IS 556 Project Management

1. IS 556 Project Management Risk Management Personal Notes Survival Guide – Chapter 7 David Lash

2. Unit Objectives • What is Risk Management? • Three Main Steps to Risk Management • Identify • Develop Response • Control

3. Plan Early… Plan Often • Mission Shared vision – Could be charter • Creates buy-in, understanding, motivation • Achievable goals • Executive Champion – Critical to project success • Open planning • Include those who carry out plan • Refine estimates of effort throughout project • Document and announce risks and achievements • Project web page • Top 10 Risks List- risk, resolution, progress

4. How Much Effort? Some budget should be committed to risk management. • Figure 7-2: Variation in risk level according to risk-management overhead. The average project devotes virtually no attention to risk management and accepts extremely high levels of risk as a consequence. Successful projects devote a small amount of overhead to risk management and substantially reduce their risk exposure

5. What Is Risk Management? • The means by which uncertainty is systematically identified and managed to increase likelihood of success • Risk might be obvious: • Development of a new drug to treat cancer • Or less obvious: • Large contract requires execution of 1 or more sub-contractors (how will ensure they will deliver?) • Turn-over in industry may result in loss of key people on project • Departmental reorganization may disrupt project

6. Why Risk Management? • Proactively understand and manage risk of: • being late • being over budget • uncertainty • quality assurance • An iterative process to identify and manage risk throughout the project

7. Level Of Risk Management? • Risks exists at business level - select right project and project level - execution of the project • For example, building a new office building on-time and on-cost - project level responsibility • If turns out there is no demand for office space (once done) - business level responsibility. • Project managers are most concerned with project level execution • Program managers or functional managers or senior management with business risk

8. PM Should Be Defined Process • Charter • Purpose • review and publish • SOW • A. Document goals, scope deliverables HL budget estimate • Review with Project board • Communication Plan • Document communication methods of various level • Review with project board, various stakeholders • Risk Strategy • Project Plan • Execute HL Plan LL Plan

9. Risk Management Influence • Risk mgmt influences project plan and rules

10. Risk Management Framework • Three main steps I. Identify - find the sources of project risk II. Develop Response - As risks are identified determine how you will mitigate them • May result in a change in change in documents that define project rules (e.g, scope change) III. Control - Implement strategies and monitor effect of changes

11. Step I - Identify Risk • There are 4 techniques to identify risks • 1.Asking stakeholders • Brainstorming sessions • Interviewing • 2. Developing a risk profile list • A risk profile (or template) might be gathered from post-mortem reviews of projects. • Develop categories of risks under each category develop possible risk areas refine over time • 3. Learning from similar projects (You may be able to find historical records )

12. 4. Identify Risk - Budgets & Schedules • There are 4 techniques to identify risks • 1.Asking stakeholders • 2. Developing a risk profile list • 3. Learning from similar projects • 4. Focus on schedule and budget risk • For each task will need to develop time & cost estimates • How accurate do you believe estimates are? • How definite are estimates? • What parts are uncertain? • How can you shore those up?

13. Risk Management Process Risk Identification • Analyze the source • of risks New Risks Known Risks Response Development • Define the risk & • potential neg impact • Assign probability • Develop risk • reduction strategy Control Risk Management Plan • Implement the risk • strategy • Continue to monitor • for new risks

14. Step II - Risk Response Strategy • Not all risks are equally important and/or likely likely. • Need a plan that will • Identify the severity of risk –For each risk identify the: • Condition - description of the risk situation • Consequence - what are possible negative outcomes • 2. Identify the probability of the risk • 3. Develop strategy to deal with the risk

15. 1-2. Risk Severity - Probability • Condition - soil conditions require a complex boring machine with which we have little experience • Consequence - Improper use of machine may damage machine and/or riverbed. • Machine damage could be from 50-250K • Riverbed damage may prevent future contracts • Probabilities- • 75K of equipment damage - 20% • 200K of equipment damage - 20% • No damage at all 60% • Probable cost of damage - 55K • ( 200*.2 + 75*.2 = 55k )

16. 3. Defining the Risk Strategy • Strategy - Hire operator from equipment provider for estimated cost of 10K. (any damage by their operator paid by them). • Adds 10K to cost of project but reduces possible additional cost and schedule risk

17. Another Example • Condition - required that all diagrams be developed with a tool that tech writers don’t know. • Consequence - Document generation and management tasks will take longer. Possibly causing rework. • Probabilities- • Work may be 25% slower. (Since everyone new to tool would work at junior level VS senior.) • Probable labor cost: 1.25*20=25 • Probable schedule: 1.25*4 mon = 5 mon

18. Another Example - 2 • Strategy - Send all technical writers to 2 day course on new tool. • Costs: $2,200 and will reduce training factor to 1.1. • Make 1 tech writer a tool expert to exercise tool and create templates for others to reduce productivity factor to 1.0.

19. Possible Format Example • Might organize material in a table • # Risk Risk Risk Risk • Cond Consequence Prob Strategies • (H,M,L) • 1. Loss of Late Project H Increase project • Staff documentation. • Require formal • reviews. • However estimation of risk costs can be very useful

20. Another format (From survival guide)

21. Risk Management Process Risk Identification • Analyze the source • of risks New Risks Known Risks Response Development • Define the risk & • potential neg impact • Assign probability • Develop risk • reduction strategy Control Risk Management Plan • Implement the risk • strategy • Continue to monitor • for new risks

22. Step Three: Control • Risk Control - not a 1-shot step • Monitor risks like monitor project execution • periodic risk review with Project Board • evaluate status of identified risks • identify new risks • Create a risk control log • Someone responsible for each risk • Rank risks by severity • Update periodically

23. Risk Control Log

24. Summary • Risk - The means by which uncertainty is systematically identified and managed to increase likelihood of success • 3 basic steps • I. Identify • Work with others • II. Develop Response • Quantify when possible • III. Control • Control log