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Project Riske Management

Project Riske Management

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Published by: Mohammed Lawal Ahmed on May 02, 2011
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01/06/2013

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Masters of Business and OperationsManagement
MODULE: Project Management(SIEM004)
Session
: 2008/09
Compiled By: Mohammed Ahmed 
INTRODUCTION
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In the real world, project decisions are made with incomplete information about uncertaintiesthroughout the life cycle of a project. Uncertainties are a fundamental part of project whichcan either derail a project or turned into opportunities. These uncertainties results in risks(Burke, 2006).
RISK IN PROJECTS
According to Olsson (2002), risk is the uncertainty of the future which cannot be predicted.They are potential events that pose a threat or opportunity to projects that may result in goalsnot being achieved as set out in a project plan (Heldman, 2005). PMBOK (2004) defines project risk as an uncertain condition that when allowed to occur would have a negative or  positive outcome on project objective. Risks are an integral part of project management fromthe inception of the profession (Olsson, 2007). Risks have the probability of occurring or notoccurring and their uncertainties can best be judge based on the knowledge and experience of the project manager (Newell and Grashina, 2004). Project risk management as defined inPMBOK (2004) involves the practices concerned with conducting risk management planning,identification, analysis and reporting, monitoring and controlling projects.
RISK EVALUATION
According to Lansdowne (1999), risks are evaluated using a five-point scale to understandthe level of impact when allowed to occur in projects.1.Critical risk would cause project failure.2.Serious risk would cause major cost or schedule increase which may preventsecondary requirements to be achieved.
3.
Moderate risk would cause moderate cost or schedule increase, though it will stillallow important requirements to be realised.4.Minor risk would cause only small cost or schedule increase.5.Negligible risk would have no substantive effect on cost or schedule.
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CLASSES OF RISK 
Pure risks: Risks that act as threats to projectsBusiness risks: Risks normal to businessesOpportunity risks: Risks with good outcome.
CAUSES OF RISK 
Project risk analysis from root cause analysis (fishbone) diagram helps the project leader tofully understand the causes, nature and the extent of risks (Kendrick, 2003). Briner et al(2001) suggested that for a project manager to avoid being caught in a web of difficulties, theneed to anticipate and analyse the potential impact of risk is important.
Inadequate feasibility studies
Weather/ climatic conditions
Poor communication
Evaluation of project proposal based on price rather than long-term consideration of quality
Lack of skills and knowledge in project and risk management
RISK MANAGEMENT PROCESSES
Risk Planning: Developing and documenting the strategies necessary to handle risks whenthey occur.Risk Assessment: The method of identifying and analysing areas that would help the projectmeet the cost, schedule and performance objective even when risk occur.Risk Handling: It helps to evaluate and select one or more strategies to help put the projectrisk under negligible level.Risk Monitoring: This involves tracking and evaluating the performance of the processesemployed in managing the project risks.
RISK IDENTIFICATION TECHNIQUES
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