bsbpmg508a manage project risk 11.1 plan risk management adapted from pmbok 4 th edition...
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BSBPMG508A Manage Project Risk
11.1 Plan Risk Management
Adapted from PMBOK 4th Edition
Initiation Planning Execution Close
Monitor
Control
• The process of defining how to conduct risk management activities for a project
• Detailed risk planning enhances the overall probability of successful project completion
• Risk planning creates visibility of the degree and types of risk inherent in a specific project
• For high risk, large and complex projects – contingency is often added to cover responses to unexpected risks
• The risk planning process (11.1) happens concurrently with the project management planning process (4.2)
• Occurs during Planning
BSBPMG508A Manage Project Risk
11.1 Plan Risk Management
• Inputs to Plan Risk ManagementProject Scope Statement
Cost Management Plan
Schedule Management Plan
Communications Management Plan
Enterprise Environmental factors
Organisational Process Assets -– Risk management standards
– Risk management policies and procedures
– Risk categories and definitions
– Standard templates
– Lessons learned from previous projects
– Stakeholder registers
Adapted from PMBOK 4th EditionAdapted from PMBOK 4th Edition
Initiation Planning Execution Close
Monitor
Control
BSBPMG508A Manage Project Risk
11.1 Plan Risk Management
• The PMBOK includes only one technique for this process – Planning Meetings and Analysis, this is a very simplistic view.
• Other tools and techniques have been included here from practice -
PlanningMeetings
Subject MatterExperts
Risk Management Standards
Risk ManagementMethodologies
StakeholderConsultation
Workshops
TemplatesStandard Risk
Categories
Risk AnalysisTools
Risk Registers
BSBPMG508A Manage Project Risk
11.1 Plan Risk Management
• Outputs of this process include –
Risk Management Plan– Risk management methodology
– Risk management roles and responsibilities
– Risk Action plans including costs and resources required to manage specific risks
– Risk categories
– Risk probability and likelihood matrix
– Risk Log
Project Document Updates
– Stakeholder Register and Responsibility Assignment Matrices (part of Project HR)
Change RequestsAdapted from PMBOK 4th Edition
Initiation Planning Execution Close
Monitor
Control
BSBPMG508A Manage Project Risk
Risk Categories
• Risk categorisation is critical• It helps to ensure that all aspects of risk on the project
are considered• Standard risk categories are hard to find• Start with the Project Management Key Knowledge
Areas and industry frameworks• Risk Breakdown Structure –
Lists the categories and sub-categories within which risks may arise for a typical project
Different RBSs will be appropriate for different types of projects, different organisations and different industries
Provides a framework to help ensure all risks are considered
BSBPMG508A Manage Project Risk
Example Risk Breakdown Structure
Project RiskBreakdown Structure
Project Management External Technical Organisational
Estimating
Planning
Controlling
Communication
Subcontractors &Suppliers
Regulatory
Market/Economy
External Customer
Environment
Requirements& Scope
Quality
Performance& Reliability
Complexity
Technology
Dependencies
PM Environment
Prioritisation
Funding
Human Resources
Methodology &Materials
Adaptations and additions to the example in the PMBOK
Adapted from PMBoK Guide – Fourth Edition
BSBPMG508A Manage Project Risk
Likelihood = Probability
Consequences = Impact
• Likelihood is the probability that a risk will occur on a project
• Consequences are the impacts that the risk will have on the project outcomes (Scope, Time, Cost and Quality) if it does occur
Probability and Impact Definitions
BSBPMG508A Manage Project Risk
Likelihood and Consequences
Simple Likelihood Scale
Simple Consequences Scale
Rating Definition Scale
Almost Certain Will definitely occur or will occur on an annual cycle 5
Likely Similar events have been experience several times in the past 20 years 4
Possible Will occur once every 20 years 3
Unlikely Occurs from time to time 2
Rare Occurrence is possible but highly unlikely 1
Adapted from Risk Management Guidelines – Companion to AS 4360:2004
Rating Definition Scale
Severe Most objectives cannot be met 5
Major Some important objectives cannot be met 4
Moderate Some objectives impacted but may still be met
3
Minor Minor effects that can be remedied 2
Negligible Almost no impact on objectives 1
BSBPMG508A Manage Project Risk
• Put your likelihood and consequence ratings together and what do you get?
Risk Rating = Likelihood x Consequences
Simple Risk Rating Matrix
Rating Severe Major Moderate Minor Negligible
Almost Certain
Red
25
Red
20
Red
15
Amber
10
Green
5
Likely Red
20
Red
16
Amber
12
Amber
8
Green
4
Possible Red
15
Amber
12
Amber
9
Green
6
Green
3
Unlikely Amber
10
Amber
8
Green
6
Green
4
Green
2
Rare Green
5
Green
4
Green
3
Green
2
Green
1
BSBPMG508A Manage Project Risk
Risk ID
Risk Category
Risk Description Risk Owner
Likelihood Impact Risk Rating
Management /Mitigation Strategies
Residual Likelihood
Residual Impact
Residual Rating
Status Priority
Risk Description• Plain English explanation of the risk• One to two sentences in length• Ensures common understanding
Inclusions in Risk Register during Planning
Adapted from PMBOK 4th Edition
Risk Id• Can be a simple as a number• May relate to the risk category• Used as a unique identifier• may be an internal standard
Risk Category• Can be taken from industry frameworks • Can be set at internal standards• May need to be developed/tailored• Ensures identification of all risks• Assists with monitoring and control
Risk Owner• A specific person or role• Ensures clear ownership of the risk• Responsible for monitoring & control