THE PROJECT MANAGEMENT KNOWLEDGE AREAS
12. Project Procurement Management
10.4 ADMINISTRATIVE CLOSURE
.2 Project closure. Confirmation that the project has met all customer requirements for the product of the project (the customer has formally accepted the project results and deliverables and the requirements of the delivering organization—for example, staff evaluations, budget reports, lessons learned, etc.).
.3 Lessons learned. Lessons learned are discussed in Section 4.3.3.3.
10.4.3.2|Chapter 11
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
Project Risk Management
Risk management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and conse- quences of positive events and minimizing the probability and consequences of adverse events to project objectives. Figure 11-1provides an overview of the fol- lowing major processes:
11.1 Risk Management Planning—deciding how to approach and plan the risk man- agement activities for a project.
11.2 Risk Identification—determining which risks might affect the project and doc- umenting their characteristics.
11.3 Qualitative Risk Analysis—performing a qualitative analysis of risks and con- ditions to prioritize their effects on project objectives.
11.4 Quantitative Risk Analysis—measuring the probability and consequences of risks and estimating their implications for project objectives.
11.5 Risk Response Planning—developing procedures and techniques to enhance opportunities and reduce threats to the project’s objectives.
11.6 Risk Monitoring and Control—monitoring residual risks, identifying new risks, executing risk reduction plans, and evaluating their effectiveness throughout the project life cycle.
These processes interact with each other and with the processes in the other knowledge areas. Each process generally occurs at least once in every project.
Although processes are presented here as discrete elements with well-defined inter- faces, in practice they may overlap and interact in ways not detailed here. Process interactions are discussed in detail in Chapter 3.
Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective. A risk has a cause and, if it occurs, a consequence. For example, a cause may be requiring a permit or having limited personnel assigned to the project. The risk event is that the permit may take longer than planned, or the personnel may not be adequate for the task. If either of these uncertain events occur, there will be a consequence on the project cost, schedule, or quality. Risk conditions could include aspects of the project envi- ronment that may contribute to project risk such as poor project management practices, or dependency on external participants that cannot be controlled.
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
Figure 11–1. Project Risk Management Overview
PROJECT RISK MANAGEMENT
11.2 Risk Identification 11.3 Qualitative Risk Analysis 11.1
.1 Inputs
.2 Tools and Techniques .3 Outputs
.1 Project charter .2 Organization’s risk
management policies .3 Defined roles and
responsibilities .4 Stakeholder risk
tolerances .5 Template for the
organization’s risk management plan .6 Work breakdown
structure (WBS) .1 Planning meetings .1 Risk management plan
.1 Inputs
.2 Tools and Techniques
.3 Outputs
.1 Risk management plan .2 Project planning outputs .3 Risk categories .4 Historical information .1 Documentation reviews .2 Information-gathering
techniques .3 Checklists .4 Assumptions analysis .5 Diagramming techniques .1 Risks
.2 Triggers
.3 Inputs to other processes
.1 Inputs
.2 Tools and Techniques
.3 Outputs
.1 Risk management plan .2 Identified risks .3 Project status .4 Project type .5 Data precision .6 Scales of probability
and impact .7 Assumptions .1 Risk probability and
impact .2 Probability/impact
risk rating matrix .3 Project assumptions
testing
.4 Data precision ranking .1 Overall risk ranking
for the project .2 List of prioritized risks .3 List of risks for
additional analysis and management .4 Trends in qualitative risk
analysis results Risk Management
Planning
11.5 Risk Response Planning
11.6 Risk Monitoring and Control
11.4 .1 Inputs
.2 Tools and Techniques
.3 Outputs
.1 Risk management plan .2 Identified risks .3 List of prioritized risks .4 List of risks for
additional analysis and management .5 Historical information .6 Expert judgment .7 Other planning outputs .1 Interviewing .2 Sensitivity analysis .3 Decision tree analysis .4 Simulation .1 Prioritized list of
quantified risks .2 Probabilistic analysis
of the project .3 Probability of achieving
the cost and time objectives .4 Trends in quantitative
risk analysis results
.1 Inputs
.2 Tools and Techniques
.3 Outputs
.1 Risk management plan .2 List of prioritized risks .3 Risk ranking of the project .4 Prioritized list of
quantified risks .5 Probabilistic analysis of
the project
.6 Probability of achieving the cost and time objectives .7 List of potential
responses .8 Risk thresholds .9 Risk owners .10 Common risk causes .11 Trends in qualitative
and quantitative risk analysis results .1 Avoidance .2 Transference .3 Mitigation .4 Acceptance .1 Risk response plan .2 Residual risks .3 Secondary risks .4 Contractual agreements .5 Contingency reserve
amounts needed .6 Inputs to other processes .7 Inputs to a revised
project plan
.1 Inputs
.2 Tools and Techniques
.3 Outputs
.1 Risk management plan .2 Risk response plan .3 Project communication .4 Additional risk
identification and analysis .5 Scope changes .1 Project risk response
audits
.2 Periodic project risk reviews
.3 Earned value analysis .4 Technical performance
measurement .5 Additional risk
response planning .1 Workaround plans .2 Corrective action .3 Project change requests .4 Updates to the risk
response plan .5 Risk database .6 Updates to risk
identification checklists Quantitative Risk
Analysis
Figure 11–1|11.1.1.6
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
A Guide to the
Project
Management Body of
Knowledge
SAMPLE
it may be possible to plan for them. Unknown risks cannot be managed, although project managers may address them by applying a general contingency based on past experience with similar projects.
Organizations perceive risk as it relates to threats to project success. Risks that are threats to the project may be accepted if they are in balance with the reward that may be gained by taking the risk. For example, adopting a fast-track schedule that may be overrun is a risk taken to achieve an earlier completion date. Risks that are opportunities may be pursued to benefit the project’s objectives.
To be successful, the organization must be committed to addressing risk man- agement throughout the project. One measure of the organizational commitment is its dedication to gathering high-quality data on project risks and their characteristics.