risk management 07-01. copyright © 2013 pearson education, inc. publishing as prentice hall chapter...
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Chapter 7Risk Management
07-01
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Chapter 7 Learning ObjectivesAfter completing this chapter, students will be able to:Define project risk.Recognize four key stages in project risk
management and the steps necessary to manage risk.
Understand five primary causes of project risk and four major approaches to risk identification.
Recognize four primary risk mitigation strategies.Explain the Project Risk Analysis and
Management (PRAM) process.
01-02
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RiskRisk management - the art and science of identifying, analyzing, and responding to risk factors throughout the life of a project and in the best interest of its objectives.
Project risk – any possible event that can negatively affect the viability of a project
01-03
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Risk versus Amount at Stake: Challenge in Risk Management
07-04Figure 7.2
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Process of Risk ManagementWhat is likely to happen?
What can be done?
What are the warning signs?
What are the likely outcomes?
Project Risk = (Probability of Event)(Consequences of Event)
07-05
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Four Stages of Risk Management
1. Risk identification
2. Analysis of probability and
consequences
3. Risk mitigation strategies …. تخفيف
4. Control and documentation07-06
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Risk Classification ClustersFinancialTechnicalContractual/Legal
Commercial Execution
Common Types• Absenteeism• Resignation• Staff pulled away• Time overruns
• Skills unavailable• Ineffective Training• Specs incomplete• Change orders
07-07
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Risk Factor Identification
Brainstorming meetings
Expert opinion
Past history
Multiple (or team based) assessments
07-08
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Risk Impact Matrix
07-9
Project Risk Scoring1. Identify factors and assess the
probability (Pf ) and consequences (Cf) of failure
2. Calculate overall probability & consequence
3. Calculate overall risk factor
3m c d
f
P P PP
4c s r p
f
C C C CC
( )( )f f f fRF P C P C
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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Risk Mitigation StrategiesAcceptMinimizeShareTransferContingency Reserves
Task contingencyManagerial contingency
MentoringCross training
07-11
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Control & DocumentationHelp managers classify and codify risks,
responses, and outcomes
Change management report system answers
What?Who?When?Why?How?
07-12
FIGURE 7.6 Contingency Document for Adjustments to Project Plan
07-13Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Project Risk Analysis & ManagementExtends risk management over project’s life
cycle
Key Features of PRAMRisk management follows a life cycleRisk management strategy changes over
the project life cycleSynthesized, coherent approach
07-14
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Nine Phases of Risk Assessment1.Define2.Focus3. Identify4.Structure5.Clarify ownership of risks6.Estimate7.Evaluate8.Plan9.Manage
07-15
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Summary1. Define project risk.2. Recognize four key stages in project risk
management and the steps necessary to manage risk.
3. Understand five primary causes of project risk and four major approaches to risk identification.
4. Recognize four primary risk mitigation strategies.
5. Explain the Project Risk Analysis and Management (PRAM) process.
07-16
07-17Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall