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11/8/2009

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P j t Ri kProject RiskManagement

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Hossein Avazkhah PMP, EMBA ,BScAryana Project Management Institute

مهندس حسين عوض خواه[email protected]

Gant.persianblog.ir

آمريكا PMIاز موسسه PMPداراي مدرك مديريت پروژه حرفه اي ايراندانشگاه علم و صنعت EMBAفوق ليسانس مديريت اجرايي

مهندسي صنايع دانشگاه علم و صنعت ايرانبرگزاري بيش از هشتاد دوره آموزشي مديريت پروژه در دانشگاه و بخش صنعت

PMIعضو موسسه مديريت پروژه اياالت متحده عضو انجمن مديريت پروژه ايران

Project Risk Mng (PMBOK Guide Project Risk Mng (PMBOK Guide 20042004) ) Hossein Avazkhah Hossein Avazkhah PMP, EMBAPMP, EMBA

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مدير برنامه ريزي و كنترل پروژه گروه خودروسازي صنعت پارس ريزي و كنترل پروژه پروژه شهر آفتاب شركت كيش اليت سرپرست برنامه

در ايران P3,P3eترجمه و تاليف اولين كتابهاي مديريت پروژه بر مبناي در شركت سپاسد OPM3و PMOمشاور پياده سازي

شركت جهان پارس 2مدير برنامه ريزي و كنترل پروژه پااليشگاه گاز بيد بلند

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Contents

Preface to PM & Risk Risk Management in PMBOK?

Risk planningRisk identificationQualitative risk analysisQualitative risk analysis


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Qualitative risk analysisRisk Response Risk control

Discussion

Project

Risk Management

Project

Risk Management

“If you don’t actively attack risks, they will attack you.”“If you don’t actively attack risks, they will attack you.”

“52.7% of projects will cost 189% of their original estimates”

Risk ManagementRisk Management


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Introduction

Risk – An uncertain event or condition that, if it occurs, , ,has a positive or negative impact on a project objective, such as time, cost, scope or quality.

ComponentsRisk eventRisk probability


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Risk probabilityRisk outcome or consequence (Impact)Risk event status –Risk Exposure (Probability x Impact)

What’s the Differences between..

RiskRiskRisk managementProject risk managementManagement riskProject Management risk


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Project Management risk

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Always refers to the future

Some Basics about Risks

Normally refers to the untoward

Start Risk Management at the beginning of the projectReview risks throughout the project (e.g. weekly, monthly)Update and project schedules, budget, staffing etc. as risk management plans are changed


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Risk management is an ongoing process

Risk Types

Known RisksKnown RisksCan be Identified, Analysed and Plan

for them

Known unknownsContingencies reserve


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Unknown UnknownsManagement reserve

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Project Risk Management

Processes for identifying, analyzing, and responding to project risk.

• It includes maximizing the probability and the results of positive events (opportunities)


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• and minimizing the probability and consequences of adverse events (risks).

Some Project Risk Management Models

SHAMPUALARMPRMAPRAMG Smith


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G.SmithLeachPritchard

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Some Project Risk Management Models continue…

WidemanWidemanBoehmFairleyمدل موسسه مهندسی نرم افزارLudin & Kilem


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Ludin & KilemPMBOK

The PMBOK Process and Risk management


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1-Risk Management Planning

Deciding how to approach and plan the risk management activities forthe risk management activities for a project

Risk Management Planning process should be completed early during project planning .


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No Risk Plan!!!


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Risk Management Planning

Tools & TechniquesPlanning Meetings and Analysis

Outputs Risk Management Plan

InputsEnterprise Environmental FactorsO i ti l P

Planning Meetings and Analysis


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Risk Management PlanOrganizational Process AssetsProject Scope StatementProject Management Plan

1.1 InputsEnterprise Environmental Factors - The attitudes toward risk and the risk tolerance of organizations and people involved in the project will influence the project p p p j p jmanagement plan. Organizational Process Assets- Organizations may have predefined approaches to risk management such as risk categories, common definition of concepts and terms, standard templates, roles and responsibilities, and authority levels for decision-making.


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y gProject Scope StatementProject Management Plan

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1.2 Tools & TechniquesPlanning Meetings and Analysis-

To develop the risk management planTo develop the risk management plan

Attendees include project manager, project team


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leaders, key stakeholders – anyone responsible for planning and executing activities

1.3 OutputsRisk Management Plan

Methodology-Approaches, tools, and data sources for risk managementRoles and responsibilities-The lead, support and risk management team membership for each type of activity, assigns people to these roles, and their responsibilities.Budgeting Assigns resources and estimates costs needed for risk managementBudgeting. Assigns resources and estimates costs needed for risk managementTiming- When and how often the risk management process will be performed throughout the project life cycle, and establishes risk management activities Risk categories- The structure that ensures a process of systematically identifying risk to the level of detail and contributes to the effectiveness of Risk IdentificationDefinitions of risk probability and impact-General definitions of probability levels and impact levels are tailored to the individual projectProbability and impact matrix Risks are prioritized according to their potential


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Probability and impact matrix. Risks are prioritized according to their potential implications for meeting the project’s objectivesRevised stakeholders’ tolerances. Stakeholders’ tolerances may be revised in the Risk Management Planning process, as they apply to the specific project.Reporting formats. Describes the content and format of the risk registerTracking. Documents how all facets of risk activities will be recorded for the benefit of the current project, future needs, and lessons learned

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Roles And Responsibility (sample)

ها و مسئوليت تهيه، تدوين، تصويب و بازنگري فرم:معاونت طرح و برنامه شركت . دستورالعمل مديريت ريسك پروژه را بر عهده دارددر واقع مدير ريسك هم خواهد بود، : سرپرست كارگاه در شركت /مدير پروژه

هاي پروژه خود و ارايه گزارش اوليه مديريت ريسك مسئوليت مديريت صحيح ريسك ري يح يري ي ريو يري ي و رش ز ي ر و و پروژ ي. به مدير عامل، را طبق اين دستورالعمل بر عهده دارد

بر فرآيند شناسايي، تحليل، نظارتوظيفه : مدير برنامه ريزي و كنترل پروژه شركتهاي هر پروژه و تهيه گزارش هاي دوره اي و نهايي مديريت واكنش و كنترل ريسك

.ريسك پروژه ها را ، تحت نظارت مدير ريسك برعهده دارد: تيم مديريت ريسك شركت

(هاي خاص مرتبط با پروژه جهت ثبت در فرم شناسايي ريسك پروژه شناسايي و بررسي ريسكو خسارت هر ريسك عتعيين احتمال وقو

تعيين راه حلها و واكنش هاي مقتضي به هر ريسكو بررسي اقدامات صورت گرفته توسط صاحبان ريسك )Risk owner(تعيين صاحبان ريسك


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ري ن ب ري)(يين ن ب و ر ور ي برر وپروژه

.سرپرست كارگاه برعهده دارد/مسؤليت انتخاب تيم و تشكيل جلسات آن را مدير پروژه :عضو اصلي شامل 5اعضاي موظف تيم متشكل از

سرپرست كارگاه /مدير پروژه/معاون فني اجرايي شركت مدير برنامه ريزي و كنترل پروژه

مدير دفتر فني كارگاه مسؤل قراردادها

Risk Breakdown Structure (RBS)


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Risk Breakdown StructureTotal Risk

P liti l M f tC t t l M tE i Political ManufactureContractual ManagementEconomic

Energy

Financial

Inflation

Delay

Change

Payment Environ-mental

Disorder

GovernmentActs

Labour

Equipment

Productivity

Quality

SafetyCapitalEquip. Costs


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Etc. Etc.

Etc.Material

Etc.

Mistakes

Etc.

Cash Flow SalesProjections

DevelopmentCosts

Profit / Loss

q p

FabricationCostsSchedule

Definition of Impact Scales for Four Project Objectives:


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Sample :definition of Probability

)P b bilit( )Probability(احتماالت)مطمئن و قريب الوقوع% (70احتمال بزرگتر مساوي : احتمال خيلي باال

تقريبا (درصد باشد 70تا 50در صورتي كه احتمال وقوع ريسك بين : احتمال باال)مطمئن

)مشكوك(باشد 50تا 30در صورتي كه احتمال وقوع ريسك بين : احتمال ميانيتقريبا (درصد باشد 30تا 10در صورتي كه احتمال وقوع ريسك بين : احتمال كم)نامطمئن


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ن.باشد% 10در صورتي كه احتمال وقوع ريسك كمتر از : احتمال خيلي كم

Sample :definition of impact

(impact)ها اثر و آسيب:بعد زماني و هزينه اي مورد بررسي قرار مي گيرند2اثرات يا آسيب ها در

S h d l I tSchedule Impact.درصد باشد 20زماني كه تاثير زماني بيشتر از : تاثير خيلي باال

.در صد پيش بيني شود 20الي 7در صورتي كه تاخير در زمان بين : تاثير باال.در صد پيش بيني شود 7الي 2.5در صورتي كه تاخير در زمان بين : تاثير متوسط

.در صد كل زمان پروژه باشد 2.5الي 1در صورتي كه تاخير در زمان بين: تاثير كم.درصد كل زمان پروژه باشد 1زماني كه تاثير زماني كمتر از : تاثير خيلي پايين

Cost Impact :.در صد بودجه كل پروژه باشد2زماني كه تاثير هزينه اي بيشتر از:تاثير خيلي باال


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ب ي ي زير ر بي ي هزي ير ي ب2ز پروژ ل ج بو ر.درصد بودجه پروژه باشد 2الي 0.4در صورتي كه تاثير هزينه اي بين : تاثير باال

.درصد بودجه پروژه باشد 0.4الي 0.2در صورتي كه تاثير هزينه اي بين : تاثير متوسط.درصد بودجه پروژه باشد 0.2الي 0.05در صورتي كه تاثير هزينه اي بين : تاثير كم

.درصد بودجه پروژه باشد 0.05در صورتي كه تاثير هزينه اي كمتر از : تاثير خيلي پايين

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Probability and Impact Matrix

Weight 0 5 1 2 4 8Weight 0.5 1 2 4 8Impact

VL L M H VHprobability

9 VH 5 9 18 36 72

7 H 4 7 14 28 56


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7 H 4 7 14 28 56

5 M 3 5 10 20 40

3 L 2 3 6 12 24

1 VL 1 1 2 4 8

Case study for a Risk management PlanCase study for a Risk management Plan

Workshop 1Define a Risk management Plan for your project


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2-Risk Identification

Determining which risks Might affect the projectDetermining which risks Might affect the project

Internal risks – Things that the project team can control or influence

hi b d h

Determining which risks Might affect the project and documenting their characteristics

Determining which risks Might affect the project and documenting their characteristics


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External risks – Things beyond the control or influence of the project team

2-Risk IdentificationTools & Techniques • Documentation Reviews

Inputs

• Information Gathering Techniques• Checklist Analysis• Assumptions Analysis• Diagramming Techniques


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Outputs • Risk Register

p• Risk Management Plan• Enterprise Environmental Factors• Organizational Process Assets• Project Management Plan

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2.1 InputsEnterprise Environmental Factors- Published information including commercial databases, academic studies,benchmarking or other industry studiesOrganizational Process Assets-Information on prior projects g p p jmay be available from previous project files,including actual dataand lessons learnedProject Scope Statement-Project assumptions in the project scope statement Uncertainty in assumptions should be evaluated as potential causes of risksRisk Management Plan- Assignments of roles and responsibilities, provision of budget and schedule for the risk, and categories of risk in an RBS can be found in Risk Management


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g gPlanProject Management Plan-Understanding of the schedule, cost, and quality management plans found in the project management plan . Outputs of other Knowledge Area processes should be reviewed to identify possible risks across the entire project

2.2 Tools & Techniques

Documentation Reviews

Information-gathering techniques

Brainstorming

Delphi technique

Interviewing


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Interviewing

Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis

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2.2 Tools & Techniques continue….

Checklists analysis– Organized by source of riskAssumptions Analysis – technique that examines the validity of assumptions to identify risks to project because of invalid assumptions

Diagramming techniques –Cause and effect diagrams used to identify causes of risksSystem or process flow charts that show how various


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System or process flow charts that show how various elements of a system interrelate and the causes of risksInfluence diagrams the graphically represent a problem showing causal influences, time ordering events and other relationships among variables and outputs

Brainstorming

Gather the participants from as wide a range of disciplines with as broad a range of experience as possible.W it d b i f d i ti f th bl th l d h ld t kWrite down a brief description of the problem - the leader should take

control of the session, initially defining the problem to be solved with any criteria that must be met, and then keeping the session on course.Use the description to get everyone's mind clear of what the problem is and post it where it can be seen.Do NOT interpret the idea, however you may rework the wording for clarity's sake.Do NOT evaluate ideas until the session moves to the evaluation phase. Do NOT censor any solution, no matter how silly it sounds. possibilities as possible and break down preconceptions about the limits of


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possibilities as possible, and break down preconceptions about the limits of the problem.The leader should keep the brainstorming on subject, and should try to steer it towards the development of some practical solutions.Once all the solutions have been written down, evaluate the list to determine the best action to correct the problem

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Delphi Decision Making

In Delphi decision groups, a series of questionnaires are sent to selected respondents (Delphi group).

f fThe group does not meet face-to-face. All communication is normally in writing (normally letters or email).Members of the groups are selected because the are experts or they have relevant information. Steps include:Members are asked to share their assessment and explanation of a problem or predict a future state of affairs Replies are gathered, summarized, and then fed back to all the group


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g , , g pmembers. Members then make another decision based upon the new information.The process may be repeated until the the responses converge satisfactory.

SWOT Analysis


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How can we Use each Strength? How can we Stop each Weakness? How can we Exploit each Opportunity? How can we Defend against each Threat?

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Strengths and weaknessesResources: financial, intellectual, location Cost advantages from proprietary know-how and/or location Creativity (ability to develop new products)

Examples of SWOTs

Creativity (ability to develop new products) Valuable intangible assets: intellectual capital Competitive capabilities Effective recruitment of talented individuals

Opportunities and threatsExpansion or down-sizing of competitors......LPK Market trends Economic conditions Expectations of stakeholders


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Expectations of stakeholders Technology Public expectations All other activities or inactivities by competitors Criticisms by outsiders Changes in markets

All other environmental condition

Risk check listCATEGORY رديف شرح ريسك كد ريسك

ريسكهاي كنترل

1 عدم يكپارچگي كافي بين كنترل حوزه هاي مختلف پروژه از زمان هزينه و ... EC01

2 تأخير در ارايه گزارشات كنترلي و شناخت نقاط اصالحي EC02

3 عدم هماهنگي بين نظارت و اجرا EC03

4 وجود سطوح كنترلي متفاوت EC04خاتمه پروژه

ريسكهاي خاتمه پروژه

1 عدم تكميل كار به علت مشكالت قانوني RL01

2 مشكالت ناشي از برچيدن كارگاه RL02

3 مشكالت ناشي از تسويه حساب با كارگران قراردادي RL03

4 محيط اطراف -جاده ارتباطي(مشكالت ناشي از آماده نبودن امكانات دسترسي به پروژه و ...) RL04

1 برف و يخبندان و’ بارندگي شديد ’طوفان ’ زلزله ’ سيل : بالياي طبيعي و عوامل جوي ... RE01

2از كارافتادگي سيستمها و تجهيزات ، خرابي ، -آتش سوزي : حوادث و اتفاقات ....خرابكاري و RE02


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ساير عوامل خارجي

3 تحريم و -بمباران -حمله نظامي (تغيير فاكتورهاي سياسي ...) RE03

4 و - سن -ازدواج -طيف جمعيتي (تغيير فاكتورهاي اجتماعي ...) RE04

5گرايش به خانه هاي لوكس و مجلل يا وياليي و يا ( تغيير فاكتورهاي فرهنگي مذهبي

(آپارتمان نشيني RE05

6 توريست و - افزايش يا كاهش مهاجرت ( تغيير عوامل موثر بين المللي ...) RE06

7عدم ساخت -قوانين فروش مسكن متري - وام براي انبوه سازان( قوانين و مقررات

ساز در مناطق خاص ...) RE07

8 وضعيت نامناسب در بازار محصول RE08

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Cause & Effect Diagram

Processes Equipements

Results


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Systems Human Resources

System or process y pflow charts


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2.3 Outputs

Risk Registers eg s eList of identified risks.List of potential responses.Root causes of risk.Updated risk categories


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3-Qualitative Risk Analysis

Th f i th i t dThe process of assessing the impacts and likelihood of identified risks.

Qualitative risk analysis requires that the probability and consequences of the risks be evaluated using established qualitative analysis method and tools


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established qualitative-analysis method and tools

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Tools & Techniques • Risk Probability and Impact

Assessment

3 .Qualitative Risk Analysis

Assessment• Probability and Impact Matrix• Risk Data Quality Assessment• Risk Categorization• Risk Urgency Assessment


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Outputs • Risk Register (Updates)

Inputs• Organizational Process Assets• Project Scope Statement• Risk Management Plan• Risk Register

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3.1 InputsOrganizational Process Assets- Data about risks on past projects and the lessons learned knowledge base can be used in the Qualitative Risk AnalysisProject Scope Statement Projects of a common or recurrent type tendProject Scope Statement- Projects of a common or recurrent type tend to have more well-understood risks. Projects using state-of-the-art or first-of-its-kind technology, and highly complex projects, tend to have more uncertainty. This can be evaluated by examining the project scope statementRisk Management Plan- Roles and responsibilities for conducting risk management, budgets and schedule activities for risk management, risk categories, definition of probability and impact, the probability and


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categories, definition of probability and impact, the probability and impact matrix, and revised stakeholders’ risk tolerances These inputs are usually tailored to the project during the Risk Management Planning process. Risk Register-A key item from the risk register for Qualitative Risk Analysis is the list of identified risks


Risk Probability and Impact AssessmentRisk probability - is the likelihood that a risk will occurRisk probability is the likelihood that a risk will occurRisk Impact – is the effect on project objectives if the risk event occurs

Probability/Impact Risk Rating Matrix –Risk Probability Scale falls between 0.0 (no probability)


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y ( p y)and 1.0 certainty)

Ordinal scale – ranked-order scale, such as very low, low, moderate, high, and very highCardinal scale – assign values to these impacts. These values are usually linear (.1/ .3/ .5/ .7/ .9) or nonlinear (.05/ .1/ .2/ .4/ .8/)

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Risk Data Quality AssessmentIt involves examining the degree to which the risk is understood

3.2 Tools & Techniques continue…

It involves examining the degree to which the risk is understoodand the accuracy, quality, reliability, and integrity of the data about the risk.Risk categorization

Risks to the project can be categorized by sources of risk (e.g., using the RBS), the area of the project affected (e.g., using the WBS), or other useful category (e.g.,project phase)


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Risk Urgency AssessmentRisks requiring near-term responsesmay be considered more urgent to address.

R * I Matrix

Weight 0.5 1 2 4 8Effect

VL L M H VHprobability

9 VH 5 9 18 36 72

7 H 4 7 14 28 56


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7 H 4 7 14 28 56

5 M 3 5 10 20 40

3 L 2 3 6 12 24

1 VL 1 1 2 4 8

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Risk Probability and Impact Assessment

ردش كش ل تأثيراحتمال ا

ک يف

لعامل ريسكشرح پيش بينيوقوع

يردرجه ريسکريسك

و WBSعدم تشخيص جامع 1هاي پروژه فعاليت

هاي مهندسي و عدم وجود نقشه428زياد 7باال عدم وضوع محدوده كار

2برآورد نادرست زمان و

هزينه و منابع در تطابق WBSبا

برآورد صحيح، عدم وجود مترهتغيير دائمي محدودة كار،

تورم، تغيير سياستهاي اجرائي

1۳كم 3پايين

د ائ ا ا ت ا د تغ


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بندي تغيير در برنامه زمان3

تغيير در سياستهاي اجرائي و عدمهاي مهندسي در وجود نقشه

ابتداي كار، عدم تطابق اي معماري، الكتريكال و نقشه

مكانيكال

خيلي زياد 436زياد9

۴كاهش انگيزه پرسنل

قراردادي كارگاهي و ترك كار توسط ايشان

عدم اختيارات مديريت پيمان درتميز بين كاركرد خوب و

بد 24 8خيلي زياد3پايين



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ImpactHigh


Risk


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Probability

Low Risk


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Risk matrixTigers

High Probability, High Impact. These are dangerous animals and must be neutralised as soon as possible.

Alligators Low Probability, High Impact. These are dangerous animalsLow Probability, High Impact. These are dangerous animals which can be avoided with care.

Puppies High Probability, Low Impact. We all know that delightful pup will grow into an animal which can do damage, but a little training will ensure that not too much trouble ensures.

Kittens Low Probability, Low Impact. The largest cat is rarely the source of trouble, but on the other hand a lot of effort can b t d t i i it!


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be wasted on training it! List each of your identified Risks, decide on the probability occurrence of each, and define the expected impact on schedule, budget, and ability to meet the users' requirements

3.3 OutputsRisk Register (Updates)

Relative ranking or priority list of project risksThe probability and impact matrix can be used to classify risks

according to their individual significance.

Risks grouped by categories. Risk categorization can reveal common root causes of risk or project areas requiring particular attention. Discovering concentrations of risk may improve the effectiveness of risk responses.


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List of risks requiring response in the near-term. Those risks that require an urgent response and those that can be handled at a later date may be put into different groups.

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3.3 Outputs continue...

List of risks for additional analysis and response. Some risks might warrant more analysis including Quantitative RiskSome risks might warrant more analysis, including Quantitative Risk

Analysis, as well as response action.

Watchlist of low priority risks.Risks that are not assessed as important in the Qualitative Risk Analysis

process can be placed on a watchlist for continued monitoring.

Trends in qualitative risk analysis results.


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q yAs the analysis is repeated, a trend for particular risks may become

apparent, and can make risk response or further analysis more or less urgent/important.

4-Quantitative Risk Analysis

Measuring numerically the probability and consequences of risks and estimating

Measuring numerically the probability and consequences of risks and estimating

Determine probability of achieving a specific project objectiveQuantify the risk exposure for the project, and determine the size of cost and schedule contingency reserves that may be needed

consequences of risks and estimating their implication for project objectivesconsequences of risks and estimating their implication for project objectives


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of cost and schedule contingency reserves that may be neededIdentify risks requiring the most attention by quantifying their relative contribution to project riskIdentify achievable and realistic cost, schedule, or scope targets

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Quantitative Risk AnalysisTools & Techniques• Data Gathering and

Outputs • Risk Register (Updates)Inputs

• Organizational Process Assets

• Data Gathering and Representation Techniques

• Quantitative Risk Analysis and Modeling Techniques


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g• Project Scope Statement• Risk Management Plan• Risk Register• Project Management Plan

4.1 Inputs

Organizational Process Assets- Information on prior, similar completed projects, studies of similar projects by risk specialists, and risk databases that may be available from industry or proprietary sourcesindustry or proprietary sources.Project Scope StatementRisk Management Plan- Roles and responsibilities for conducting risk management, budgets and schedule activities for risk management, risk categories, the RBS, and revised stakeholders’ risk tolerances all are in Risk Management PlanRisk Register- The list of identified risks, the relative ranking or priority list of project risks, and the risks grouped by categories


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by categoriesProject Management Plan-The project management plan includes:

• Project schedule management plan • Project cost management plan

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1- Data Gathering and Representation Techniques

Interviewing Interviewing techniques are used to quantify the probability and impact of

risks on project objectives. The information needed depends upon the type of robability distributions that will be used.

Probability distributions.Continuous probability distributions represent the uncertainty in values, such

d ti f h d l ti iti d t f j t t


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as durations of schedule activities and costs of project components.

Expert judgment.Subject matter experts internal or external to the organization, such

as engineering or statistical experts, validate data and techniques.

Commonly Used Probability Distributions


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4.2 Tools & Techniques (continue…)

2- Quantitative Risk Analysis and Modeling Techniques•Sensitivity analysis. Sensitivity analysis helps to determine which risks have the most potential impact on the project.most potential impact on the project.

• Expected monetary value analysis. Expected monetary value (EMV) analysis is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen (i.e., analysis under uncertainty).

• Decision tree analysis. Decision tree analysis is usually structured using a decision tree diagram that describes a situation under consideration, and the implications of

h f h il bl h i d ibl i


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each of the available choices and possible scenarios.

•Modeling and simulation. A project simulation uses a model that translates the uncertainties specified at a detailed level of the project into their potential impact on project objectives. Simulations are typically performed using the Monte Carlo technique.

Sensitivity analysis (Tornado diagram)


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Decision Tree Diagram


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Decision Tree Analysis

Decision Definition Chance Node Net ImpactProbability Impact Cost + Total EV

Early

Decision NodeCost of the Decision

Prob x Impact

$1 500Early10% +$15,000

Develop In House On Time ($32,500)($20,000) 20% $0

Delayed70% -$20,000

Develop In House or TOTAL ($12,500)Contract?

Early $1,500

$0

($14,000)

$1,500


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Early $1,50010% +$15,000

Contract On Time $0 ($31,500)($30,000) 70% $0

Delayed ($3,000)20% -$15000

TOTAL ($1,500)

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Simulation – Uses a model or copy of a system to analyze the behavior or performance of the system

Quantitative Risk Analysis and Modeling Techniquescontinue…

analyze the behavior or performance of the system

Monte Carlo– “Perform” project many times to provide a statistical

distribution of calculated results– Uses results to quantify the risk of various schedule


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alternatives, different project strategies, different paths through the network, and individual activities

– Can be used to assess the range of possible cost options

A Monte Carlo method is a technique that involves using random numbers and probability to solve problems.

Monte Carlo simulation needs three estimates (most likely, pessimistic, and optimistic) plus an estimate of the likelihood of the estimate being between the optimistic and most likely values


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Sample Monte Carlo Simulations Results for Project Costs


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Sample Monte Carlo Simulations Results for Project schedule


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Sample Monte Carlo Simulations Results for Project duration


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Risk Quantification (mapping to tasks)


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Scatter plot


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Probabilistic cash flow


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4.3 Outputs

Probabilistic Analysis of the Project – forecasts potential project h d l d t lt li ti th ibl l ti d t

Risk Register (Updates)

schedule and cost results, listing the possible completion dates or project duration and costs with their associated confidence levels

Probability of Achieving Cost and Time Objectives - under the current project plan and with the current knowledge of the risks facing the project

Prioritized List of Quantified Risks – risks that pose greatest threat or present the greatest opport nit to the project together ith a meas re


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present the greatest opportunity to the project together with a measure of their impact

Trends in Quantitative Risk Analysis Results – as analysis is repeated, a trend of results may become apparent

5-Risk Response Planning

Process of developing options and determining actions toProcess of developing options and determining actions toProcess of developing options and determining actions to enhance opportunities and reduce threats to the project’s objectives

Process of developing options and determining actions to enhance opportunities and reduce threats to the project’s objectives

Risk response planning must be appropriate to the severity of the risk cost effective in meeting the challenge timely to be successful


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risk,cost effective in meeting the challenge, timely to be successful, realistic within the project context, agreed upon by all parties involved, and owned by a responsive person

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Risk Response PlanningTools & Techniques

• Strategies for Negative Risks or Threats• Strategies for Positive Risks or Opportunities

Tools & Techniques• Strategies for Negative Risks or Threats• Strategies for Positive Risks or Opportunities

Inputs

• Strategies for Positive Risks or Opportunities• Strategy for Both Threats and Opportunities• Contingent Response Strategy

• Strategies for Positive Risks or Opportunities• Strategy for Both Threats and Opportunities• Contingent Response Strategy

Outputs• Risk Register (Updates)


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• Risk Management Plan• Risk Register

• Project Management Plan (Updates)• Risk-Related Contractual

Agreements

Risk Response


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5.1 Risk Response Planning: Inputs

1 Risk Management PlanImportant components of the risk management plan include roles andresponsibilities, risk analysis definitions, risk thresholds for low,

moderate, and high risks, and the time and budget required to conduct Project Risk Management.

Risk RegisterThe risk register is first developed in the Risk Identification process, and

is updated during the Qualitative and Quantitative Risk Analysis Th Ri k R Pl i h t f


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processes. The Risk Response Planning process may have to refer back to identified risks, root causes of risks, lists of potential responses, risk owners, symptoms, and warning signs in developing risk responses.


1-Strategies for Negative Risks or Threats

Avoidance – Change project plan to eliminate the risk or condition or to protect the project objectives from its impact

Transference – Shift the consequences of a risk to a third party together with the ownership of the response

g g


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Mitigation – Reduce the probability and/or consequences of an adverse risk event to an acceptable threshold

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“Eliminate the risk or condition or to protect the project objectives from its impact”...

Avoidance

Decline the project ?Reduce the scope / requirements ?Change technology ?Revise your strategy

Do root-cause analysis Eliminate the cause of the risk


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Avoidance (Prevention)

Example:Risk that staff unfamiliar with

development environmentBring in expert training before heavy

development starts

“Reducing the expected monetary value of a risk event by:

Mitigation

• Lowering the probability of occurrence, or• Reducing its effect

e.g. More experienced PM / team / vendorsTighter project controlsRegular formal risk reviews

h i i i


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Further investigation“Contingency plans / disaster recovery”…what to do if it happens Mitigation

(Corrective action)

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By contract types ...• Fixed price vs. cost-reimbursable

Transference

pBy contract clauses ...

• Liquidated damages• Warrantees, guarantees, etc.

By insurance or bondsIn all cases, you will pay a “risk premium”

I t th i k f th


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Transference(Shift Responsibility)

Insurance: pay someone to assume the risk of the problem happeningMay be done through insurance company, customer, supplier, etc.Not usually possible for individuals on a team

5.2- Tools & Techniques (cont.)

2-Strategies for Positive Risks or OpportunitiesExploit - Make it happen !organization wishes to ensure that the opportunity is realized. Directly

exploiting responses include assigning more talented resources to eliminate the uncertainty associated with a particular upside risk by making the opportunity definitely happen.

Share -Bring in a 3rd party!Sharing a positive risk involves allocating ownership to a third party who

is best able to capture the opportunity for the benefit of the project.


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s bes b e o c p u e e oppo u y o e be e o e p ojec .

Enhance- Increase the probability ,or increase the positive impact !modifies the “size” of an opportunity by increasing probability and/or

positive impacts, and by identifying and maximizing key drivers of these positive-impact risks.

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5.2 Tools & Techniques (cont.)

Acceptance Do not change project plan but develop a

Strategy for Both Threats and Opportunities

Acceptance – Do not change project plan, but develop a contingency plan should the risk event occur

Contingent Response Strategy- Some responses are designed for use only if certain events occur. For some risks, it is appropriate for the project team to make a


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pp p p jresponse plan that will only be executed under certain predefined conditions, if it is believed that there will be sufficient warning to implement the plan.

Schedule Mitigation plan


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Cost Mitigation plan


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5.3 OutputsRisk Register (Updates)- In the Risk Response Planning

process, appropriate responses are chosen, agreed-upon, and p , pp p p , g p ,included in the risk register.

Project Management Plan (Updates)-The project management plan is updated as response activities are added after review and disposition through the Integrated Change Control process


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Risk-Related Contractual Agreements– May be entered into for insurance, services, and other items, as appropriate, in order to avoid or mitigate threats

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6-Risk Monitoring & Control

The process of keeping track of the identified risks, monitoring residual risks and identifying new risks, ensuring the execution of risk plans and evaluating their effectiveness in reducing risk


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Tools Risk reassessmentRisk a dits

Risk Monitoring & Control

Inputs

Risk auditsVariance and trend analysisTechnical performance measurementReserve analysisStatus meetings

Outputs Risk register (updates)


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Risk management planRisk registerApproved change requestsWork performance informationPerformance reports

Risk register (updates)Requested changes Recommended corrective actionsRecommended preventive actionsOrganizational process assets (updates)Project management plan (updates)

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6.1 Inputs1 Risk Management PlanThis plan has key inputs that include the assignment of people, including the risk

owners, time, and other resources to project risk management.

2 Risk RegistergThe risk register has key inputs that include identified risks and risk owners ,agreed-

upon risk responses, specific implementation actions, symptoms and warning signs of risk, residual and secondary risks, a watch list of low priority risks, and the time and cost contingency reserves.

3 Approved Change RequestsApproved change requests can include modifications such as work methods,

contract terms, scope, and schedule.

4 Work Performance Information


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4 Work Performance InformationWork performance information, including project deliverables’ status, corrective

actions, and performance reports, are important inputs to Risk Monitoring and Control.

5 Performance ReportsPerformance reports provide information on project work performance, such as an

analysis that may influence the risk management processes.

6.2 Tools and Techniques1 Risk ReassessmentRisk Monitoring and Control often requires identification of new risks and reassessment of risks, using the processes of this chapter as appropriate. 2 Risk AuditsRisk audits examine and document the effectiveness of risk responses inRisk audits examine and document the effectiveness of risk responses in

dealing with identified risks and their root causes, as well as the effectiveness of the risk management process.

3 Variance and Trend AnalysisTrends in the project’s execution should be reviewed using performance data.

4 Technical Performance MeasurementTechnical performance measurement compares technical accomplishments

during project execution to the project management plan’s schedule of


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during project execution to the project management plan s schedule of technical achievement.

5 Reserve AnalysisThroughout execution of the project, some risks may occur, with positive or

negative impacts on budget or schedule contingency reserves .6 Status MeetingsProject risk management can be an agenda item at periodic status meetings.

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6.3 Outputs

.1 Risk Register (Updates)An updated risk register contains:• Outcomes of risk reassessments, risk audits, and periodic risk reviews. • The actual outcomes of the project’s risks, and of risk responses that can help project The actual outcomes of the project s risks, and of risk responses that can help project

managers plan for risk throughout the organization, as well as on future projects.

.2 Requested ChangesImplementing contingency plans or workarounds frequently results in a requirement to

change the project management plan to respond to risks.

.3 Recommended Corrective ActionsRecommended corrective actions include contingency plans and workaround plans.

4 Recommended Preventive Actions


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.4 Recommended Preventive ActionsRecommended preventive actions are used to bring the project into compliancewith the project management plan..5 Organizational Process Assets (Updates)

.6 Project Management Plan (Updates)

Classes of Contractual Documents

CPPC CPFF CPIF FPI FFP

Variable Sharing Ratio 0 100100 0

Seller Risk LOW HIGH

Buyer RiskHIGH LOW


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Spectrum of risk

Cost Plus Fixed

Fee (CPFF)

Cost Plus Incentive Fee (CPIF)

Firm Fixed PriceCost Plus Percentage of Costs (CPPC)

Fixed Price Incentive (FPI)

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Important Web Sites

DoD Risk Managemento s a age e thttp://www.acq.osd.mil/io/se/risk_management/index.htmPMI Risk Managementhttp://www.risksig.comSEI Risk Managementhttp://www.sei.cmu.edu/programs/sepm/risk/risk.mgmt.overview.html


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Pertmaster softwarehttp://www.Pertmaster.comhttp://www.Primavera.com

Questions

Thank you


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Download - Pj tRikProject Risk Management - Sharifce.sharif.edu/courses/88-89/1/ce428-1/resources/root/IIPMC.com/214.pdfPj tRikProject Risk Management ... Project Risk Mng (PMBOK Guide Project

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