PMBOK" is a trademark of the Project Management Institute, Inc., and is registered in the United States and other nations. PMBOKa is a trademark of the Project Management Institute, Inc., and is registered in the United States and other nations .
4bout the Author
In accordance with this definition, this book addresses project risk management from the perspective of the project manager. It does not cover insurance risk, security risk or accident risk outside the context of the project.
Approach
Risk management is an integral part of project management and should be thought of as part of any project management methodology rather than as an independent function distinct from other project management functions.
Using This Book
By using these techniques, the project manager can gain some of the insights needed to proceed with risk management. As such, the ultimate authority on risk is not some tool or technique that is dealt with between these coverages.
Risk Processes and Practices-
Management 3
A Systematic Process
In 2000, the Standards Committee of the Project Management Institute, Inc. PMI@)3 made a big change in the context of how risk management will be implemented. In this new area, the project risk infrastructure is created and a project-specific risk management plan is generated.
Summary
Thus, the ultimate authority on risk is the project manager, who must make determinations based on the project's cost, schedule, and performance challenges.
Without a clear definition of the risk event, determining probability and impact becomes much more difficult. However, as you move toward the low probability/high impact quadrant of the figure, determining the level of risk becomes more subjective and requires strict guidelines.
Classifying Risk
Some statisticians and project managers apply probability distributions (see Appendix C), others do not. While project managers sometimes need to call on technical experts in the risk management process, they must also be prepared to make the final judgment themselves.
Risk Facets
Poorly assessed risks are not simply borne by low initial cost and schedule estimates. Risk factors are usually the technical, programmatic and support facets while cost and schedule facets are the indicators.
Risk Categories
As a result, at a minimum, project managers should expect to have a clear understanding of the breadth of risks associated with a particular technical level. While project management is largely rooted in planning, most of the risks identified within this category are those associated with the effectiveness of the plans created.
Other Relevant Considerations
While focusing on the short term, the project manager must also keep an eye on the long-term implications. Sudden changes in organizational priorities can wreak havoc on long-term plans (an area of risk in itself).
The Risk Management dtructure
Risk Management Planning
They should include basic inputs for risk management planning, some of which are common to many other project management processes. Such clarity of description will prove invaluable in determining the relative magnitude of project risk management effort.
Risk Environment
Consequences- This is the evaluation of the potential impact on the project if the assumption turns out to be invalid. Risk quantification gives project managers both a sense of the overall level of risk in the project and a value (in terms of cost or duration) for that risk.
Risk Avoidance
Risk Transference
Risk Mitigation
All these measures are embedded in the project plan (cost plans, schedule plans) and finally in the work breakdown structure (WBS). Risk monitoring and control includes the implementation of a risk management plan, which must be an integral part of the project plan.
Management Techniques
Ease of use refers to the level of training and education required before the technique can be implemented. It can also refer to the level of effort that may be involved in simply implementing the technique. Design understanding refers to the level of insight that the technique under consideration can potentially provide for any given project.
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
This requires some time during the interview for the professional to express his personal thoughts on areas that may be outside of his field. Although additional clarification may be required or the practitioner may not wish to attempt quantification, the risk identification nevertheless remains valid. This requires the professional to consider the probability of occurrence of a particular risk event and its potential impact.
Use of Results
Resource Requirements
Reliability
Selection Criteria
While the monitoring process is not a primary application of the expert interview, gathering the information essential for status reports is often a function of the interviews. In general, the expert interview should be considered less than purely quantitative due to the inevitable existence of individual bias. While team members with limited skills can handle expert interviews reasonably, those who understand the critical nature of the expert interview and the numerous applications of the technique will ultimately achieve the best results.
Major Steps in Applying the Technique
The costs for the risk planning interview consist of the participants' hourly wages and any facilitator fees. The results of the planning meeting are usually a set of minutes (or, in the most extreme case, a transcript of the meeting). Accuracy in the planning meeting environment is generally a function of the levels of information and insight available to the team members present.
The risk methodology consists of a series of pro forma steps to be followed according to the needs and structures of the project(s) concerned. Since the methodology represents the accumulated practice of the entire project organization, it is usually bypassed only in the most extreme circumstances. These scoring intervals (at least contact the project office to document and identify deficiencies in the reported in the quarter project risk practice and others.
Use of Results
As mentioned earlier, any documentation designed to provide clarity on the project, its processes or its objectives should be included in such a review. As new risks, triggers or symptoms are identified, the information should be captured and linked to the original documentation. If the risks are not communicated to the other parties in the project, the chances of the information being used effectively are small.
Use of Results
Design guidance should rely heavily on documentation reviews, as the reviews should point to customer expectations, the overall project goals, and the detailed implementation approach. For similar reasons, documentation reviews can support source selection because the nature of the project work and the history of performance in achieving similar objectives can go a long way toward establishing the best available sources of project performance. Utility is high for documentation reviews because the newly discovered information is maintained and stored with the original documentation.
Description and project characteristics of existing or past projects and their components (or approach). For the analogy to be valid, there must be some connection between the characteristic being used to make the comparison and the specific aspect of the project under consideration. Although analogies can be found, some extrapolation or independent evaluation of the data must also be performed.
Ian Evaluation
Finally, the WBS represents the cost and schedule performance framework (although it does not represent the schedule itself). Part of the previous discussion is about the important relationship between the WBS and the specifications and the need for compatibility. Does the SOW cover entire parts of the WBS that can be clearly assessed against the specifications.
Major Steps in Applying theTechnique
Plan evaluation operates on the collective body of documentation commonly referred to as project plans and includes primarily those documents listed earlier.
Plan evaluations are usually conducted after the project is implemented to evaluate the effectiveness of the plan against reality. The design evaluation technique can provide insight into the needs of the .. project and the shortcomings of the existing vendor base. As long as the project manager uses the tool appropriately, it is one of the most powerful techniques available.
Tedhnique Description
Whlen Applicable
The time required to implement the Delphi technique is the most important drawback of the approach. The Delphi technique has wide applicability due to the use of the skills and knowledge of experts. The Delphi technique is unparalleled in enabling a thoughtful review of subject matter experts' insights.
Chapter 12
Crawford Slip Method
Ihapter 13
The key use of the SWOT analysis is early in the project to draw attention to the organizational or environmental impacts on the project. The SWOT analysis is designed to address broad organizational issues rather than specifics of the project. The usefulness of the SWOT analysis can be high in organizations where presentations dictate future action.
Droject Templates
The costs of performing an assumption analysis are closely related to the lack of knowledge of the project and its environment. The time that the project manager devotes to the analysis of assumptions depends on the novelty of the project and the uniqueness of the environment. However, if the analysis of assumptions is done based on the project objective or scope statement alone, the level of detail will not be as thorough.
One of the most attractive features of the EMV method of decision analysis is that after taking the relevant inputs into the model, there is no ambiguity about the analysis. Ease of use in decision analysis is based on the skill level of the analyst. Here, decision analysis is of limited use unless applied to schedules to determine the potential for success in terms of the schedule.
Estimating Relationships
Summing the judgment values for each of the four project characteristics, as was done in the previous example, is only one way to develop one or more independent variables for a valuation relationship for contingent fund requirements. This sensitivity analysis is usually cautious because of the uncertainty associated with the characteristics of the projected project or contract. To cover the necessary risk funds, a percentage of the estimated cost of the contract or project is added to the base cost estimate.
Chapter 20 ERT ERT
This figure represents the standard deviation for the duration of the PERT project as a whole. It is worth noting that this number is significantly less than the sum of the standard deviations for the project's PERT estimates. In this scenario, the assumption is that there is a 68.26% probability that the project duration will be within one standard deviation of the PERT mean.
