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