project management report
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a200sam_week_6_slides.pptxEssential skills for the Project Manager
A200SAM ADD+VANTAGE MODULE
Review of week 5
Critical Path Analysis
Identifying activities on the critical path
Identifying activities with float
Resourcing the plan
Resource smoothing
Resource levelling
Project cost estimation
Any questions?
Risks and opportunities
Projects and risk
Projects are subject to higher levels of uncertainty for several reasons:
they are unique/one-off
project organisations are often temporary
they are about change
What are risks and opportunities?
In small groups, discuss the use of the following terms in project management:
Risks
Opportunities
Uncertainty
Risk management
Risk definitions
‘Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project objective.’
(PMI Guide to the PMBoK, 2004: 373)
‘The potential of an action or event to impact on the achievement of objectives.’
(apm.org.uk, accessed 22/2/2013)
Definitions from risk publications
‘…a threat (or opportunity) which could affect adversely (or favourably) achievement of the objectives ...’
(ICE’s RAMP Guide, 2005: 19)
‘A risk consists of a combination of the probability of a perceived threat or opportunity occurring and the magnitude of its impact on objectives.’
(Office of Government Commerce’s M_o_R, 2007: 1)
‘…an uncertain event or set of circumstances that, should it occur, will have an effect on the achievement of the project’s objectives.’
(APM’s PRAM Guide, 2004: 176)
Institution of Civil Eng – Risk Analysis and Management for Projects
MoR – Management of Risk
APM Project Risk Analysis and Management (PRAM)
Change in definitions
The view of risk management changed to incorporate positive and negative outcomes during the period 1997 to 2000
Pre-1997, risk definitions were threat-based
Post- 2000, usage embraces both threat and opportunity
‘There is increasing awareness that risk management can and should be used to minimise the negative effect of downside threat-risks, while also attempting to maximise the positive effect of upside opportunity-risks, in order to optimise achievement of objectives’
(Hillson and Murray-Webster, 2007: 6)
Most projects carry speculative risk – chance of a seizing an opportunity through (say) using new technology or running in to problems if the new technology doesn’t perform as expected.
Opportunity
‘A positive risk event that, if it occurs, will have a beneficial effect on achievement of objectives.’ (apm.org.uk, accessed 22/2/2013)
‘An opportunity can be defined as an uncertain event or set of conditions that, if it occurs, would benefit the project or business.’
(Hillson, 2003: 18)
Risk management
‘A process that allows individual risk events and overall risk to be understood and managed proactively, optimising success by minimising threats and maximising opportunities.’
(apm.org.uk, accessed 22/2/2013)
‘The objective of risk management is to minimise the negative impacts of risks on the project and to benefit from opportunities.’
(Koster, 2010: 100)
Outline of management process
Identification
Analysis
Planning
Monitoring and control
Identifying risks
Sources of risks
Risks arising from factors under the project’s control:
expertise of team and project stakeholders
management systems and processes
performance of contractors
Risks arising from factors in the wider external environment which are only controllable by decision makers elsewhere:
competitor action
changes in government policy
Risks arising from factors which are uncontrollable:
weather / climate
commodity prices
terrorism
Risk identification – Activity (10 mins)
Read the short case study
In groups of 4/5, identify all the negative and positive risks you can associate with this project
Write down your list of risks
Risk analysis
Analysing risks enables an assessment of the following features of risk:
Probability – how likely is this risk to occur?
Impact – if it does occur, what would its effect be on the project?
Trigger – what event/circumstances etc might trigger the occurrence of the risk?
Which of the risks will have the most positive or negative impact upon the project? (or upon the organisation)
IMPACT AND PROBABILITY EXAMPLE
Impact
Days to resolve or deviation in budget
Low 1 < 1 day/<£250
Low/medium 2 1-3 days/£251-1000
Medium 3 4-7 days/£1001-2000
Medium/high 4 8-12 days/£2001-4000
High 5 > 12 days/>£4000
Probability
% chance of occurring
Low 1 0-10%
Low/medium 2 11-25%
Medium 3 26-50%
Medium/high 4 51-75%
High 5 76-99%
Example – Planning a conference
Probability/impact matrix
Tool for risk prioritization
Combines the likelihood of risk occurrence with the effect the risk will have on the project objectives
Provides stakeholders with overview of risk propensity
Categorization of risks in terms of project impact/probability can be put on a scale
eg three stage (low, medium, high) or five stage (insignificant, minor, moderate, major, severe)
Probability/impact matrix example
LOW
MEDIUM
HIGH
LOW
MEDIUM
HIGH
Probability
Impact
Risk analysis – Activity (5 mins)
Using your list of negative and positive risks identified from the case study:
assess their impact and probability
plot the risks on a matrix
Risk response strategies
There are a number or risk response strategies available when planning for potential risks.
These are the main five strategies:
Avoidance
Acceptance
Sharing
Mitigation
Transfer
Risk response strategies
There are a number or risk response strategies available when planning for potential risks.
These are the main five strategies:
Avoidance – remove the source of risk
Acceptance – acknowledge and tolerate risk
Sharing – share risk through collaboration with others
Mitigation – reduce the probability or impact of the risk
Transfer – pass risk to another party (e.g. insurance)
Avoidance – e,g, avoid using a small contractor who could go bankrupt – use a large one instead
SELECTING A RESPONSE
Cost of action
Likelihood and impact of risk occurring
e.g. is it worth a charity carnival taking out insurance for £3000 guaranteeing £6000 if the carnival is rained off?
Risk planning - activity (10 mins)
Choose five risks (negative and positive) from your case study list
Working in your groups, can you consider a suitable response to five of the risks to the project you have identified?
Monitor and control risks
Risks must be managed once the project is underway
Commonly done by use of risk registers
All risks should be transferred to a risk register and be a live document
Each risk will have a risk owner
Risks and triggers should be monitored
Communication of risk status is part of management
| Risk register | |||||||
| Risk No. | Risk description | Cause of risk | Probability of occur-rence | Impact on project | Risk response plan | Risk owner | Date of entry |
Examples of risk registers
10
Preparation for week 7
Week 7
Project methodologies
For next week, you must research one of the following project management methodologies ready to prepare and give a short group presentation on the methodology in next week’s seminar.
Waterfall
Agile
Scrum
PRINCE2
Critical chain project management
Consider (1)
This requires some more in-depth research. How will you achieve this in the time allocated?
How you will present? (i.e. PowerPoint, Flipchart poster etc.)
What examples/illustrations/models you will use to aid understanding?
Who will present?
How you will keep to time?
Consider (2)
Who will respond to any questions asked by the audience?
Ensure each group considers what questions they might ask of other groups.
Be respectful of others presenting.
Note: There will be a prize for the best group presentation (as voted for by the class)!
