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OCTOBER 7, 2013

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How to manage risk inPrimavera P6 Professional

Risk Management in

Primavera P6 Release 8.2

Risks are uncertain events/conditions that have

the potential to negatively (or positively) impact

project objectives. Primavera P6 Release 8.2

Professional includes an integrated Risk

Management feature that enables you to

identify, categorize and prioritize risks, assign a

responsible person for managing the risk,

assign risks to one or more activities that may

be impacted by the risk, and conduct

qualitative analysis on each risk. Additionally,

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you have the ability to record a risk response.

P6 generates a “Risk Score” based on

information that is entered for each risk. The

“Risk Score” can then be used to help you

evaluate the significance of the risk. This

tutorial demonstrates the process of using theRisk Management functionality in P6 R8.2.

Step 1. We will document a possible risk to our 

project involving the Design and Engineering

process. We want to document that if the

customer changes the design of our Office

Building Addition, the project may incur 

additional costs as well as schedule delays.

The image below illustrates the Design and

Engineering WBS element (work breakdown

structure). As you can see below, this portion of 

the project is currently scheduled to start on

Jan. 11 and finish on Feb. 9, and the total

budgeted cost is $3120. We can also view the

activities comprising this WBS element and

their corresponding dates & budgeted cost.

Please note that we have added the “Risks” tab

in our Activity Details.

 

Step 2. Access the “Risks” icon on the

directory bar and click the add icon on the

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Command Bar to begin the process of 

documenting the potential risk. The details

pertaining to the risk are added using the detail

tabs. The “General” tab is used to identify the

risk category, risk type, owner or person

responsible for resolving the risk, and status.

The Exposure Start and Exposure Finish dates

correspond to the start and finish of the

activities in the Design and Engineering WBS.

These dates represent the earliest and latest

dates this risk may occur. The Pre-Response

Exposure Cost represents the possible cost

this risk may impose, and the Post-Response

Exposure Cost is the cost the risk may impose

based on your risk response. We will discuss

the calculations behind these values shortly.

Notice that you can also provide the date the

risk was identified as well as the resource that

identified the risk.

 

Step 3. The impact tab enables you to identify

both pre-response and post-response

parameters. Notice that you can select the

Probability that the risk will occur, the impact

that the risk may have on the schedule, and the

monetary impact on the project if this risk

occurs. The Risk Score is calculated based 

upon the values selected for the above

mentioned parameters. The impact tab can

also be utilized to document a response plan

as well as response impact parameters to

arrive at a Post-Response Risk Score.

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The Help menu indicates how the Risk

Score (both Pre-Response and Post-

Response) is calculated:

The overall risk score based on the values you

select for three fields: Probability, Cost, and

Schedule. Two of these fields, Cost and

Schedule, are known as the impact fields.

The Probability field and each impact field have

these possible values: Very High, High,

Medium, Low, Very Low, and Negligible. The

application uses the highest value selected for 

the Cost and Schedule fields as the overall

impact value. The application determines the

Score by plotting the overall impact value with

the value entered for Probability, as shown in

the table below.

For example, if you enter the value Low for 

Cost and the value Medium for Schedule, the

application uses Medium, the higher of the two,

as the overall impact value. The application

then uses the table below to determine the

Score value by plotting the overall impact and

Probability values. The columns in the table

represent the overall impact values (Negligible

through Very High), while the rows represent

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the Probability values (Very High through

Negligible). The application determines the

Score as the number that corresponds to the

intersection of the applicable Impact column

and Probability row. So, to continue our 

example, if you entered a value of High for 

Probability, the Score would display as 14, the

number shown where the Impact Medium

column intersects the Probability High row.

Impact

Negligible

Impact

Very

Low

Impact

Low

Impact

Medium

Impact

High

Impact

Very

High

Probability

Very High

0 5 9 18 36 72

Probability

High

0 4 7 14 28 56

Probability

Medium

0 3 5 10 20 40

Probability

Low

0 2 3 6 12 24

Probability

Very Low

0 1 1 2 4 8

Probability

Negligible

0 0 0 0 0 0

The Help menu identifies how the Pre-

Exposure and Post-Exposure cost values

are calculated. These values can be viewed

on the General tab (see the image for Step 2

above):

The application calculates the potential cost of 

a risk. The potential cost displays in the Pre-

Response Exposure Cost and Post-Response

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Exposure Cost fields on the Risks, General tab.

(The Post-Response Exposure Cost field

displays only after a response is made to a risk

using the Post-Response fields on the Impact

tab.) The following discussion refers to both the

Pre- and Post-Response Exposure Cost fields

generically as Exposure Cost fields because

both are calculated using the same equation.

The value for the Exposure Cost field is based

on the values selected for the Probability and

Cost fields, located on the Risks, Impact tab,

and on cost figures associated with the

activities assigned to the Risk or to the project,

if no activity assignments have been made.

The application calculates the Exposure

Cost value using this equation: Exposure

Cost = Planned/Budgeted Total Cost *

(Probability Midpoint * Cost Midpoint).

The Planned/Budgeted Total Cost is the sum of 

the Planned/Budgeted Cost values for each

activity assigned to the risk (or the planned

project cost, if no activities are assigned to the

risk).

The Probability Midpoint is the midpoint of the

Probability field value for the selected risk. The

Cost Midpoint is the midpoint of the Cost field

value for the selected risk. The way each is

calculated is discussed below.

Note: The Cost and Probability midpoint for the

value Negligible is always zero, so the value of 

Negligible is not relevant to the following

discussion.

The equation for the calculation of 

Probability Midpoint and Cost Midpoint

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varies, depending on which values are

selected for the Probability and Cost fields:

When using a value between highest and

lowest:

When a value of High (50% to 70%),

Medium (30% to 50%), or Low (10% to30%) is selected for the Probability field,

then the Probability Midpoint is

calculated using this equation:

Probability Midpoint = (lower range for 

selected value + higher range of 

selected value)/2. So if the Probability

value is Medium (30% to 50%), then the

Probability Midpoint is calculated asfollows: (30+50)/2 = 40%.

When a value of High (20% to 40%),

Medium (10% to 20%), or Low (1% to

10%) is selected for the Cost field, then

the Cost Midpoint is calculated using the

same equation as Probability Midpoint.

So if the Cost value is Medium (10% to

20%), then the midpoint is calculated as

follows: (10 + 20)/2 = 15%

For highest values:

When the value Very High (70% or 

higher) is selected for the Probability

field, then the Probability Midpoint is

calculated as the midpoint between the

lower value and 100%. So the

Probability Midpoint for the value Very

High (70% or higher) midpoint is

calculated as follows: (70 + 100)/2 =

85%.

When the value Very High (40% or 

higher) is selected for the Cost field,

then the Cost Midpoint is calculated

using this equation: ((the lower range for 

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the selected value * 2) + the high range

for the selected value)/2. So the Cost

Midpoint for the value Very High (40% or 

higher) is calculated as follows: ((40 * 2)

+ 100)/2 = 90%.

For lowest values:

When the value Very Low (<=10%) is

selected for the Probability field, then

the Probability Midpoint is calculated as

the midpoint between zero and the

upper value. So the Probability Midpoint

for the value Very Low is calculated as

follows: (0 + 10)/2 = 5%.

When the value Very Low (Up to 1%) is

selected for the Cost field, then the Cost

Midpoint is calculated as the midpoint

between zero and the upper value. So

the Cost Midpoint for the value Very Low

is calculated as follows: (0 + 1)/2 =

.005%.

So if the Planned/Budgeted Total Cost is

$700,689.00, and the Probability Midpoint is

Medium (40%), and the Cost Midpoint is VeryHigh (90%), then the Exposure Cost would be

calculated as follows: $700,689.00 * (.4 * .9) =

$252,248.00.

 

Step 4. You can use the Activities tab to

identify activities that may be impacted by this

risk.

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Step 5.  Use the Description tab to further 

describe the risk.

 

Step 6.  Use the Cause tab to document the

cause of the risk.

 

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Step 7. Document the effect of the risk.

 

Step 8. Additional Notes can be entered.

 

Step 9.  In the Activities window, you can view

and/or assign risks to activities using the Risks

tab in activity details.

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LEAVE A REPLY

1 COMMENT

Simon Dewey

September 4, 2014 at 4:54 am  REPLY

Hi There

 Are you using Primavera Enterprise? My company is using

Primavers Enterprise v8.3, and has been told that Risk Mgt function

is not available for that version.

Hope you can help, as we have to log in to web UI to enter details of 

risks, which isn’t a good user experience.

Kind Regards

Simon

Name

Email

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