What is Advanced Project Risk Management?

Rubin Jen, P. Eng, PMPBeyond Execution

March 3, 2011

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About The Speaker

• Rubin is a speaker, writer, teacher and consultant of project management – PM for 15 yrs across several industries– Presented at PMI Global Congress,

ProjectWorld Toronto, PMI Ottawa Symposium

– Served on board of directors for the PMI Southern Ontario Chapter from 2005-2007

– Project Management training on Risk, Scope and PMP

3

Agenda

1. What is Advanced Project Risk Management?

2. How can it help?3. What should I know?4. How can I use and implement it?

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What’s Your Opinion?

• What do you think Advanced Project Risk Management (APRM) is?

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Different Ideas around APRMRisk Database

Probabilisticanalysis

Monte Carlo Insurance

Attack Risk

Visualization

ConfidenceLevels

Delphi

OpportunityManagement

RiskCommunication

IssuesAnalysis

BubbleGraphs

QuantitativeAnalysis

RiskProject

Manager

Audits

PredictiveMetrics

RiskBreakdownStructure

RangeEstimates

RiskAwareness

RiskToleranceCalibration

QualitativeAnalysis

LessonsLearned

Urgency

RiskReporting Enterprise Risk

Management

Monitoring& Control

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Common Perception

• Most Project Managers would likely consider APRM as deeper in Risk Analysis– Software analysis (Monte Carlo,

probabilistic analysis)– Quantification, cost analysis– Expected Monetary Value, decision trees

• What about Risk Planning, Identification, Response and Monitoring & Control?

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So, What Is It?

• To understand this better, we need to understand what is “regular” project risk management, as well as what we mean by “Advanced”

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Risk Management

• Risk: – The effect of uncertainty on objectives

• Risk Management: – The identification, assessment, and

prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events

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Project Risk Management

• Project Risk Management:– The processes of

conducting risk management planning, identification, analysis, response planning and monitoring & control on a project

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What is “Advanced”?

• dictionary.com:1. placed ahead or forward2. ahead or far or further along in progress,

complexity, knowledge, skill, etc3. pertaining to or embodying ideas,

practices, attitudes, etc., taken as being more enlightened or liberal than the standardized, established, or traditional

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Advanced Project Management

• The use of tools, techniques and practices that are above the standard, to enable better decisions and more effective project management– Different tools– Different techniques– Different processes– Different level of thinking

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Proposed APRM Principles

1. Further reduction of uncertainty2. More effective response plans3. Higher level competency and skills

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Reduction of Uncertainty

• Greater clarity and understanding of risks

• More detailed analysis• Uncover hidden information and trends

Better Assessment

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More Effective Response Plans

• Improved prioritization• Greater option development• More effective project management

Better Decisions

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Competency and Skills

• Risk ownership• Training• Risk awareness• Increased teamwork, buy-in &

performance

Better Performance

What should I know?

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Define Your Objectives

• Better decisions– Tools & techniques, processes, decision

tree

• Better performance– Visualization, buy-in– Team awareness

• Better assessment– Monte Carlo– Timeframe/urgency

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APRM Outcomes

• Better Decisions– Increased identification– Delphi technique– Risk audits– Risk breakdown structures– Attacking risk– Mitigation and contingency plans– Decision trees

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APRM Outcomes

• Better Performance– Risk management training– Team involvement– Risk awareness– Team meetings– Visualization

• Visual Ishikawa Risk Technique (VIRT)• Heat map/bubble chart

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APRM Outcomes

• Better Assessment– Monte Carlo simulation– Increased subjective range assessment– Confidence level estimation– Range estimates– Probabilistic/statistical analysis– Weighted scoring– Urgency

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Implementation Costs

• Risk management has been a difficult realm to show ROI

• Some risk tools & techniques can cost a lot but provide very little improvement in return

• It’s not just about software

How Can I Use It?

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Choosing APRM

• Which parameters provide the maximum effectiveness for the minimum amount of time? (biggest bang for the buck?)1. Techniques that are simpler and practical2. Knowledge that can be easily shared and

explained to others3. Techniques that can involve others4. Visualization5. Better risk prioritization

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Better Decision Techniques

Sim

ple

Tech

niq

ue

Know

led

ge

Tra

nsfe

r

Colla

bora

tive

Tech

niq

ues

Gra

phica

l

Prio

ritizatio

n

Increased identification

Delphi technique

Risk audits

Risk breakdown structures

Attacking risk

Mitigation/contingency plans

Decision trees

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Better Performance Techniques

Sim

ple

Tech

niq

ue

Know

led

ge

Tra

nsfe

r

Colla

bora

tive

Tech

niq

ues

Gra

phica

l

Prio

ritizatio

n

Training

Team involvement

Risk awareness

Team meetings

VIRT

Heat map/bubble chart

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Better Assessment Techniques

Sim

ple

Tech

niq

ue

Know

led

ge

Tra

nsfe

r

Colla

bora

tive

Tech

niq

ues

Gra

phica

l

Prio

ritizatio

n

Monte Carlo

Increased range

Confidence level

Range estimates

Probabilistic analysis

Weighted scoring

Urgency

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Implementing APRM

• Understand and assess risk stakeholders– Champions– By-standers– End users

• Continual education and communication• See results <-> creates buy-in• Create mini case studies of successes• Know each techniques’ implementation

costs

Are We Done Yet?

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Summary

• There are a number of ways to be "advanced" but don't confine yourself to simply analysis tools

• Utilizing APRM is like a project management process:– Understand what your needs are, then

choose an appropriate technique(s)

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Contact Information

• Name: Rubin Jen, P. Eng, PMP

• Email: rubin.jen@beyondexecution.com

• Phone: (416) 618-1734