Project Based Risk Management Defusing a potential ticking time bomb

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Project BasedRisk ManagementDefusing a
potential ticking time bomb

• What is Risk Management?
• Why do we need to manage Project Risk?
• How do we manage Project Risk?

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What is Risk?

• Risk is an uncertain event or condition that,
  if it occurs, has a positive or negative effect
  on a projects objectives. PMBOK Third
  Edition

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Risks That Can Effect a Project

• The technology used on the project
• The environment in which the project is executed
• The relationships between team members
• How well the project fits the culture or business
  area or strategic objectives of the agency
• How great of a change will result from the
  project

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Project Risk can increase when you have

• Lack of resources

Lack of communication and information
Lack of authority and/or responsibility
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Using Risk Management to Plan

• Identify risk mitigation strategies
• How can we fix it?
• Are we working on the right risks?
• Identify risk contingency strategies
• If we cant fix it, how do we do it differently?
• Develop Action Plans
• Prioritize items
• Minimize impact
• Dont over-correct

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PMM Risk Management Steps
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Risk Management Strategy Development

• Decide on a Risk Management Methodology
• Identify Risk Assumptions
• Define Risk Management Roles and Responsibilities
• Define Risk Management Timeframes
• Define Risk Communication Strategy
• Define How Risks Are to be Tracked
• Define any Risk Thresholds
• Define Ranking/Scoring Techniques

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Identifying Risk

• Some Techniques
• Brainstorming
• All team members participate - include
  stakeholder perspectives
• Initially list all potential risks, no matter how
  small
• Watch for contradictory information
• SME Interviews
• Project Documents
• Deliverable Descriptions
• Specifications Documents

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Identifying Risk(continued)

• Categorizing Risks
• Technical, Quality, or Performance risks
• Project Schedule risks
• Project Management risks
• Organizational risks
• External risks

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Risk Analysis

• Qualitative Analysis
• Individual Risk Ranking
• Probability/Impact Matrix (below)
• Overall Risk Ranking of the Project

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Risk Analysis(continued)

• Quantitative Analysis
• Sensitivity Analysis
• Decision Analysis
• Note Not every Risk needs Quantitative Analysis
  only those that need to be highly quantified,
  such as needing to determine certain cost and
  time objectives for the project.

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Risk Response Planning

• Risk Avoidance
• Eliminate Cause
• Risk Transfer
• Purchase Insurance
• Subcontract high risk tasks
• Risk Mitigation
• Minimize Probability
• Minimize Impact
• Risk Acceptance
• Contingency Plans

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Risk Monitoring and Control

• Using the Risk Management Plan to monitor risk
  (periodically reviewing the known risks) and
  controlling risk (mitigating and tracking known
  risks)
• Dealing with actual risk events (taking
  corrective action)
• Identifying new risks
• Updating the Risk Management Plan

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PMM Risk Management Template
General Info
Risk Management Strategy
Risk Identification
Qualitative and Quantitative Analysis
Risk Response Planning
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State of Michigan Project Management
Methodology(PMM)

• More information on Risk Management can be found
  in the
• PMM starting on page 3-70