TRAIN TO WIN

Project Risk Management

Presented by: Michael C. Nollet, MBA, PMP
www.BUtrain.com 1-800-BU-TRAIN (288-

Performance Objectives
Whats new in PMBOK 3rd edition? Three tips for more effective risk management Select common problems and brainstorm solutions Document our possible solutions Start to improve project risk management in the real world!

About Boston University

Founded in 1839 4th largest private university in U.S. Over $1.4 billion annual budget $2.6 billion in assets Largest foreign student population in the world 17 Schools and Colleges Over 3,000 Faculty Members
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Boston University Corporate Education Center (BUCEC)

Project Management ITIL PRINCE2 Management & Communication Business Process Management Leadership Six Sigma Team Building Business Analysis Information Technology
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What is Project Risk?

Risks and Objectives

RISK

RISK

Time
Stakeholder Needs and Expectations

Cost
RISK

RISK

Scope/Quality
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Whats New in PMBOK 3rd Edition?

Look at the Inputs, Tools, Techniques and Outputs!

Risk Management Process

Start

Identify Risk Monitor and Control Risk

Analyze Risk

Respond to Risk

Finish
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Key Concepts

Risk Knowledge Area

Initiating Planning Executing Controlling Closing

Risk Management Planning Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Response Planning

Risk Monitoring and Control

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Risk Management Planning

Inputs Tools and Techniques
Planning meetings and analysis

Outputs

Enterprise environmental factors Organizational process assets

Project scope statement

Risk management plan

Project management plan

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Risk Identification
Inputs Tools and Techniques
Documentation reviews

Outputs

Enterprise environmental factors

Risk register

Information gathering Organizational process assets techniques Project scope statement Risk management plan Checklists Assumptions analysis Diagramming techniques

Project management plan

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Risk Identification

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Qualitative Risk Analysis

Inputs Tools and Techniques Outputs

Organizational process assets Risk probability and impact assessment Project scope statement Probability and impact Risk management plan matrix

Risk register (updates)

Risk register

Risk data quality assessment Risk categorization

Risk urgency assessment

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Qualitative Analysis

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Quantitative Risk Analysis

Inputs
Organizational process assets Project scope statement Risk management plan Risk register Project management plan Project schedule management plan Project cost management plan

Tools and Techniques

Data gathering and representation technique Quantitative risk analysis and modeling techniques

Outputs Risk register (updates)

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Risk Response Planning

Inputs Tools and Techniques
Strategies for negative risks or threats Strategies for positive risks or opportunities Strategies for both threats and opportunities Contingent response strategy

Outputs

Risk management plan

Risk register (updates) Project management plan updates Risk-related contractual agreements

Risk register

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Risk Monitoring and Control

Inputs Tools and Techniques
Risk reassessment Risk audits

Outputs

Risk management plan

Risk register (updates)

Risk register Approved change

Work performance information

Requested changes Recommended corrective Variance and trend analysis actions requests Recommended preventive Technical performance actions measurement

Reserve analysis
Status meetings

Organizational process assets (updates)

Performance reports

Project management plan (updates)

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1. Three 2. Risk 3. Tips

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1. Risk and Impact Travel Together!

There is a risk that IMPACT, Because (of) RISK EVENT Or
IF RISK EVENT #1 RISK EVENT #2 THEN IMPACT #1 IMPACT #2

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2. Make Risk Visible

% 5 4 3 2 1
Impact
5 4 3 10 8 6 15 12 9 6 3 20 16 12 8 4 25 20 15 10 5

R3

R1
2 1 4 2

R2

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3. Show Total Risk Exposure

Project nam e: Project ref: Date:
Estim ated Im pact Risk Id. M itigation (how to lower the risk factor) Capacity an alysis w be don ill e du ring the design stage, if this show a problem s design issu w es ill be rev isted. Early dev elopm of ent in tegration plan, w form entry ith al requirem ents for com ponen ts en tering in tegration . Project organization setup w a ith dev elopm ent m ager to focu an s on the team 's w ork, leaving project m anager tim to focus on e ex ternal stakeh olders. Frequen contact t to discern intern al issu Check for es. conditional approvals at each status m eetin g. Contingency plan (what to do if the risk occurs) Pu rchase an in d stall additional disc space at the cu stom site. er Schedule work days 0 Contingency

Custom er: Project Manager:

Title 1 U derestim n ated capacity

Description T e server h capacity in itially defined m be ay in adequ ate.

Labor $1,000

Expenses $600

M aterials $2,500

Probability 30%

Schedule Labor 0.00 $300

Expenses $180

M aterials $750

TO L TA $1,230

2 Integration issues

Systemintegration m com ore plex th an estim ated.

Ex pend m developm ore ent effort, try an m d inim th ize is by regular m eetings betw een developm and integration ent team s.

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$10,000

$0

$0

25%

2.50

$2,500

$0

$0

$2,500

3 Cu stom er m anagem t en

Custom requ er ires m interfacin to ore g m anage than planned

Escalate in custom er's organization.

$15,000

$4,000

$0

30%

1.50

$4,500

$1,200

$0

$5,700

4 N Custom ew er

Custom intern er al issues - cou take ld longer than planned to m ake a decision.

Escalate in custom er's organization.

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$25,000

$2,000

$2,000

40%

4.00

$10,000

$800

$800

$11,600

TO LS TA TO L Risk Exposure TA

25 25

$51,000

$6,600

$4,500 $62,100

0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.00

$0 $0 $0 $0 $0 $0 $0 $17,300

$0 $0 $0 $0 $0 $0 $0 $2,180

$0 $0 $0 $0 $0 $0 $0 $1,550

$ $ $ $ $ $ $ $21,030

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3.5 Include Contingency in the Plan

4 WD $X

6 WD $Y

C 8 WD $21,030

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Group Exercise
Identify 5 common risks on your projects Review in your small groups Select at least one common risk, and brainstorm all the potential responses you can come up with and write them down!

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Web Resources
PMI Risk Special Interest Group (SIG)
www.risksig.com

Society of Risk Analysis

www.sra.org

Tech Republic
www.techrepublic.com

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Reference Books
PMBOK, chapter 11 Wideman, Project and Program Risk Management Martin and Chadbourne, The Professional Guide to Risk Assessment DeMarco and Lister, Waltzing with Bears

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Next Steps
Document todays results Email our potential solutions Start a dialogue Improve project risk management practices What else could we do?

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TRAIN TO WIN

Thank You !
Please send comments to: mnollet@usa.net
www.BUtrain.com 1-800-BU-TRAIN (288-