Post on 04-Apr-2018
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Risk Mana ement
What is a Project Risk?
uncertain event or condition
mpacts project o jectives
Examples?
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Uncertainty is a rule, not an
exception
Uncertainty is there whilepursuing opportunities as well
Risk i enti ication consequence
of uncertainty and not reflectionof our own ability
Characterizing Uncertainty in Projects
Variation: Cost, time and performance levels vary,
Foreseen Uncertainty : A few known factors willinfluence the project , but in unpredictable way
Unforeseen uncertainty: One or more majorinfluences factors can not be predicted
Chaos: Unforeseen events com letel invalidatethe project's target, planning and approach
Managing Project Uncertainty, Meyer, Loch, and Pich, Sloan Mgmt Review,2002
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What is risk management?
Risk Management :enti y, iscuss an ocument an
finalize the mitigation and contingencyaction plans for foreseen uncertaintythrough the lifecycle of the project.
Also, review and revaluate existing
identified risks, and discuss the progresson the mitigation actions.
Risk Planning
RiskIdentification
RiskMonitorin &
Control
IT PROJECT RISK
MANAGEMENT
PROCESSES
RiskAssessmentRisk
Response planning
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Project Risk Management Processes
Risk management planning: deciding how to
activities for the project
Risk identification: determining which risks arelikely to affect a project and documenting thecharacteristics of each
Qualitative risk analysis: prioritizing risksbased on their probability and impact ofoccurrence
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Project Risk Management Processes(continued)
Quantitative risk analysis: numerically estimatingthe effects of risks on project objectives
Risk response planning: taking steps to enhanceopportunities and reduce threats to meetingproject objectives
Risk monitoring and control: monitoring identifiedan res ua r s s, en y ng new r s s, carry ngout risk response plans, and evaluating theeffectiveness of risk strategies throughout thelife of the project
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Project Risk Management Summary
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Risk Management Planning
Create a RM plan omm men o a e o ers me
Frequency of review of the risks
Methodology to be followed
Availability of tools, if required Review and up dation of the plan at regular
intervals or when required
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Risk Identification
Both threats and opportunities can be
Risks need to be identified through everyphase of the project Can have unique risks associated to every phase
Risk identification to start from the proposalstage
Risk Identification
How will you identify?
Risk identification tools and techniquesinclude:
Brainstorming
The Delphi Technique
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Risk Identification
How will you document identified risk? Risk Register
What will you document? Name
Description
Owner
Triggers
Mitigation plan
contingency plan
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Sample Risk Register
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Qualitative Risk Analysis
Assess the likelihood and impact of
magnitude and priority
Risk quantification tools and techniquesinclude: Probability/impact matrixes
T e Top Ten Risk Item Tracking
Expert judgment
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Risk Assessment & Analysis
Analysis: To determine probability and
Assessment : Prioritizing risk to formulatethe strategy
Risk Priority = Probability * Impact
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Risk Assessment & AnalysisTechniques
eig te na ysis
Multi-variable Analysis
Weighted Analysis
Probability Reference Table
Score General Scale Probability Sco General Impact
Impact Reference Table
1 Low Infrequently
2 Medium Occasionally
3 High Frequently
re Sca e
1 VeryLow
Nuisance or NA
2 Low Limits effectiveness
3 Medium Financial Impact, CustomerDissatisfaction
4 High Disruption to Operation,Large Financial Impact Risk Priority = Probability * Impact
5 VeryHigh
Major Financial impact,significant complianceconcern
Highest possible priority = 15
Lowest possible priority = 1
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Weighted AnalysisFor each variable, determine probability and impact
Risk Variable Probability-
Impact-
Priority*- -
ScheduleSlippage
3 5 15
IBM AIX skillsnot available
2 5 10
Delay in Visaprocessing
2 3 6
Priority cut-off is determined after calculating priorities
Only risks above the cut-off are carried forward for analysis
Method favors Impact over Probability
Multi-Variable Analysis Impact calculated against 4 variables of Schedule, Cost, Quality & Scope to
determine impact weight
Probability assessed to determine probability weight
Probability & Impact used to calculate priority
Impact weight classified as Low, Medium or High based on the table below:
Impact Schedule Cost Quality Scope ImpactWt
Low 5% offunctionalitycannot bedelivered
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Multi-Variable Analysis
Probability of impact is classified asOccurrence Probabilit Wei ht
Improbable < 5% chance ofoccurrence
2
Likely 5% - 50% chance ofoccurrence
5
Very Likely 50% chance ofoccurrence
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Multi-Variable Analysis
Risk Impact on Impact Weight ProbabilityWeight
Impact Value
IBM AIX skillsnot available
Schedule 5 5 25
Cost 5 5 25
Quality 10 10 100
Scope 2 2 4
Risk Weight 154
Priority of the risk decided on the risk weight as computed above
Priority cut-off is determined after calculating priorities
Only risks above the cut-off are carried forward for analysis
Method favors Impact and Probability equally
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Quantitative Risk Analysis
Often follows qualitative risk analysis, but
Large, complex projects involving leadingedge technologies often require extensivequantitative risk analysis
Main techniques include: Simulation
Sensitivity analysis
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Steps of a Monte Carlo Analysis
1. Assess the range for the variables beingconsidered
2. Determine the probability distribution ofeach variable
3. For each variable, select a random value basedon the probability distribution
.through the model
5. Repeat steps 3 and 4 many times to obtain theprobability distribution of the models results
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Sample Monte Carlo Simulation Results forProject Schedule
40Information Technology Project Management, Fifth Edition, Copyright 2007
s1
What should be Risk Strategyor Response to Risk?
Accept or Ignore
Avoidance
Mitigate
Transfer
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lide 40
1 I can't seem to read the final art files for this chapter. This figure is the same as what should be hereexcept for the dates. OK as is, or can someone put in the proper art file?schwalbe, 1/21/2005
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Risk Response Planning
Each risk must have One or more miti ation actions
Contingency actions
Each action must have an owner and target completiondate
Mitigation action may include modification to project approachor roles and responsibilities
Must have a Risk Profile : a template to present Risk assessment, impact and mitigation plans
The impact on estimates of time, costs, scope
RISK MONITORING AND CONTROL
Risk Audits
is eviews
Risk Status meeting and Reports
Monitor the triggers continuously and keep.
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Risk Management for the Project
Risk Identification: Brain Storming Delphi
Risk Assessment & Analysis : Multi-variable Analysis
Risk Response Planning : Mitigation and Contingency actions stated
Risk Monitoring and Control : Status Reporting Audits & Reviews