Chapter 7 PM

4 Risk Responses

-Mitigating Risk Reducing the likelihood an adverse event will occur Reducing the impact of an adverse event -Avoiding Risk Changing the project plan to eliminate the risk or condition -Transferring Risk Paying a premium to pass the risk to another party Requiring Build-Own-Operate-Transfer (BOOT) provisions -Accepting Risk Making a conscious decision to accept the risk

Risk Management Benefits

-Proactive -Reduces surprises and negative consequences -Prepares the project manager to take advantage of appropriate risks -Provides better control over the future -Improves chances of reaching project performance objectives within budget and on time

Type of Risks

-Technical -Schedule -Cost -Funding

The Risk Management Process

1. Risk Identification 2. Risk Assessment 3.Risk Response Development 4. Risk Response Control

Change Control Benefits

1.Inconsequential changes are discouraged by the formal process. 2.Costs of changes are maintained in a log. Integrity of the WBS and performance measures is maintained. 3.Allocation and use of budget and management reserve funds are tracked. 4.Responsibility for implementation is clarified. 5.Effect of changes is visible to all parties involved. 6.Implementation of change is monitored. 7.Scope changes will be quickly reflected in baseline and performance measures.

Contingency Plan

An alternative plan that will be used if a possible foreseen risk event actually occurs -a plan of actions that will reduce or mitigate the consequences of a risk event

Change Control Process

Change Originates->Change Request Submitted->Review Change Request->Approved->Update Plan of Record->Distribute for Action

Risk Control

Consists of: -Execution of the risk response strategy -Monitoring of triggering events -Initiating contingency plans -Watching for new risks

Types of Opportunity Management

Exploit: seeking to eiliminate uncertainty with an opportunity that def happes Share: allocating some of the ownership of an opportunity to another party Enhance: taking action to increase the probability of an opportunity Accept: being willing to take advange of an opportunty if it occurs but not taking action to pursue it

Contingency Funds

Funds to cover project risks-identified and unknown

Budget Reserves

Linked to the identified risks of specific work packages

Failure Mode and Effects Analysis (FMEA)

Risk Value= ImpactxProbabilityxDetection

Risk

Uncertain or chance events that planning cannot overcome or control

Risk Profile

a list of questions addressing additional areas of uncertainty on a project.

Time Buffers

amounts of time used to compensate for unplanned delays in the project schedule

Risk Management

an attempt to recognize and manage potential and unforeseen trouble spots that may occur when the project is implemented -what can go wrong, what are the consequences, what can be done before, and what can be done when an event occurs

Change Management System

involves reporting, controlling, and recording changes made to the project baseline

Management reserves

large funds to be used to cover major unforeseen risks of the total project