risk Attitudes • Risk Tolerance • Organizational Process Assets • Risk Categories • Common Definition of Concepts and terms • Standard templates • Roles and Responsibilities • Project Scope Statement • Project Management Plan

  8. Risk Management Planning : Tools & Techniques • Planning Meetings and Analysis • Basic plan for conducting Risk Management activities • Risk Cost Elements • Risk Scheduled Activities • Risk responsibilities • Tailoring of Organization templates

  9. Risk Management Planning : Outputs • Risk Management Plan • Methodology • Roles and Responsibilities • Budgeting • Timing • Risk Categories • Definition of risk probability and impact • Probability and impact matrix • Revised stakeholder’s tolerance • Reporting Format • Tracking

  10. Risk Identification

  11. Risk Identification Process

  12. Risk Identification Objectives • Determining Risks that could impact the project • Documenting project risk characteristics

  13. Risk Identification: Inputs • Enterprise Environmental Factors • Published Information • Commercial databases • Academic studies • Benchmarking and other Industry studies • Organizational Process Assets • Historical experiences • Project Scope Statement • Uncertainty in project assumptions • Risk Management Plan • Assignment of roles and responsibilities • Provision for Risk Management activities in Schedule and Budget • Categorizing Risks • Project Management Plan

  14. Risk Identification: Tools & Techniques • Documentation Reviews • Performing structured reviews of Project artifacts • Information Gathering Techniques • Brainstorming • Delphi Technique • Interviewing • Root Cause Identification • SWOT Analysis • Checklist Analysis • Developing Risk identification checklist based on historical precedence's • Assumptions Analysis • Diagramming Techniques • Cause-and-effect diagram • System or process flow charts • Influence diagrams

  15. Risk Identification: Outputs • Risk Register • List of identified risks • List of potential responses to a risk • Root causes of risk • Updated risk categories

  16. Qualitative Risk Analysis

  17. Qualitative Risk Analysis

  18. Qualitative Risk Analysis Objectives • Determining the priority of the identified risks • Ranking the risk by priority • Determining the impact on the project objectives

  19. Qualitative Risk Analysis : Inputs • Organizational Process Assets • Data about risks on past projects • Lessons learned knowledge base • Project Scope Statement • Projects of common or recurring type • Projects using first-of-its-type technology • Risk Management Plan • Roles and responsibilities • Budget, and schedule activities for risk management • Risk Categories • Definition of probability and impact • Probability and impact matrix • Revised stakeholders tolerance • Risk Register

  20. Qualitative Risk Analysis : Tools & Techniques • Risk Probability and Impact Assessment • Risk assessment by interviews • Meetings with participants • Probability and Impact Matrix • Risk ratings • Classification of risks as high, moderate and low • Risk Score Card • Risk data Quality Assessment • Accuracy • Quality • Integrity of data about risk • Risk categorization • By sources of risk • By area of project affected • Risk Urgency Assessment

  21. Qualitative Risk Analysis : Outputs • Risk Register Updates • Relative ranking or priority list of project risks • Risks grouped by categories • List of risks requiring responses in the near term • List of risks for additional analysis and response • Watchlists of low priority risk • Trends in qualitative risk analysis results

  22. Quantitative Risk Analysis

  23. Quantitative Risk Analysis Overview • Performed on the Risks already prioritized by QRA • Assigns the numerical value to the risk. • Various techniques for assigning the numerical values – Monte Carlo Simulation and Decision tree Analysis. Objectives • Quantify the possible outcome of risk and its probability • Identify the realistic and achievable cost, schedule and scope of the project • Determine the management decision – GO or NO-GO

  24. Quantitative Risk Analysis

  25. Quantitative Risk Analysis : Input • Organizational Process Asset • Information on similar risk in other projects, Risk database and study of similar risk by specialist • Project Scope Statement • Initial Risk identification • Risk Management Plan • Roles and Responsibilities, risk categories, revised stakeholders • Risk Register • List of identified risks, Risk ranking and Risk Categorization • Project Management Plan • Project Schedule Mgt Plan • Controls Project schedule • Project Cost Mgt Plan • Controls Project budget

  26. Quantitative Risk Analysis : Tools & Technique • 1. Data Gathering • Interviewing – Info collected for Cost Optimistic (low), Pessimistic (High) and most likely (Medium) • Expert Judgment – SMEs validate the risk and data

  27. Quantitative Risk Analysis : Tools & Technique • 2. Modeling Techniques • Sensitivity Analysis – helps to determine which risks have most impact on project • EMV Analysis – Expected monetary value is a statistical concept and calculates the average outcome of future scenario • EMV = Each possible outcome of risk x probability of occurrence • Decision Tree Analysis – It is a method to determine which of two decisions is the best to make e.g. Buy-verses-Build scenario, Lease-or-purchase equations, and use in-house resources rather than outsourcing.

  28. Quantitative Risk Analysis : Output • Risk Register Updates • Probabilistic analysis of the project • Probability of achieving cost and time objectives • Prioritized list of Risks – • that pose greatest threat or greatest opportunity. • that influence the critical path • That require greatest cost contingency.

  29. Risk Response Planning

  30. Risk Response Planning Risk Response Planning is the process of developing options, and determining actions to enhance opportunities and reduce threats to the project objectives.

  31. Risk Response Planning Objectives • How to approach and conduct Risk Response Planning • Prepare Risk response Plan

  32. Risk Response Planning : Inputs • Risk Management Plan • Some components of the Risk Management Plan that are important inputs to Risk Response Planning may include risk thresholds for low, moderate, and high risks to help understand those risks for which responses are needed, assignment of personnel and scheduling and budgeting for risk response planning. • Risk Register • Important inputs to Risk response planning include the relative rating or priority list of project risks, a list of risks requiring response in the near term, a list of risks for additional analysis and response, trends in qualitative risk analysis results, root causes, risks grouped by categories, and a watchlist of low priority risks.

  33. Risk Response Planning : Tools & Techniques • Strategies for Negative Risks or Threats • Avoid • Transfer • Mitigate • Strategies for Positive Risks or Opportunities • Exploit • Share • Enhance • Strategy for both Threats and Opportunities • Acceptance • Strategies for Negative Risks or Threats • Contingent Response Strategy

  34. Risk Response Planning : Outputs • Risk Register (Updates) • Identified Risks, their descriptions, area of project affected, their causes, and how they may affect project objectives. • Risk owners and assigned responsibilities • Prioritized lists of project risks and probabilistic analysis of the project • Agreed upon response strategies • Specific actions to implement the chosen response strategy • Symptoms and warning signs of risks occurrence • Budget and Schedule activities required to implement the chosen responses • Contingencies reserves of time and cost designed to provide for stakeholders risk tolerances • Contingency plans and triggers that call for their execution • Fallback plans for use as a reaction to a risk that has occurred, and the primary response proves to be inadequate • Residual risks that are expected to remain after planned responses have been taken, as well as those that have been deliberately accepted. • Secondary risks that arise as a direct outcome of implementing a risk response.

  35. Risk Response Planning : Outputs • Contingency reserves that are calculated based on the quantitative analysis of the project and the organisations risks thresholds. • Project Management Plan (Updates) • Risk response strategies, once agreed to, must be fed back in to the appropriate processes in other knowledge areas, including the project’s budget and schedule. • Risk-Related contractual Agreements • Contractual agreements, such as agreements for insurance, services, and other items as appropriate, can be prepared to specify each party’s responsibility for specific risks, should they occur.

  36. Risk Monitoring & Control

  37. Risk Monitoring & Control Process

  38. Risk Monitoring & Control Objectives • Identify, analyze and plan for newly arising Risks • Keeping track of the identified risks • Reanalyzing existing risk • Monitoring trigger conditions • Reviewing the execution of risk responses • Determine the project assumptions if they are still valid • Determine if Risk, as assessed, has changed from its prior state, with analysis of trends • Determine risk management policies and procedures are being followed • Determine whether Contingency reserves of cost or schedule are modified in line with the risk of the project

  39. Risk Monitoring & Control : Inputs • Risk Management Plan • Risk Owners • Agreed upon risk Responses • Specific implementation actions • Residual and secondary risk • Low priority risk • Time and cost contingency reserves • Risk Register • Approved Change Requests • Impact on risk register • Impact on risk response plan • Impact on risk management plan

  40. Risk Monitoring & Control : Inputs • Work Performance Information • Project deliverables status • Corrective actions • Performance reports • Performance Report • Project work performance

  41. Risk Monitoring & Control : Tools & Techniques • Risk Reassessment • Identification of new Risk • Reassessment of the risk • Risk audits • Document the effectiveness of risk response • Document the effectiveness of risk management process • Performance reports • Variance and Trend Analysis • Earned Value Analysis • Trend analysis • Reserve Analysis • Technical Performance Measurement • Status Meetings

  42. Risk Monitoring & Control : Outputs • Risk Register Updates • Outcomes of Risk reassessment, Risk Audits and Risk Reviews • Outcome of Project’s risk, and of risk responses • Requested Changes • Recommended Corrective Actions • Contingency Plan • Workaround Plans • Recommended Preventive Actions • Organizational Process Assets Updates • Project Management Plan Updates

  43. Thank you

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