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PROJECT RISK SLIDE PRESENTATION

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Risk Management (EMRM5103) - Slides Presentation
LECTURER; ASSOCIATE PROFESSOR SAMIAPPAN MARAPPAN

GROUP MEMBER; 1) MOHD. NORIZAM MD. SALLEH IC NO: 670703-01-6045 STUDENT ID:CGS00534317 2) REIDZUAN BIN AHMAD IC NO: 691218-04-5275 STUDENT ID: CGS00541817

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CONTENT
1. 2. 3. 4. 5. 6. 7. 8.

PROJECT BRIEF DEFINATION RISK MANAGEMENT OBJECTIVES RISK MANAGEMENT 6 PROCESSES MATRIX SHOWS THE SIX MAIN PROCESS & ALL OF THE DELIVERABLES MATRIX SHOWS THE SIX PROCESS AND THE RESPONSIBILITIES PLAN RISK MANAGEMENT IDENTIFY RISK DESIGN RISK EXTERNAL RISK ENVIRONMENTAL RISK ORGANISATIONAL RISK PROJECT MANAGEMENT RISK ROW RISK CONSTRUCTION RISK ENGINEERING SERVICE RISK

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RISK WERE PUT INTO WERW PUT INTO RISK BREAKDOWN STRUCTURE. RISK SHALL BE PUT INTO PROJECT RISK REGISTER (SAMPLE) PERFORM RISK ANALYSIS – QUALITATIVE

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CONTENT (conti.)
12. RISK BEEN PUT INTO PROBABILITY/IMPACT MATRIX (SAMPLE) 13. PROBABILITY/IMPACT MATRIX FOR QUALITATIVE RISK ASSESSMENT (SAMPLE) 14. CHART SHOWING HIGH, MEDIUM, AND LOW RISK TECHNOLOGIES (SAMPLE) 15. TOP TEN RISK ITEM TRACKING. 16. TOP TEN RISK ITEM TRACKING (SAMPLE) 17. EXPERT JUDGEMENT. 18. PROJECT RISK GET RANKED (SAMPLE). 19. QUANTITATIVE RISK ANALYSIS 20. DECISION TREES AND EXPECTED MONETARY VALUE (EMV). 21. EXPECTED MONETARY VALUE (EMV) EXAMPLE. 22. SIMULATION 23. FINISHED DATE PROBABILITY - USING MONTE CARLO SIMULATION (SAMPLE). 24. PLAN RISK RESPONSE.

25. Risk Handling Techniques 26. Monitor & Control Risk 27. Some risk in this project (example) & How to Monitor & Control them???
A. Risk Funding Techniques. B. CAPITAL RISK C. Schedule Risks. D. Cost Risks E. Communication Risks F. Quality Risks G. CONSTRUCTION RISK H. SAFETY RISK 28. THANK YOU

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1. PROJECT BRIEF
PROJECT: CONCTRUCTION OF REINFORCE CONCRETE BRIDGE. JABATAN KERJA RAYA MALAYSIA.

CLIENT:

CONTRACTOR : CONTRACTOR CLASS:

ZR CONST SDN. BHD. A

CONTRACT AMOUNT:

RM 20,000,000.00

CONTRACT SECURED:

VIA TENDER.
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2. DEFINATION OF RISK MANAGEMENT

The process of planning, leading and controlling the resources and activities of an organization/project To fulfill its objectives cost effectively To protect and grow corporate assets To enhance shareholder value
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3. OBJECTIVES
Understand what risk is and the importance of good project risk management. Discuss the elements involved in risk management planning and the contents of a risk management plan. List common sources of risks in this project. Describe the risk identification process, tools, and techniques to help identify project risks, and the main output of risk identification, a risk register. Discuss the qualitative risk analysis process and explain how to calculate risk factors, create probability/impact matrixes, apply the Top Ten Risk Item Tracking technique, and use expert judgment to rank risks.

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3. OBJECTIVES (CONT’D)
Explain the quantitative risk analysis process and how to apply decision trees, simulation, and sensitivity analysis to quantify risks. Provide examples of using different risk response planning strategies to address both negative and positive risks. Discuss what is involved in risk monitoring and control. Describe how software can assist in project risk management.
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4. RISK MANAGEMENT 6 PROCESSES

Based on: PMBOK Chapter 11, APM PRAM Guide, AS/NZ S4360

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5. MATRIX SHOWS THE SIX MAIN PROCESS & ALL OF THE DELIVERABLES ASSOCIATED WITH PROJECT RISK MANAGEMENT

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6. MATRIX SHOWS THE SIX PROCESSES AND THE RESPONSIBILITIES OF THE PROJECT MANAGER AND STAKEHOLDERS.

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7.PLAN RISK MANAGEMENT
Careful and explicit planning enhances the possibility of success of the five other risk management processes. Risk Management Planning is the process of deciding how to approach and conduct the risk management activities for a project. Planning of risk management processes is important to ensure that the level, type, and visibility of risk management are commensurate with both the risk and importance of the project to the organization, to provide sufficient resources and time for risk management activities, and to establish an agreed-upon basis for evaluating risks. The Risk Management Planning process should be completed early during project planning, since it is crucial to successfully performing the other processes described in this handbook. The risk management plan identifies and establishes the activities of risk management for the project in the project plan (RMP)
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8.IDENTIFY RISK
POTENTIAL RISK SECTOR ARE DETERMINE AS FOLLOWS; ENVIRONMENTAL DESIGN RIGHT OF WAY ENGINEERING SERVICE RISK CONSTRUCTION PROJECT MANAGEMENT EXTERNAL NATURAL DISASTER
NOTE; RISK FOR EACH SECTOR ARE DETAIL OUT IN THE NEXT 8 SLIDES; 13

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9. RISK WERE PUT INTO RISK BREAKDOWN STRUCTURE

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10. RISK SHALL BE PUT INTO PROJECT RISK REGISTER (SAMPLE)

Notes; All the risk indentified shall be put in the register.

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11. PERFORM RISK ANALYSIS QUALITATIVE
Using established methods and tools, qualitative risk analysis assesses the probability and the consequences (impact) of each identified risk to determine its overall importance. Using these tools helps to correct biases that are often presented in a project plan. In particular, careful and objective definitions of different levels of probability and impact are the keys to the credibility of the results.
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12. RISK BEEN PUT INTO PROBABILITY/IMPACT MATRIX (SAMPLE)

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13. PROBABILITY/IMPACT MATRIX FOR QUALITATIVE RISK ASSESSMENT (SAMPLE)

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14. CHART SHOWING HIGH, MEDIUM, AND LOW RISK TECHNOLOGIES (SAMPLE)

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15. TOP TEN RISK ITEM TRACKING
Top Ten Risk Item Tracking is a qualitative risk analysis tool that helps to identify risks and maintain an awareness of risks throughout the life of a project. Establish a periodic review of the top ten project risk items. List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item.

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16. TOP TEN RISK ITEM TRACKING (SAMPLE)
Monthly Ranking Risk Item This Mont h Inadequate planning Poor definition of scope Absence of leadership 1 2 Last Mont h 2 3 Number of Months 4 3 Risk Resolution Progress

Working on revising the entire project plan Holding meetings with project customer and sponsor to clarify scope Just assigned a new project manager to lead the project after old one quit Revising cost estimates Revising schedule estimates
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1

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Poor cost estimates Poor time estimates

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17. EXPERT JUDGMENT
Many organizations rely on the intuitive feelings and past experience of experts to help identify potential project risks. Experts can categorize risks as high, medium, or low with or without more sophisticated techniques. Can also help create and monitor a watch list, a list of risks that are low priority, but are still identified as potential risks.

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18. PROJECT RISK GET RANKED (SAMPLE)
No.
R44

Rank
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Risk

Description

Category

Root Cause

Triggers

Potential Responses

Risk Owner

Probability

Impact

Status

R21

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R7

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Note: The assigned project team members SHALL arrange the project risk according to their rank.

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19. QUANTITATIVE RISK ANALYSIS
Often follows qualitative risk analysis, but both can be done together. Large, complex projects involving leading edge technologies often require extensive quantitative risk analysis. Main techniques include:
Decision tree analysis Simulation Sensitivity analysis
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20. DECISION TREES AND EXPECTED MONETARY VALUE (EMV)
A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain. Estimated monetary value (EMV) is the product of a risk event probability and the risk event’s monetary value. You can draw a decision tree to help find the EMV.

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21. EXPECTED MONETARY VALUE (EMV) EXAMPLE

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22. SIMULATION
Simulation uses a representation or model of a system to analyze the expected behavior or performance of the system. Monte Carlo analysis simulates a model’s outcome many times to provide a statistical distribution of the calculated results. To use a Monte Carlo simulation, you must have three estimates (most likely, pessimistic, and optimistic) plus an estimate of the likelihood of the estimate being between the most likely and optimistic values.

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23. Finished Date Probability - Using Monte Carlo simulation (Sample).
The yellow arrow, pointing at 08/05/02, this is the date shown as the project completion date on the project plan. Now that we’ve performed the risk analysis we can determine that our chances of actually finishing the project on or before that date are just 15%!
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24. PLAN RISK RESPONSE
Risk Response Planning is the process of developing options, and determining actions to enhance opportunities and reduce threats to the project’s objectives. It focuses on the high-risk items evaluated in the qualitative and/or quantitative risk analysis. In Risk Response Planning parties are identified and assigned to take responsibility for each risk response. This process ensures that each risk requiring a response has an owner monitoring the responses, although a different party may be responsible for implementing the risk handling action itself. The project manager and the PDT identify which strategy is best for each risk, and then design specific action(s) to implement that strategy.

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25. Risk Handling Techniques
Risk Avoidance •Avoiding a high risk approach to software development by selecting a lower-risk approach •Statement – “I will not accept this risk; I will look for a less risky solution to the problem”
–A lower risk approach is not always appropriate –A higher risk approach has increased design flexibility, potentially lower cost, or potentially early delivery of the product.

•Not every risk can be avoided. •Avoiding risk in one area of a project might increase risk in another area. Risk Assumption •A decision to accept the consequences when an undesired event occurs. •Statement – “I am aware of the risk, and I chose to accept this risk because of the potential benefits of this approach” •Risk assumption acknowledges the existence of risk and a decision to accept the consequences if problems occur. •Continuous monitoring of project status and the development of other solutions if the risk becomes a problem. •Statement – “I am aware of the risk, and I will develop options to reduce the potential of the problem occurring and to reduce its effect should the problem occur.”

Risk Control

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25. Risk Handling Techniques (contd.)
Risk Control [Contd.] •Uses reviews, verification and validation, development of fallback positions, and similar management actions. •Involves development of a risk reduction plan and tracking to that plan. •Involves continual measurement of project status and development of options and fall-back positions to permit alternative, lower risk approaches when the problem occur. •Transferring potential problems to other areas of responsibility. •Care must be taken that transfer of a risk factor includes transfer of responsibilities for a successful outcome • Transferring a difficult technical issue to a subcontractor does not eliminate the risk of product failure because failure of the subcontractor will result in failure of the overall product. •Gathering additional information to further assess risk and to develop new contingency plans •A continuous process that enables the participants to perform risk management with greater confidence. •Techniques – Prototyping, Benchmarking, Simulation and modeling, Incremental development

Risk Transfer

Knowledge Acquisition

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26. MONITOR & CONTROL RISK
Risk monitoring and control keeps track of the identified risks, residual risks, and new risks. It also monitors the execution of planned strategies on the identified risks and evaluates their effectiveness. Risk monitoring and control continues for the life of the project. The list of project risks changes as the project matures, new risks develop, or anticipated risks disappear. Typically during project execution there should be regularly held risk meetings during which all or a part of the Risk Register is reviewed for the effectiveness of their handling and new risks are discussed and assigned owners. Periodic project risk reviews repeat the process of identification, analysis, and response planning. Risk ratings and prioritization commonly change during the project lifecycle.

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26. Monitor & Control Risk (Contd.)
If an unanticipated risk emerges, or a risk’s impact is greater than expected, the planned response may not be adequate. The project manager and the PDT must perform additional response planning to control the risk. Risk control involves: Choosing alternative response strategies Implementing a contingency plan Taking corrective actions Re-planning the project, as applicable The individual or a group assigned to each risk (risk owner) reports periodically to the project manager and the risk team leader on the status of the risk and the effectiveness of the response plan. The risk owner also reports on any unanticipated effects, and any mid-course correction that the PDT must consider in order to mitigate the risk.

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27. SOME RISK IN THIS PROJECT (EXAMPLE) & HOW TO MONITOR & CONTROL THEM???
After we have ranked all the risks and some got eliminated as they give minimal impact or eliminated by the response action taken, the remaining risks shall be monitored and controlled closely. The next few slides shall discuss some of the risk in this project and how they are monitor & control.

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A. Risk Funding Techniques:
• • • • • • • Current Expensing Unfunded Reserves Funded Reserves Borrowing Captive Insurers Commercial Insurance Contractual Transfer for Risk Financing

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B. CAPITAL RISK
THE BOTTOM LINE: IT ALL BOILS DOWN TO CAPITAL

“Capital”
Assets less liabilities; owners’ equity; net worth Support for (riskiness of) operations Thus, supports profitability and solvency of firm

“Capital Management”
Determine need for and adequacy of capital Plans for increasing or releasing capital Strategy for efficient use of capital For our project, despite the estimated/forecast profit plays a big role in its viability, finance cost, company net worth, escalation of material 44 price, politics , man powers, machineries are also important.

C. SCHEDULE RISKS
Techniques to use;
Algorithmic scheduling models Critical Path model PERT analysis

3 C 1 A (1) B (6) 4 (3) 2 D (1)

F (2)

5 K (1) L (1 ) M (1)

E (6) G (5) 6

8 H (1) J (2) 7 K (1 )

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Letters = Activities; Numbers = Milestones; (x) = Activity duration
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C. SCHEDULE RISKS (CONTD.)
The schedule network is a source of identifying potential risks Nodes or junction points with a high degree of fan-in and those with a high degree of fan-out are potential risk areas. A node with a high degree of fan-in has many tasks that must be completed before the milestone can be achieved. [Node 8] No subsequent tasks can be initiated until all tasks fanning into the node are completed. Delay in any one node will delay all subsequent tasks. Activity (nodes) on the critical path also are potential areas of high risk [path ABGJKLM] A slip in schedule for any activity on the critical path will result in a slip of the overall schedule.

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D. COST RISKS
Aggregation of costs and associated risk factors for each element of the work breakdown structure provides a detailed Cost-risk analysis. Budgets are determined using EFFORT (people * time) as the primary cost factor. Nonlinear increase in cost with decreasing schedule may result in a very high risk that the project cannot be completed within the budget. Other factors influencing cost and schedule Creeping requirements Schedule compression Unreasonable budgets Techniques (Monitor using); Algorithmic cost models Analysis of project assumptions S –curves Resources Vs Work Progress Nominated suppliers and sub-contractor (fixed price) Control resources. Training Clear Job delineation

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E. COMMUNICATION RISKS COMMUNICATION BREAKDOWN
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Client & consultant meeting Contract documents Proper job delineation proper correspondences Progress/site meeting Co-ordination meeting Tool box meeting Clear Job delineation

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F. QUALITY RISKS
Many software project risks result from delivery of unexpectedly poor software quality
Unreliable software Unusable software Unmaintainable software Nonportable software Nonexpandable software

Techniques
Performance modeling Reliability softwares Quality factor analysis Knowledge. Training. Experience personnel.
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G. CONSTRUCTION RISK - Inability of a sub-contractor to perform
Technique; Choose contractor with specialist track record. Choose contractor with strong financial backup. Choose contractor technology “know how”. Contractor with experience personnel. Giving training.

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H. SAFETY RISK
Worker injured or killed A job accident that injures the public A construction vehicle is involved in an accident off the project. Solution;
Public awareness Safety Briefing Trainning Contractor safety programs Traffic management and signboard Insurance
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28. Thank You

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