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IT PROJECT MANAGEMENTDr. Zeeshan BhattiMPhil (IT)Chapter 4
Institute of Information and Communication TechnologyUniversity of Sindh, Jamshoro
Risk Management
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ShareLessonsLearned
EvaluateSuccess
ConductClose-Out
Meeting
Roadmap to Project Management Success
FormProject
Team
Statementof WorkPurpose
Project Background
Project Deliverables
WorkBreakdownStructure
ResponsibilityMatrix
R A
A
S SR
Network Gantt ResourcePlan
UpdatePlan
ResolveIssues
ManageChange
TrackProgress
PerformTasks
Budget
TIME
LEADERSHIP
COMMUNICATION
P R O J E
C T N
O T E B O O K M E E
T I N G S
R E P O
R T S
L E S S O N S L E A R N E D
P L A N
I M P L E
M E N T
C L O S E
- O U T
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WHAT IS RISK?
Risk can be defined as:
“Any threat to project success.”
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Schedule
Within
AvailableResources
Project Scope
Project Risk
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RISK MANAGEMENT PROCESS
RiskUncertain or chance events that planning can not overcome or control.
Risk ManagementA proactive attempt to recognize and manage internal events and external threatsthat affect the likelihood of a project’s success.
What can go wrong (risk event).
How to minimize the risk event’s impact (consequences).
What can be done before an event occurs (anticipation).
What to do when an event occurs (contingency plans).
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THE RISK EVENT GRAPH
FIGURE 7.1
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RISK MANAGEMENT’S BENEFITSA proactive rather than reactive approach.
Reduces surprises and negative consequences.
Prepares the project manager to take advantage
of appropriate risks.Provides better control over the future.
Improves chances of reaching project performance objectives within budget andon time.
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THE RISK MANAGEMENPROCESS
FIGURE 7.2
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MANAGING RISK
Step 1: Risk IdentificationGenerate a list of possible risks through brainstorming, problemidentification and risk profiling.
Macro risks first, then specific events
Step 2: Risk AssessmentScenario analysis for event probability and impactRisk assessment matrix
Failure Mode and Effects Analysis (FMEA)Probability analysis
Decision trees, NPV, and PERT
Semiquantitative scenario analysis
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THE RISK BREAKDOWN STRUCTURE (RBS)
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PARTIAL RISK PROFILE FOR PRODUCT DEVELOPMENT PROJECT
FIGURE 7.4
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DEFINED CONDITIONS FOR IMPACT SCALES OF A RISK ON MAJOROBJECTIVES (EXAMPLES FOR NEGATIVE IMPACTS ONLY)
FIGURE 7.5
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RISK ASSESSMENT FORM
FIGURE 7.6
Failure Mode and Effects Analysis (FMEA)Impact × Probability × Detection = Risk Value
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RISK SEVERITY MATRIX
Failure Mode and Effects Analysis (FMEA)
Impact × Probability × Detection = Risk Value
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MANAGING RISK (CONT’D)
Step 3: Risk Response DevelopmentMitigating Risk
Reducing the likelihood an adverse event will occur.
Reducing impact of adverse event.
Avoiding RiskChanging the project plan to eliminate the risk or condition.
Transferring RiskPaying a premium to pass the risk to another party.
Requiring Build-Own-Operate-Transfer (BOOT) provisions.
Retaining RiskMaking a conscious decision to accept the risk.
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CONTINGENCY PLANNING
Contingency PlanAn alternative plan that will be used if a possible foreseen risk event actually occurs.
A plan of actions that will reduce or mitigate the negative impact (consequences) of arisk event.
Risks of Not Having a Contingency PlanHaving no plan may slow managerial response.
Decisions made under pressure can be potentially dangerous and costly.
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RISK AND CONTINGENCY PLANNING
Technical RisksBackup strategies if chosen technology fails.Assessing whether technical uncertaintiescan be resolved.
Schedule RisksUse of slack increases the risk of a late project finish.Imposed duration dates (absolute project finish date)Compression of project schedules due to a shortened project duration date.
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RISK RESPONSE MATRIX
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RISK AND CONTINGENCY PLANNING
(CONT’D)Costs Risks
Time/cost dependency links: costs increase when problems take longer to solve thanexpected.
Deciding to use the schedule to solve cash flow problems should be avoided.
Price protection risks (a rise in input costs) increase if the duration of a project isincreased.
Funding RisksChanges in the supply of funds for the project can dramatically affect the likelihoodof implementation or successful completion of a project.
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OPPORTUNITY MANAGEMENT TACT
ExploitSeeking to eliminate the uncertainty associated with an opportunity toensure that it definitely happens.
ShareAllocating some or all of the ownership of an opportunity to anotherparty who is best able to capture the opportunity for the benefit of theproject.
EnhanceTaking action to increase the probability and/or the positive impact ofan opportunity.
AcceptBeing willing to take advantage of an opportunity if it occurs, but nottaking action to pursue it.
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MANAGING RISK (CONT’D)
Step 4: Risk Response ControlRisk control
Execution of the risk response strategy
Monitoring of triggering events
Initiating contingency plans
Watching for new risks
Establishing a Change Management SystemMonitoring, tracking, and reporting risk
Fostering an open organization environment
Repeating risk identification/assessment exercises
Assigning and documenting responsibility for managing risk
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CHANGE MANAGEMENT CONTROL
Sources of ChangeProject scope changes
Implementation of contingency plansImprovement changes
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CHANGE CONTROL SYSTEM PROCES1. Identify proposed changes.2. List expected effects of proposed changes
on schedule and budget.
3. Review, evaluate, and approve or disapproveof changes formally.
4. Negotiate and resolve conflicts of change, condition,and cost.
5. Communicate changes to parties affected.
6. Assign responsibility for implementing change.7. Adjust master schedule and budget.
8. Track all changes that are to be implemented
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THE CHANGE CONTROL PROCESS
FIGURE 7.9
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BENEFITS OF A CHANGE CONTROL S1. Inconsequential changes are discouraged
by the formal process.2. Costs of changes are maintained in a log.
3. Integrity of the WBS and performance measuresis maintained.
4. Allocation and use of budget and management reserve fundsare tracked.
5. Responsibility for implementation is clarified.
6. Effect of changes is visible to all parties involved.
7. Implementation of change is monitored.
8. Scope changes will be quickly reflected in baseline andperformance measures.
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SAMPLE CHANGEREQUEST FORM
FIGURE 7.10
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CHANGE REQUESTLOG
FIGURE 7.11
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KEY TERMSAvoiding risk
Budget reserve
Change management system
Contingency plan
Management reserve
Mitigating risk
OpportunityRisk
Risk breakdown structure (RBS)
Risk register
Risk profile
Risk severity matrix
Scenario analysis
Sharing risk
Time buffer
Transferring risk
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ShareLessonsLearned
EvaluateSuccess
ConductClose-Out
Meeting
Roadmap to Project Management Success
FormProjectTeam
Statementof Work
ResponsibilityMatrix
Purpose
Project Background
Project Deliverables
WorkBreakdownStructure
R A
A
SS
R
Network Gantt BudgetResourcePlan
UpdatePlan
ResolveIssues
ManageChange
TrackProgress
PerformTasks
LEADERSHIP
COMMUNICATION
TIME
P R O J E C
T N O
T E B O O K
M E E T I N
G S
R E P O R T S
L E S S O
N S L E A R N E D
P L A N
I M P L E
M E N T
C L
O S E - O U T
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REFERRED NOTESA Short Course in ProjectManagement, by Nayda G.Santiago
REFERRED BOOK
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THANK YOU!!!!
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