project and change management
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project_risk.pptx"If you can't afford to mitigate the risk now, be absolutely sure you can afford to resolve the problem later when it happens."
Project Management Risks and Constraints
"If you can't afford to mitigate the risk now, be absolutely sure you can afford to resolve the problem later when it happens."
Definition
A risk is an event that may or may not happen. If it does happen, it will have unwanted consequences and will result in losses.
What Risk Management Does
Identify potential problems and confront them when it is cheaper and easier to do so, before there are problems and before a crisis blows up.
Focus on the project’s goals and consciously look for things that may affect quality throughout the project lifecycle.
Identify potential problems early in the planning cycle (the proactive approach) and provide input into management decisions regarding resource allocation.
Involve personnel at all levels of the project, focus their attention on a shared project (or product) vision, and provide a mechanism for achieving it.
Increase the overall chances of project success.
All Projects Have a Downside
Look at everything that will get in your way or become a potential roadblock.
If it is at all possible, look at both the positive and negative sides of the project before making a commitment to it.
Common Project Risks-1
Funding: Will you get enough money to fund your project’s needs?
Time: Things can take much longer than originally planned.
Staffing: Do you have the right staff? Do they have the right skill set and experience to meet your project’s objectives?
Customer relations: If your customer can’t or won’t work with your project team to help define the attributes of the project solution, watch out down the road.
Common Project Risks-2
Project size and complexity: When a project is too complex or large, it will be hard to stay within budget and get it done on time, and there will be too many factors to control. Any of them can bite you.
Overall structure: As a result of political decisions, responsibility gets split between competing groups and organizations
External factors: There are factors outside of your control, such as regulations, changing technologies, etc., that can throw your project off.
Additional Risks
Market acceptance: Will the customer buy the product?
Time to market: Can you get the product out there before anyone else does?
Incompatible product fit: It’s a great product, but no one can afford it.
Difficult to sell: It’s a high-ticket item or doesn’t offer enough incentive to sell.
Loss of support from the higher-ups: If a new manager is brought on board at a higher level, your project could lose support and funding.
Acts of God, Man, and War (Force Majeure)
Your project should be insured (if possible) against:
Hurricanes
Tornadoes and Hailstorms
Floods
Earthquakes
Terrorism
Be aware, though, that many insurance policies have exclusionary clauses covering some of the items above.
Three Types of Risk
Known risks: You can identify these after reviewing the project definition within the context of the technical and business environments. Use your own experience and that of your stakeholders to define such risks.
Predictable risks: These are risks that might occur or are anticipated based on work on other similar projects. They have to do with the economy or staff turnover and have an anticipated impact. You will be instinctively aware of these risks.
Unpredictable risks: The “doo-doo happens” things beyond the control of any project manager or project team.
Tying It All Together
Project risks should be accounted for before the project gets underway.
Some projects should simply not happen.
Be careful of inheriting problem projects.
The impossible stays impossible, no matter how enthusiastic and motivated the project manager and the project team are.
There is no security on this earth. Only opportunity.
-Douglas MacArthur
Risk Analysis
Process-1
Identify Risks
Consider (as a minimum)
Tasks
Groups of tasks
Project as a whole
Business risks
Determine the impact of the risk (should it happen)
Consider the probability of the risk happening
Process-2
Rank risks according to probability/impact score
Determine intervention
Avoid
Transfer
Mitigate
Accept
Probability/Impact
| Risk Score for a Specific Risk | |||||
| Probability | Risk Score = P x I | ||||
| 0.9 | 0.90 | 1.80 | 2.70 | 3.60 | 4.50 |
| 0.7 | 0.70 | 1.40 | 2.10 | 2.80 | 3.50 |
| 0.5 | 0.50 | 1.00 | 1.50 | 2.00 | 2.50 |
| 0.3 | 0.30 | 0.60 | 0.90 | 1.20 | 1.50 |
| 0.1 | 0.10 | 0.20 | 0.30 | 0.40 | 0.50 |
| 1.00 | 2.00 | 3.00 | 4.00 | 5.00 | |
| Impact |
14
Risk Response Template
| Project Name: | |||||
| Prepared by: | |||||
| Date: | |||||
| Identified Risk | Statement of Impact | Impact rating | Probability of occurring | Risk priority number | Mitigation action |
| A | B | AxB | |||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 | |||||
| 0 |
Possibilities
You may need to
Have a “Plan B” – another project plan that assumes the risk happened
Develop a Risk Management Plan – depending on how risky the project turns out to be
This is Not a One-Time Event
Risk is an on-going process
During planning and executing you must constantly
Review identified risks
Look for additional risks
Be sensitive to the possibility of changing risk parameters (impact and probability)
