Peoject Risk Management(quantative&qualitive)
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This document discusses various tools and techniques for project risk management. It covers the key steps in risk management including risk planning, identification, analysis, response, and monitoring. Some common tools for risk identification include brainstorming, checklists, and SWOT analysis. Qualitative analysis involves assessing probability and impact, while quantitative analysis uses expected monetary value and decision trees to assign numerical values to risk. Risk responses can involve avoiding, transferring, mitigating, or accepting risks. Commercial risk management software tools are also listed.
Peoject Risk Management(quantative&qualitive)
- 1. ANALYZES OF PROJECT RISK MANAGEMENT-TOOLS AND TECHNICS Risk Management Processes Risk Profile Identify Risk: Tools & Tech Perform Qualitative Risk Analysis-tools and technics Perform Quantitative Risk Analysis-tools and technics Risk Response Commercially Available Tools
- 2. RISK MANAGEMENT PROCESSES(1) • Risk Planning – this is how you plan on conducting risk management. You wouldn’t start managing your project without a plan, so why would you approach risk management that way? • Identify Risks – this is the phase where you attempt to identify most of your risks • Qualitative analysis – this is a subjective analysis of your risks that produces a risk ranking, usually in the order of high, medium, low, or on an ordinal scale. Rankings are by agreement of your project team, sponsors and key stakeholders
- 3. RISK MANAGEMENT PROCESSES(2) • Quantitative Analysis – a numerical analysis of the probability and impact of the risk on your project • Plan Risk Response– a course of action you will take to deal with your risks should they go from risk to issue • Monitor & Control Risks – monitoring your lists (there are two lists which I will discuss later) of risks to enact a risk response plan, to move a risk from one list to the other, or to remove a risk because it is no longer a risk.
- 4. RISK PROFILE • A risk profile is a list of questions that address traditional areas of uncertainty on a project. • These questions has been designed and developed from the experience of past projects.
- 8. IDENTIFY RISK: TOOLS & TECH(1) • Documentation Reviews – including charter, contracts, and planning documentation, can help identify risks. • Those involved in risk identification might look at this documentation, as well as lessons learned, articles, and other documents, to help uncover risks.
- 9. IDENTIFY RISK: TOOLS & TECH(2) • Brainstorming: One idea generates another • Delphi technique: Expert participate anonymously; facilitator use questionnaire; consensus may be reached in a few rounds; Help reduce bias in the data and prevent influence each others. • Interviewing: interviewing experts, stakeholders, experienced PM • Root cause analysis: Reorganizing the identified risk by their root cause may help identify more risks
- 10. IDENTIFY RISK: TOOLS & TECH(3) • Checklist analysis: checklist developed based on accumulated historical information from previous similar project • Assumption analysis: identify risk from inaccuracy, instability, inconsistency, incompleteness. • SWOT analysis – Strengths, Weaknesses, Opportunities, Threats
- 11. IDENTIFY RISK: TOOLS & TECH(4) • Influence diagrams – show the casual influences among project variables, the timing or time ordering of events, and the relationships among other project variables and their outcomes. • Cause and Effect Diagrams • Flowcharts
- 12. PERFORM QUALITATIVE RISK ANALYSIS • Things to remember – Perform Qualitative Risk Analysis is subjective – What is the probability of the risk occurring? High, medium, low? 1-10? – What is the impact if the risk does occur? High, medium, low? 1-10?
- 13. TOOLS AND TECHNIQUES OF QUALITATIVE ANALYSIS(1) • Probability & Impact Matrix – a matrix that creates a consistent evaluation of high, medium, or low for your projects. This helps to make the risk rating process more repeatable between projects. • Risk Data Quality Assessment – What is the quality of the data used to determine or assess the risk? Think about the following – Extent of the understanding of the risk – Data available about the risk – Quality of the data – Reliability & Integrity of the data
- 14. TOOLS AND TECHNIQUES OF QUALITATIVE ANALYSIS(2) • Risk Categorization – Which of your categories has more risk than others? Which of your work packages could be most affected by risk? • Risk Urgency Assessment – Which of your risks could occur soon, or require a longer planning time? Risk urgency assessment helps move these risks more quickly through the rest of the project management process
- 15. TOOLS AND TECHNIQUES OF QUALITATIVE ANALYSIS(3) Mind Map-generates many more ideas quicker than other techniques
- 16. PERFORM QUANTITATIVE RISK ANALYSIS(1) • A numerical analysis of the probability and impact of the risks with the highest risk rating score determined from qualitative analysis • Is a numerical evaluation (more objective) • This process may be skipped.
- 17. PERFORM QUANTITATIVE RISK ANALYSIS(2) Purpose of this process • Determine which risk events warrant a response. • Determine overall project risk (risk exposure). • Determine the quantified probability of meeting project objectives. • Determine cost and schedule reserves. • Identify risks requiring the most attention. • Create realistic and achievable cost, schedule, or scope targets.
- 18. TOOLS AND TECHNIQUES OF QUANTITATIVE ANALYSIS(1) • EMV – Expected Monetary Value – What is the probability of the risk occurring multiplied by the impact if the risk does occur? If the risk occurs, what could the financial or time loss be to your project? • In the example below, this project has an EMV of ($58,250), this means that you need to put aside $58,250 in your risk reserve account for potential risks
- 19. TOOLS AND TECHNIQUES OF QUANTITATIVE ANALYSIS(2) Q: If a project has a 60% chance of a US $ 100,000 profit and a 40% chance of a US $ 100,000 loss, the expected monetary value for the project is : A. $ 100,000 profit B. $ 60,000 loss C. $ 20,000 profit D. $ 40,000 loss
- 20. TOOLS AND TECHNIQUES OF QUANTITATIVE ANALYSIS(3) • Decision Tree – used for planning on individual risks instead of planning for the whole project – Takes into account future events to make a decision today – Can calculate the EMV in more complex situations – Involves mutual exclusivity
- 23. TOOLS AND TECHNIQUES OF QUANTITATIVE ANALYSIS(4) • Monte Carlo Analysis – A technique that uses simulation to show the probability of completing your project on time and within budget. – Determines the overall risk of the project, not the task – Determines the probability of completing the project on a specific day and for a specific cost – Takes into account path convergence (places in the network diagram where many paths converge into one activity) – Used to evaluate the impact to your schedule and budget – Due to the complicated mathematical computations used, Monte Carlo analysis is usually done with a computer program – Essentially, the Monte Carlo method solves a problem by directly simulating the underlying (physical) process and then calculating the (average) result of the process
- 24. RISK RESPONSE • After risks are analyzed qualitatively and quantitatively, the project management team should plan risk responses • Risk responses can be categorized in four ways: Avoid Transfer Mitigate Accept
- 25. COMMERCIALLY AVAILABLE TOOLS • WelcomRisk • Pertmaster • KLCI Project Self Assessment • RiskTrak • Risk Radar • Active Risk Manager • Rational Rose Excell