Unit 3: Managing Risks in Projects Source: Project Management

for Business and Technology

BY John Nicholas

Objective of Study
 Definition

: Risk in Projects  What are the sources of Risk?  Risk Response Planning  Project Management is Risk Management

Definition: Risk
 Risk

: “Possibility of exposing to danger,hazards,loss,injury”-Dictionary Meaning.  Risk is associated with project about technical ,schedule, Cost outcomes  From the investment point of view, Risk can be defined as the variability of return

Risk Concepts
 Risk

is function of the Uniqueness of a project and the experience of the project team.  The notion of the project risk involves Two concepts  1. The Likelihood that some problematical event will occur.  2.The impact of the event if it does occur.  Risk = f (Likelihood , impact )

Risk identification
 Risk

of Failure: which implies that project might fall short of schedule, budget, or technical goals by large margin.  Risk of Opportunity: which are events that could lead to rewards, savings or benefits
 The

main emphasis of the risk management is on determining the risk

Ways to identify the Project risk
Project Chronology: (Project feasibility, contract negotiation, engineering concept, or system definition design and development).  Type of the work or technical function: (Engineering risk, production risk) High risks in project typically stem from…
 
  

Using an unusual approach Attempting to further technology Training for a new task or applying new skills Developing and testing new equipment, system, or procedure

Sources of risk

Any factor with an uncertain probability of occurring that can influence the outcome of a project is considered a risk source or risk hazard.

Risk can be classified as Internal risks and external risks

Internal risk :Internal risks originate inside the project (Business Risk, Financial Risk and Technical risk) (Technical Risk: Maturity, Complexity, Quality, Concurrency or Dependency)  External risk: risks that stem from outside the project.  (Market conditions, Competitors' action, Interest rates ,Customer needs, Supplier relations, Weather, Labor availability )

Risk Identification Techniques
Project risks are identified from the analysis of the numerous documents ( past projects, lists of users needs and requirements, WBS, cost estimates, schedules and schematics and models of end-item) Techniques for pinpointing the risks are….. 4. Analogy 5. Checklists 6. WBS analysis 7. Process flowchart 8. Brainstorming

Risk Identification Techniques
Analogy  Records  Post-Completion summaries  Notes from Project Team  Similar projects to identify the risk

Checklists List the factors that can affect the risk in a project and also specify the risk level associated with the factors

Risk Identification Techniques

WBS analysis Every Work package is scrutinized for potential problems with mgmt, customers, suppliers ,resource availability and technical hurdles

Process flowchart Flowchart illustrates steps, procedures and flow between the activities. Pinpoint the trouble spots and area of risks Brainstorming Experience people share opinion and generate the idea about the possible problems or hazards in the project

Risk Response Planning
Response resource planning addresses the matter of how to deal with the risk
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Way to deal with the Risk………….. 1.Transfer the risk 2.Alter the plan or procedure to avoid /reduce the risk 3. Preparing the contingency plan 4.Accepting the risk

Project management is Risk Management
Risk Management Principles 1. Create risk management plan and risk profile 2. Appoint risk officer 3. Budget and schedule for dealing with risks as they materialized 4.Risk must be continuously monitored 5.Establish communication channel 6.Maintain documentation

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