• No results found

Project Risk Management

N/A
N/A
Protected

Academic year: 2021

Share "Project Risk Management"

Copied!
9
0
0

Loading.... (view fulltext now)

Full text

(1)

1

Project Risk Management

By

Sami Fahmy, Ph.D, P. Eng, PMP

ENG M 680 Lecture 1

Introduction to Risk and

Risk Management

2

Agenda

Introduction to general risk

Definition of risk and related

topics

Personal approach to risk

Types of risks

Risk factors

Risk in a project environment

Risk management processes

3

Course Objective

• Learn how to manage risk more effectively • Become familiar with risk and related

definitions

• Identify and understand techniques for determining risk source

• Identifying causes and effects of the risks • Develop a frame of work that will help you

make decisions

• Learn more about your own willingness to take risks

4

Risk

A course of action or inaction taken

under conditions of uncertainty which

exposes the risk taker to possible

loss, or gain to reach a desired

outcome

An undesirable situation or

circumstance that is likely to cause a

harm or a loss

RISK

is

Everywhere

Risk is all around us

To live is to risk dying

To laugh is to risk appearing the

fool

To hope is to risk despair

To love is to risk not being loved in

(2)

7

Can

We

Elimina

te

Risk?

Can

We

Avoid

Risk?

8

Let us think about risk

One who risks nothing

Does nothing

Has nothing

and is nothing

9

3 Types of Personal Risk

• Physical risk

• Emotional risk • Financial risk

10

Why People take Risks

Profit

Rewards

Excitement

Benefits

Stupidity

What is the biggest risk you

have ever taken?

• What was your greatest fear? • How did you feel?

• Were you discouraged or encouraged by others?

• What is the worst that could happen? • What is the best that could happen?

Risk Guiding Principles

Learning and personal growth

requires taking risks

Take only these risks, where you

can handle the loss

Adjust risks that are too much to

gamble with

Accept that the price of risk is an

(3)

13

Hazard is

An situation or condition that

is likely to cause a harm or a

loss under certain

circumstance (Dangerous

condition)

Hazard is a prerequisite to

risk

Hazard is a condition not an

event

14

Risk tolerance

The amount of risk that is

acceptable to the individual,

organization or client

It may be different from the

individuals working in that

organization

15

Issues, Problems, and Risks

• Issues : any thing that requires the

project manager attention

• Problem: A thing or an event that has gone wrong and require action to correct

• Risk : Potential problem or event that may occur and if it occurs will cause harm

16

Crisis

• An unplanned event or possible situation which triggers a real or perceived or possible threat to safety, health or to the environment or to to an organizational reputation

Understanding

Risk

Understanding Risk

Risk happens as a result of a cause

If it happens ( Probability)

it will result in (an impact or effect)

(4)

19

Risk Spectrum

Total Uncertainty Total Certainty NO Information Complete Information Unknown Unknown Known Known Known Unknown 20

Uncertainty, Opportunity, Risk

Start of project Completion of the Project Unknown Or Uncertainty Unfavorable Risk Favorable Opportunity 21

Risk and Uncertainty

Risk

• The outcome can be described within established confidence limits

Uncertainty

• Uncommon state of nature characterized by absence of any information related to the desired outcome

Complete absence of information Nothing is known about the outcome

• You can not assign probabilities to uncertainty

22

Certainty

• All information for making the right decision is available

• The outcome is predictable with reasonable certainty

Risk Factors ( Aspects)

Risk event

• What might happen to the determent of the project (The unwanted change)

Risk probability

• How likely the event is to occur?

Risk Impact

• Extend of loss that will happen or amount at stake

• What is the cost?

Risk is function of

(Event,

Probability, Impact)

Risk Event Status

RES = Risk Probability x Amount at

Stake

(5)

25

Types of risk

• Source

• Amount of information available • Personal

• Insurability

• Ability to control the risk • Constraints

26

Types of Risk (Source)

• Internal risk • External risk • Technical risk • Unforeseeable risk

27

Types of Risk (Information)

Known/known risks

• Everything about the situation is known Known/Unknown risks

• Identified, assessed and quantified risks Develop a contingency plan to cover Unknown/Unknown risks

• Not identified, impossible to predict

28

Types of risk (Insurability)

• Business risk

Chance for a profit or a loss

Not insurable • Pure risk

Only a chance for loss, no chance for profit

(Direct property loss / indirect property loss)

Know the Difference

Internal risk

The project team can influence or control

• Staff assignment

• Cost estimates

• Inability to get parts

External Risk

Beyond the control of or the influence of the project team

• Market shift

• Government action

• Senior Management actions

Risk and Decision Making

• Risk should only be taken when the

potential benefits and the chances of winning exceed the remedial cost of an unsuccessful decision and the chance of loosing by a satisfactory margin

(6)

31

Individual Exercise I-1

Think of one risk you have successfully taken or about to take.

Answer the following questions: • The risk I am about to take is:

• Was that situation a risk or uncertain situation? And why • How did you approach that risk?

• What exactly was risky about the situation? What could go wrong? • Did you think about reducing the risk?

• What are the chances of that happening? • Did you think about the consequences of this risk? • Did you ask yourself, what is the worst that could happen? • If you do not take that risk, what would you lose?

• Why should I take the risk If I take the risk what will I gain? What can be done if the desired results are not achieved?

• Can I break down the risk into small risks so you do not risk as much? • Is the potential reward worth the risk?

32

Risk Taking Tips

Never risk more than you can

afford to lose.

Reduce the amount of risk as much

as you can.

Practice makes perfect.

Try new ways of doing things.

Keep track of the risks you take.

Failure is temporary. and pursue

same with them until all work is

satisfactorily completed.

33

When Should you take Risk?

The potential benefits and chances

of winning far exceed the remedial

cost or the chances of losing

Factors that will affect your decision

on taking risks

34

Risk

and the

Projects

Environment

What is a Project

• It is a temporary undertaking to create a unique product or service.

New technologies Increases specialization Complex contractual relation Increased political and social

involvement

Federal and provincial rules and

regulations Globalization

Class discussion

70% to 90 %

of the project’s problems

and challenges

are

(7)

37

What is Project Management

• The application of knowledge, tools

and techniques to project activities to ensure project success

• Project management is risk management

38

Common Sources of Risk

Change in the requirements

Design errors, omissions

Misunderstandings among project

team

Poorly defined or understood roles

Insufficiently skilled staff

False assumptions

Subcontractor performance

39

How risky is your project ?

• The project is very different from

previous ones

• The project scope is not well defined • Some of the technical data is lacking • Cost, schedule, and performance

are not expressed in clear terms • The design did not consider the

users

40

Risk in Project Environment

Concept Development Execute Finish Uncertain ty and risk Amou nt at sta ke T I M E

$

What is Risk Management?

• It is the systematic process of

identifying, analyzing and responding to project risks. It includes actions to maximizing the positive events and minimizing the negative ones.

• The preparation for possible events in advance rather than responding as they happen.

What is the Goal of Project

Risk Management?

To forecast the various sources of risk to a project, especially those with the most serious impact, and seek to reduce their Consequences or probabilities.

(8)

43

Why Risk Management is

important?

• It offers significant improvement to the final project

• Projects have better chances of success • It improves the project schedule and

cost

• Stakeholders and team members will better understand the nature of the project

• It helps to define the strengths and the weaknesses of the project

44

Risk Management Guidelines

Applies to all projects

It should be done throughout the

life cycle of the project

It is the responsibility of the Project

Manager

It is the ultimate responsibility of the

sponsor

45

Goal of Risk Management

To forecast various sources of

risk to a project especially those

with the

most serious impact and

seek to reduce their

consequences

46

Risk Management Processes

1.

Risk management planning

2.

Risk identification

3.

Qualitative risk analysis

4.

Quantitative risk analysis

5.

Risk response planning

6.

Risk monitoring and control

Risk Management Planning

Deciding how to approach risk

management for a particular

project

How

What

Who

When

How much time

Risk Identification

What are the things that could go

wrong?

What are the possible causes for

things going wrong?

If it does go wrong, what could be

(9)

49

Qualitative Risk Analysis

Performing analysis of risk and

condition to prioritize the risk that

have major impact on the project.

50

Quantitative Risk Analysis

• Evaluating risks and risk interaction to assess the range of possible project outcomes

• Measuring the probability and the consequence of risk and estimating its impact on the project objectives

51

Risk Response Development

Developing procedures and techniques to enhance opportunities and reduce threats to the project objectives

52

Risk Monitoring and Control

Monitoring of residual risks and

new risk that may come up

during the project execution

Execute the risk reduction plan

and

Evaluate the effectiveness of

the risk responses developed

during the project’ planning

stage

References

Related documents

You’ve set your business goals, you’ve aligned some content marketing strategies to those and you’ve been busy listening to your audience. Now what? Like many

experience with children is largely in the context of resettling families where children are accompanied by one or more parents. But ORR’s jurisdiction extends

Presents the incident duration with respect to many dimensions: location (spatially and by road), type of incident, time period during the day, year, week period. Consultation of

In this thesis I pursued contributions in three distinctive areas. These are i) the collection and analysis of evidence demonstrating the benefits of variation for learning

Associative Network Theory (Bower, 1981, 1992) suggests MDM is most likely to be observed when to-be-remembered information is generated by participants themselves, when retrieval

Advertising networks, Internet players, specialists in mobile ad technology, and systems integrators, too, are looking to build a strong position in the mobile advertising

We developed an intervention aimed to train clinical su- pervisors to teach communication skills in practice. A first controlled study showed that the intervention was success- ful