RISK MANAGEMENT

PRMG-095

Dr. Mohamed Abd El Ghany

FCIArb, PhD, Msc, Dipl.
Projects Manager
ACE Arab Consulting Engineers
“Moharram.Bakhoum”
 Topics Covered in Lecture One
• Course Contents.
• Introduction and Basic Definitions.
• Risk and Project Management.
• Importance of Risk Management.
• Benefit of Risk Management.
• Risk Management Process.

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 Topics Covered in Lecture Two

• Establishing the Context.

• Risk Identification.

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 ESTABLISHING THE
CONTEXT

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 • It is concerned with developing a structure for risk
identification and assessment.
• It establishes the organizational and project
environment in which risk assessment is to take
place.
• It specifies the main objectives and outcomes
required of the project.
• It identifies a set of success criteria against which the
consequence of identified risks can be measured.
• It defines a set of key elements for structuring the risk
Identification assessment Process.
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  Project Execution Strategy.
 Project Contract.
 Cost and Schedule Assumptions.
 Scope Definitions.
 Engineering Design and Studies.
 Economic Analysis.
 Any other relevant documentation about the
project and its purpose.

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  Review Organizational and Project Documents.
 Perform Stakeholders Analysis.
 Develop Criteria For Success.
 Develop a Set of Key Elements.

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  Organizational and Project objectives.
 Specific Criteria For Success.
 Objectives and scope for the Risk Assessment.
 Key Elements For Structuring Risk Identification.

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  It is necessary to know the objectives of the
organization and the project in order to make sure
that all significant risks are captured.
 Objectives are linked to the risk management
process through criteria for measuring success.
 Success criteria is assessed by measuring the impact
or consequences of risks that might jeopardize
achieving objectives.

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  Identify the scope of the project.
 Identify the main questions and issues of concerns
of the organization.
 Identify the relationship between the project and
the organization’s strategy and business objectives.

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 • Adopt the most cost effective strategy.
• Ensure that the Business Users are involved in
developing the strategy.
• Optimize Project Schedule to ensure timely
implementation and operation of project facilities.
• Minimize disruption to any current operation at any
company site.
• Minimize health, safety and environmental risks
during construction.

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  Control project cost and make sure that it is not
deviated from the available budget.
 Controlling the project schedule to make sure that
the project is completed on time.
 Quality control to make sure the project outcomes
are suitable for their intended purpose.

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 Any person or entity that have any direct or indirect
relation to the project.

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 STAKEHOLDERS IN A GOVERNMENTAL PROJECT
Governmental Executive Management
Agencies Agency Business Units Involved
Agency Users
Governments and National Governments
Their Ministers State and Local Governments
Other Government Funding Agencies
Department
Finance Providers Financial Institutions
Industry Suppliers
Communities Beneficiaries, Neighbors

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 Stakeholders Desired Outcomes
Business Units Involved •Well Structured and Efficient Procurement
in the Project Strategy.
•Open and Effective Competition.
•A selected capability acquisition option that
demonstrably provides best value for money.
Financial Institutions •Enhanced business opportunities.
•A reasonable profit on business investments.
Agency Users •Delivered capabilities that meet the
requirements and needs of users

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 Criteria For Success
Criteria Notes
Community •The highest standards of community consultation and liaison
Relation must be maintained.
Environment •The Solutions to the technical issues must be environmentally
sound.
Quality •The client requires equipment that is properly engineered
and reliable.
Safety •Project delivery processes must ensure that the highest
standards of safety are contained in the contract conditions.

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 Criteria For Success
Criteria Notes Measure
Cost The installation and testing must be Budget $
completed within the allocated
budget
Quality •The operators and users require •Down Time Less than 15
reliable equipment minutes per month over the
first 6 months of operation

Timing •The project must be delivered and • Certain Dates to be

commissioned on time to meet defined and deviation to be
business obligations measured for non
compliance

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  It is much more effective to divide the project into
sections or key elements for risk identification.
 Key Elements are set of topics to be considered one
by one during risk identification.
 Each topic is smaller than the project as a whole.
 The key elements may be based on different aspects
of the project; depending on objectives and key
issues of concern, the following table indicates some
of the ways of structuring the elements for different
purposes.

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 Basis for Selecting The
Purpose , Objectives, Relevant Issues
Elements
Business Planning and Strategic Business Activities
Procurement
Budget Constraints, external financing Cost Items
Technical and Environmental Issues; Physical Component
Reliability; Allocation of Engineering and
Management Effort

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  For each element use the key element description in
the table below to expand on the definition.
 Define each element in terms of what involved
(construction, installation, supply items,
measurements available, drawing references ,
equipment list, date sources considered and
accepted or rejected…).
 The main assumption about the element should be
stated clearly.

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 Project Element: Reference no:

Description:

Assumptions:

Source Material:

Compiled by: Date: Reviewed by: Date:

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 The stakeholders should develop a set of Key
Elements For structuring Risk Identification in
the next stage

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 RISK IDENTIFICATION

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  Definition
Risk Identification involves identifying and
documenting all the risks that could impact the
project.
 Question
What is the potential risks that may exist in the
project in other words what are the expected risks
in the project which could hinder the achuevments
of project objuectives?
 Output
Usually risk identification provides a list of project’s
risks.

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 In order to answer the previously mentioned
question, we need to have a clear vision about
our project’s environment and
objectives.

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  Project defined scope of work.
 Bench mark and pre-construction cost
estimates.
 Project preliminary schedule.
 Organization charts.
 Logistics plan

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  Documentation Reviews.
 Information Gathering Techniques.
 Checklist analysis.
 Assumption analysis.
 Diagramming techniques.

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  Review of project documentation, including
plans, assumptions, project files, and other
information that can be indicators of risks in
the project.
 Review available information in the data base
and select projects similar to the project, this
similarity could be identified by complexity,
size, scope …etc.
 Review lessons learned from similar projects.

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  Brainstorming is exchanging/sharing information of
industry experts.

 The goal of brainstorming is to obtain a

comprehensive list of project risks.

 The project team usually performs brainstorming,

often with a multidisciplinary set of experts not in
the team.

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  Ideas about project risk are generated under the
leadership of a facilitator.

 Categories of risk, such as a risk breakdown

structure, can be used as a framework.

 Risks are then identified and categorized by type of

risk and their definitions are sharpened.

 Risks should be recorded in front of the team

whether using white board or flip chart
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  Participants shall not interrupt colleagues.
 Participants shall not despise or criticize any idea.
 All participants have the same opportunities and
time to express their ideas.

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  The Delphi technique is a way to reach a consensus of experts.
 Project risk experts participate in this technique anonymously.
 A facilitator uses a questionnaire to solicit ideas about the
important project risks.

 The responses are summarized and are then re-circulated to the

experts for further comment.

 Consensus may be reached in a few rounds of this process.

 The Delphi technique helps reduce bias in the data and keeps any
person from having undue influence on the outcome.

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  Interviewing
Interviewing experienced project participants, stakeholders, and
subject matter experts can identify risks.

 Root Cause Identification

 It is an inquiry into the essential causes of a project’s risks.
 It sharpens the definition of risk and allows grouping risks by
causes.

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  Risk identification checklists can be developed based on historical
information and knowledge that has been accumulated from
previous similar projects and from other sources of information.

 The lowest level of the RBS can also be used as a risk checklist.
 While a checklist can be quick and simple, it is impossible to build an
exhaustive one.

 Care should be taken to explore items that do not appear in the

checklist.

 The checklist should be reviewed during project closure to improve it

for use on future projects.

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  Every project is conceived and developed based on a set
of hypotheses, scenarios, or assumptions.

 Assumptions analysis is a tool that explores the validity

of assumptions as they apply to the project.

 It identifies risks to the project from inaccuracy,

inconsistency, or incompleteness of assumptions.

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  Cause-and effect diagrams: These are also known as
Ishikawa or fishbone diagrams, and are useful for
identifying causes of risks.

 System or process flow charts: These show how various

elements of a system interrelate, and the mechanism of
causation.;

 Influence diagrams: These are graphical representations

of situations showing causal influences, time ordering of
events, and other relationships among variables and
outcomes.

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 Diagramming techniques are useful for showing the
logical steps of the process

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Risk Identification Usually Ends-Up with Risk Register.

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