Pmbok 4th edition chapter 11 - Project Risk Management

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I am Continuously seeking to improve my competencies and skills to provide first class professional Project Management training courses; and develop my scope experience in Project Management functions.I am confident that my innovative and results-focused approach would make significant contribution to the continued success of your organization.this is the first presentations uploaded to Slide Share, For more information do not hesitate to contact me.Ahmad H. Maharma - PMPRamallah, Palestine Phone: + (972) (2) 2968644Mobile: + (972) (599) 001155E-Mail: ahmad.maharma@gmail.com

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<ul><li>1.CHAPTER11PROJECTRISKMANAGEMENT AhmadH.Maharma PMP</li></ul><p>2. PMKnowledgeAreas&amp;ProcessGroupsPM ProcessInitiating ProcessPlanning Process GroupExecuting Process Monitoring &amp; Controlling ClosingGroups /Group Group Process GroupProcessKnowledgeGroupArea ProcessesProject Develop Project Charter Develop Project ManagementDirect and Manage Project Monitor and Control Project Work Close ProjectManagementPlanExecution Integrated Change ControlIntegrationProject Scope Collect requirementsVerify ScopeManagementDefine ScopeControl ScopeCreate WBSProject TimeDefine Activity Schedule ControlManagementSequence ActivityEstimating ResourceEstimating DurationDevelop ScheduleProject CostEstimating Cost Control CostManagementBudgeting CostProject Quality Quality PlanningPerform Quality Assurance Perform Quality ControlManagementProject HRHuman Resources PlanningAcquire Project TeamManagementDevelop Project TeamManage Project TeamProject Identify Stakeholders Plan Communications Distribute InformationPerformance ReportingCommunicationsManage stakeholdersManagementexpectationsProject RiskPlan Risk ManagementRisk Monitoring and ControlManagementRisk IdentificationQualitative / Quantitative RiskAnalysisyRisk Response PlanningProject Plan procurementConduct procurement Administer ContractCloseProcurementprocurementManagement 3. ProjectRiskManagement Monitoring &amp;Controlling Processes Planning Processes Enter phase/ InitiatingClosing Exit phase/ Start project Processes ProcessesEnd projectExecutingProcessesKnowledgeProcessAreaInitiating Planning ExecutingMonitoring &amp; Contol Closing Plan Risk Management Identify RiskRisk Perform Qualitative Risk Analysis Monitor and Control Risks Perform Quantitative Risk Analysis Plan Risk Response 4. ProjectRiskManagement Risk is an uncertain event or condition that, if occurs, has an effect on at least one projectobjective. RiskRi k management objectives: t bj ti increase the probability and impact of positive events (opportunities). decrease the probability and impact of negative events (threat). Terms &amp; concepts: Uncertainty: a lack of knowledge about an event that reduces confidence Risk averse: someone who does not want to take risks. Risk tolerances: area of risk that are acceptable/unacceptable. Risk thresholds: the point at which a risk become unacceptable Remember that in this area there is no activity in executing process group 5. ProjectRiskManagementRisk factors2.3. 4.1. The range of Expected The anticipatedThe probabilitypossible timing (when) frequency ofthat it will occur outcomein the projectrisk event (impact)life cycle(how often) 6. PlanRiskManagement Importance of Risk Management Planning Ensure that the degree, type, and visibility of risk management are commensurate g , yp , y g Provide sufficient resource and time for risk management activities Establish an agreed-upon basis for evaluating risk Risk Categories A standard list of risk categories can help to make sure areas of risk are not forgotten. Companies and PMO should have standard list of risk categories to help identify riskrisk. 2 Main type of Risk B i Business Ri k of gain or llossRisk f i Pure (insurable) risk Only a risk of loss (i.e. fire, theft, personal injury, etc) Sources of risk = risk categories g Risk categories may be structured into Risk Breakdown Structure (RBS) 7. ProjectRiskManagementProject Risk ManagementProjectRiskManagementincludestheprocessesofconductingriskmanagementProject Risk Management includes the processes of conducting risk managementplanning,identication,analysis,responseplanning,andmonitoringandcontrolonaproject.TheobjectivesofProjectRiskManagementaretoincreasetheprobabilityandimpactofpositiveevents,anddecreasetheprobabilityandimpactofnegativeeventsintheproject. 8. ProjectRiskManagementProject Risk Management11.1PlanRiskManagementTheprocessofde ning howtoconductriskmanagementactivitiesforaproject.11.2IdentifyRisksTheprocessofdeterminingwhichrisksmayaffecttheprojectanddocumentingtheircharacteristics.11.3PerformQualitativeRiskAnalysisTheprocessofprioritizingrisksforfurtheranalysisoractionbyassessingandcombiningtheirprobabilityofoccurrenceandlb dbh b bl f dimpact.11.4PerformQuantitativeRiskAnalysisTheprocessofnumericallyanalyzingtheeffectofidentiedrisksonoverallprojectobjectives.effect of identied risks on overall project objectives11.5PlanRiskResponsesTheprocessofdevelopingoptionsandactionstoenhanceopportunitiesandtoreducethreatstoprojectobjectives.and to reduce threats to project objectives11.6MonitorandControlRisksTheprocessofimplementingriskresponseplans,trackingidentiedrisks,monitoringresidualrisks,identifyingnewrisks,andg pgp jevaluatingriskprocesseffectivenessthroughouttheproject. 9. 11.1PlanRiskManagement 11.1 Plan Risk Management PlanRiskManagementistheprocessofdefininghowtoconductriskmanagementactivitiesforaproject.Carefulandexplicitplanningenhancestheprobabilityofsuccessforthefiveotherriskmanagementprocesses. Planningriskmanagementprocessesisimportanttoensurethatthedegree,type,andvisibilityofriskmanagementarecommensuratewithboththerisksandtheimportanceoftheprojecttotheorganization. gppPlanningisalsoimportanttoprovidesufficientresourcesandtimeforriskmanagementactivities,andtoestablishanagreeduponbasisforevaluatingrisks.ThePlanRiskManagementprocessshouldbeginasaprojectisconceivedandshouldbecompletedearlyduringprojectplanning. 10. 11.1PlanRiskManagement11.1 Plan Risk Management 11. 11.1.1PlanRiskManagement:Inputs11.1.1Plan Risk Management: Inputs.1ProjectScopeStatement Theprojectscopestatementprovidesaclearsenseoftherangeofpossibilitiesassociatedwiththeprojectanditsdeliverablesandestablishestheframeworkforhowsignificanttheriskmanagementeffortmayultimatelybecome. g.2CostManagementPlan Theprojectcostmanagementplandefineshowriskbudgets,contingencies,andmanagementreserveswillbereportedandaccessed.DescribedinSection7.0..3ScheduleManagementPlan The schedule management plan defines how schedule contingencies willTheschedulemanagementplandefineshowschedulecontingencieswillbereportedandassessed.DescribedinSection6.0. 12. 11.1.1PlanRiskManagement:Inputs 11.1.1 Plan Risk Management: Inputs.4CommunicationsManagementPlan Theprojectcommunicationsmanagementplandefinestheinteractionsthatwilloccurontheproject,anddetermineswhowillbeavailabletoshareinformationonvariousrisksandresponsesatdifferenttimes(andlocations).DescribedinSection10.2.3.1. p.5EnterpriseEnvironmentalFactors TheenterpriseenvironmentalfactorsthatcaninfluencethePlanRiskManagementprocessinclude,butarenotlimitedto,riskattitudesandtolerancesthatdescribethedegreeofriskthatanorganizationwill ggwithstand. 13. 11.1.1PlanRiskManagement:Inputs11.1.1 Plan Risk Management: Inputs.6OrganizationalProcessAssets TheorganizationalprocessassetsthatcaninfluencethePlanRiskManagementprocessinclude,butarenotlimitedto: Riskcategories,g, Commondefinitionsofconceptsandterms, Riskstatementformats, Standard templatesStandardtemplates, Rolesandresponsibilities, Authoritylevelsfordecisionmaking, Lessonslearned,and Stakeholderregisters,whicharealsocriticalassetstobereviewedascomponentsofestablishingeffectiveriskmanagementplans. 14. 11.1.2PlanRiskManagement:ToolsandTechniques g q.1PlanningMeetingsandAnalysis Projectteamsholdplanningmeetingstodeveloptheriskmanagementplan. Attendeesatthesemeetingsmayincludetheprojectmanager,selectedprojectteammembersandstakeholders,anyoneintheorganizationwithresponsibilitytomanagetheriskplanningandexecutionactivities,and p yg pg ,others,asneeded. High levelplansforconductingtheriskmanagementactivitiesareHighlevel plans for conducting the risk management activities aredefinedinthesemeetings. 15. 11.1.2PlanRiskManagement:ToolsandTechniques g qPlanningMeetingsandanalysis:HoldingofRiskPlanningmeetingscomprisingofprojectteammembers,andstakeholdersincludingii f j tt b d t k h ld i l disponsorstodetermine:1. Riskmanagementresponsibilities2. Riskcategories3. Risklevels4. Probabilitybytypeofrisks4 Probability by type of risks5. Impactbytypeofobjectivities6. Probabilityandimpactmatrix7. Riskcontingencyreserveapplicationapproaches8. Developmentofriskmanagementcostelementsandactivities 16. 11.1.3RiskManagement:Outputs11.1.3 Risk Management: Outputs RiskManagementPlanincludes:1. Methodology Definingtheapproaches,tools,anddatafordefiningriskmanagement2. Roleandresponsibilities Definingthelead,supportandriskp g, ppmanagementteammembersforeachtypeofactivities3. Budgeting Assigningresources,estimatefundsneededforriskaspartofriskmanagementforinclusioninthecostbaselineg4. Timing Defineswhenandhowoftenriskmanagementprocesswillbeperformedduringtheprojectlifecycle5. Risk Categories Using risk breakdown structure (RBS) which depictsRiskCategories Usingriskbreakdownstructure(RBS)whichdepictsrisksinhierarchicalformsandthesubcategoriesidentifiestheareasandcausesofpotentialrisks 17. 11.1.3RiskManagement:Outputs11.1.3 Risk Management: Outputs6.Definitionofriskprobabilityandimpact Definingdifferent levelsofriskprobabilitiesandtheirimpacts7.Probabilityandimpactmatrix Combiningriskprobabilities withtheirimpactsandrankingthemasHigh,ModerateandLow8.RevisedStakeholderstolerances9.Reportingformat Defininghowtheoutcomesofriskmanagementprocesseswillbedocumented g p10. Tracking Defininghowriskmanagementprocesseswillbeaudited. 18. ExampleofRiskBreakdownStructureExample of Risk Breakdown Structure 19. DefinitionofImpactScalesforfourProjectobjectivesDefined Conditions for Impact of a Risk on Major Project ObjectivesDefinedConditionsforImpactofaRisk onMajorProjectObjectivesRelativeornumericalscalesareshownProject Very low/0.05 Low/0.1 Moderate/ High/0.4VeryHighobjective 0.2/0.8 / 0.8Cost Insignificantcost 40%cost increaseincrease cost increase increaseincreaseTime Insignificanttime 20%time increaseincreaseincrease increase increaseScopeScopeincrease ScopeMajorareas Scope Project barelynoticeable minorofscopereduction endis affectaffected unacceptable effectively useless Qualitydegradationbarely Affected onlyQualityreduction Qualityreduction ProjectendQualitynoticeablevery demanding requiressponsors unacceptableto itemsis applicationapproval sponsoreffectively useless Thistablepresentsexamplesofriskimpact definitionsforfourdifferentprojectobjectives.Theyshould betailoredintheriskmanagementplanningprocesstotheindividualprojectandtotheorganizations riskthresholds.Impactdefinitionscanbedevelopedforopportunitiesinasimilarway. 20. DefinitionofImpactScalesforfourProjectobjectives 21. Exercise 22. Exercise 23. Exercise 24. 11.2IdentifyRisks:Inputs11.2 Identify Risks: Inputs 25. 11.2IdentifyRisks:Inputs11.2 Identify Risks: Inputs IdentifyRisksistheprocessofdeterminingwhichrisksmayaffecttheproject y pg y p janddocumentingtheircharacteristics. Participantsinriskidentificationactivitiescanincludethefollowing:projectmanager,projectteammembers,riskmanagementteam(ifassigned),customers,subjectmatterexpertsfromoutsidetheprojectteam,endusers,otherprojectmanagers,stakeholders,andriskmanagementexperts. Whilethesepersonnelareoftenkeyparticipantsforriskidentification,allprojectpersonnelshouldbeencouragedtoidentifyrisks. 26. 11.2IdentifyRisks:Inputs11.2 Identify Risks: Inputs IdentifyRisksisaniterativeprocessbecausenewrisksmayevolveorbecome y pyknownastheprojectprogressesthroughitslifecycle.Thefrequencyofiterationandwhoparticipatesineachcyclewillvarybysituation.Theformatoftheriskstatementsshouldbeconsistenttoensuretheabilitytocomparetherelativeeffectofoneriskeventagainstothersontheproject. Theprocessshouldinvolvetheprojectteamsotheycandevelopandmaintainasenseofownershipandresponsibilityfortherisksandassociatedriskresponseactions.Stakeholdersoutsidetheprojectteammayprovideadditionalobjectiveinformation. 27. 11.2.1IdentifyRisks:Inputs11.2.1 Identify Risks: Inputs1.RiskManagementplan UsingRBSandprovidingforrisksinbudgetandschedule2.ActivitycostEstimates UsingquantitativeassessmentofTCPIandexpressingitasarange.Thewiderthemorerisksareinvolved3. yActivityDurationEstimates4.Scopebaseline5.Stakeholderregister6.CostManagementPlan7.ScheduleManagementPlan8.QualitymanagementPlan9.ProjectDocuments AssumptionLog,Workperformancereports,Earnedvaluep ,g,reports,Networkdiagrams,Baselinesetc.10. EEFS Benchmarking,industrystudies,publishedchecklists,Riskattitudes11. OPAs Projectfiles,riskstatementtemplates,Lessonlearntprojectprocesscontrol 28. 11.2.2IdentifyRisks:Tools&amp;Techniques 11.2.2 Identify Risks: Tools &amp; Techniques1. DocumentationReviews reviewingassumptions,requirements Documentation Reviews reviewing assumptions, requirements contractsetc.2. InformationGatheringTechniques:a) Brainstorming Obtaining comprehensive listing of all risks byObtainingcomprehensivelistingofallrisksby categoriesusingRBSb) Delphi Technique Usinganonymousexpertsbyusing questionnairesforgettingconsensusonrisks.Itkeepsbiasaway questionnaires for getting consensus on risks It keeps bias awayc) Interviewing Askingsubjectmatterspecialiststoidentifyrisksd) RootCauseAnalysis Identifyingtheriskproblem,theunderlying causesthatleadstoitanddevelopingpreventiveactions causes that leads to it and developing preventive actions 29. 11.2.2IdentifyRisks:Tools&amp;Techniques 11.2.2 Identify Risks: Tools &amp; Techniques3. Checklist Analysis UsingthelowestlevelofRBSaschecklistbased onhistoricinformationandknowledgeofprojects4. Assumptions Analysis Exploringthevalidityofassumptions, accuracies,completeness,stabilityandconsistency5. DiagrammingTechniques:a) CausesandeffectsalsoknownasISHIKAWA identifyingrisk causesb) Systemorprocessflowcharts identifyingsysteminterrelateand mechanismofcausationc) Influencediagram graphicalrepresentationshowingcausal, Influence diagram graphical representation showing causal influences,timeorderingofevents6. SWOTAnalysis StrengthWeaknessOpportunitiesThreats7. ExpertJudgment Usingexpertssuchasconsultants 30. 11.2.3IdentifyRisks:Output11.2.3 Identify Risks: Output Risk RegisterRiskRegister1. ListofIdentifiedrisks Theidentifiedlistsmustbedescribed indetailssuchasCAUSE,EVENT,EFFECTS2. ListofpotentialResponses Listofpossiblepotentiali fi li fibli l responsesandtheirimpacts 31. 11.3PerformQualitativeRiskAnalysis11.3 Perform Qualitative Risk Analysis 32. 11.3PerformQualitativeRiskAnalysis 11.3 Perform Qualitative Risk Analysis Perform Qualitative Risk Analysis is the process ofPerformQualitativeRiskAnalysisistheprocessofprioritizingrisksforfurtheranalysiswhichinvolvescombiningtheirprobabilitiesofoccurrenceandimpacts,thetimeframeforresponseshouldtheriskoccurandtheorganizationsrisktoleranceassociatedwiththeprojectconstraintsofcost,schedule,scopeith thj t t i t ft h d landquality 33. 11.3.1PerformQualitativeRiskAnalysis11.3.1 Perform Qualitative Risk Analysis Inputs1. RiskRegister g2. RiskManagementPlan Detailingdefinitionsof categories,probabilityandimpact,stakeholderrisk tolerance l3. ProjectScopeStatement Stateoftheartorfirst ofitskindtechnologyandcomplexprojectstend of its kind technology and complex projects tend tohavemorerisks4. OrganizationProcessAssets Riskinformationong priorprojects 34. 11.3.2PerformQualitativeRiskA...</p>

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