Ahmed El Antary - PMP Part 11- Risk 5th Ed - General

8/19/2019 Ahmed El Antary - PMP Part 11- Risk 5th Ed - General

1/33

Project Management ProfessionalPMP Exam Preparation Course

Prepared By: Eng. Ahmed El Antary, PPM, MSPMEngineering & Management Technologies LLC

Delaware, USA

[email protected] – www.enmatecs.com

Project Risk Management

Chapter 11PMBOK 5th Ed.

“Ahmed El Antary”


2/33

The Course Leader

Ahmed El Antary, PPM, MSPM Engineering and Management Consultant

Certified Professional Project Manager (PPM), WCU, USA PhD Learner with concentration on Project Management - PhD-BA

program. NorthCenteral University, AZ, USA Master of Science in Project Management, Colorado Technical University,

Colorado Springs, CO, USA

B. Sc. Civil Engineering, Al Azhar University, Cairo, Egypt Project Management Certificate & PMP Preparation Course, WCU, USA Business Management Certificate GL, CTU, CO, USA Change Management Certificate GL, CTU, CO, USA Project Management Certificate GL, CTU, CO, USA

Team Member of the Construction Extension Project for the PMBOK 3rdEd. By (PMI) and (ANSI) Certified Green Buildings Expert (GBE) Certified LEED Expert (CLE) Certified Sustainable Development Expert (SDE)

Certified Building Information Modeling Expert (BIME)


3/33


Project Risk Management includes the processes of conducting risk

management planning, identification, response planning, andmonitoring and control on a project.

The objectives of Project Risk Management are to increase theprobability and impact of positive events, and decrease the probabilityand impact of negative events in the project.

Projects are launched to take advantage of opportunities

Opportunities carry with them associated (adverse) risks

The greater the opportunity, the greater the degree of uncertainty and

the associated risk Project risk management should be seen as advanced preparation for

possible adverse future events, rather than responding as theyhappen.


4/33

Organization’s Risk Attitude

Organizations perceive risk as the effect of uncertainty onprojects and organizational objectives. Organizations andstakeholders are willing to accept varying degrees of riskdepending on their risk attitude. The risk attitudes of both theorganization and the stakeholders may be influenced by anumber of factors, which are broadly classified into three

themes: Risk appetite, which is the degree of uncertainty an entity is willing

to take on in anticipation of a reward.

Risk tolerance, which is the degree, amount, or volume of risk that

an organization or individual will withstand. Risk threshold, which refers to measures along the level of

uncertainty or the level of impact at which a stakeholder may have aspecific interest. Below that risk threshold, the organization will

accept the risk. Above that risk threshold, the organization will nottolerate the risk.


5/33


The knowledge area of Project Risk Management consists of thefollowing processes:

Risk Management Processes

Process Project Phase Key Deliverables

Plan Risk Management Planning Risk Management Plan

Identify Risks Planning Risk register

Perform Qualitative Risk

AnalysisPlanning Risk register updates

Perform Quantitative Risk

Analysis Planning Risk register updates

Plan Risk Responses PlanningRisk related contract

decisions

Control Risks Monitoring and Controlling Risk register updates


6/33

Plan Risk Management

Plan Risk Management is the process of defining how to conduct riskmanagement activities for a project.

Inputs Tools and Techniques Outputs

Project management plan

Project charter

Stakeholder register

Enterprise environmentalFactors

Organizational process assets

Analytical techniques:

Analytical techniques areused to understand anddefine the overall riskmanagement context ofthe project.

Expert judgment

Meetings

Risk management plan

Plan Risk Management Process


7/33

Risk Management Plan

The risk management plan is a component of the project management plan anddescribes how risk management activities will be structured and performed. The

risk management plan includes the following: Methodology. Defines the approaches, tools, and data sources.

Roles and responsibilities.

Budgeting.

Timing.

Risk categories. Provide a means for grouping potential causes of risk. A riskbreakdown structure (RBS) helps the project team to look at many sources from whichproject risk may arise in a risk identification exercise. The RBS is a hierarchicalrepresentation of risks according to their risk categories.

Definitions of risk probability and impact. The example table definitions negative

impacts that could be used in evaluating risk impacts related to four project objectives.(Similar tables may be established with a positive impact perspective). The exampleillustrates both relative and numerical (in this case, nonlinear) approaches.

Probability and impact matrix.

Revised stakeholders’ tolerances.

Reporting formats.

Tracking.


8/33

Example of a Risk Breakdown Structure (RBS)


9/33

Definition of Impact Scales for Four Project Objectives


10/33

Identify Risks Identify Risks is the process of determining which risks may affect the

project and documenting their characteristics.



Cost management plan

Schedule management plan

Quality management plan

Human resource

management plan

Scope baseline

Activity cost estimates

Activity duration estimates

Stakeholder register

Project documents

Procurement documents

Enterprise environmental Factors


Documentation reviews

Information gathering techniques:

Brainstorming Delphi technique Interviewing Root cause analysis

Checklist analysis

Assumptions analysis

Diagramming techniques: Cause and effect diagrams System or process flow charts Influence diagrams

SWOT analysis

Expert judgment

Risk register: List of identified risks

List of potential responses

Identify Risks Process


11/33

Brainstorming

Think of all thepossible risks thatproject may face

Note risks down andbe careful to define

them clearly

Monitor risksthrough all projectphase and their

impact possibilities


12/33

Influence Diagram


13/33

SWOT Analysis

Strengths: (Organizational Internal) Build on these strengths

Weaknesses: (Organizational Internal) Eliminate or reduces these weaknesses

Opportunities: (Organizational External) Exploit all possible opportunities

Threats: (Organizational External) Mitigate all potential threats


14/33

Perform Qualitative Risk Analysis Perform Qualitative Risk Analysis is the process of prioritizing risks for

further analysis or action by assessing and combining their probability

of occurrence and impact.



Scope baseline

Risk registerEnterprise environmental factors


Risk probability and impactassessment

Probability and impact matrix

Risk data quality assessment

Risk categorizationRisk urgency assessment

Expert judgment

Project documentsupdates:

Risk register updates

Assumptions log

updates

Perform Qualitative Risk Analysis Process


15/33

Probability and Impact Matrix


16/33

Probability and Impact Matrix “Cont.”


17/33

Perform Quantitative Risk Analysis

Perform Quantitative Risk Analysis is the process of numericallyanalyzing the effect of identified risks on overall project objectives.



Cost management plan

Schedule management plan

Risk register

Enterprise environmental factors


Data gathering and representation

techniques: Interviewing Probability distributionsQuantitative risk analysis andmodeling techniques:Sensitivity analysis: The Tornadodiagram Expected monetary value analysis:Decision tree analysis Modeling and simulation

Expert judgment

Project documents

updates: Probabilistic analysisof the project Probability ofachieving cost and timeobjectives Prioritized list ofquantified risks Trends in quantitativerisk analysis results

Perform Quantitative Risk Analysis Process


18/33

Range of Project Cost Estimates by Risk Interviewing

Interviewing relevant stakeholders helps determine the three-point estimatesfor each WBS element for triangular, beta or other distributions.

In this example, the likelihood of completing the project at or below the mostlikely estimate of $41 million is relatively small as shown in the simulationresults.


19/33

Perform Quantitative Risk Analysis

Quantitative risk analysis and modeling

techniques Sensitivity Analysis: Tornado Diagram –

determines which risks have the most potential

impact on the project Expected monetary value analysis – a statistical

concept that calculates the average outcome

when the future includes scenarios that may ormay not happen

Modeling and Simulation


20/33

Example of Tornado Diagram


21/33

Decision Tree Diagram

A decision is being made whether to invest $120M US to build a new plant or to instead invest only $50M USto upgrade the existing plant. For each decision, the demand (which is uncertain, and therefore represents a“chance node”) must be accounted for. For example, strong demand leads to $200M revenue with the new plant but only $120M US for the upgradedplant, perhaps due to capacity limitations of the upgraded plant. The end of each branch shows the net effect ofthe payoffs minus costs. For each decision branch, all effects are added (see shaded areas) to determine theoverall Expected Monetary Value (EMV) of the decision.

Remember to account for the investment costs. From the calculations in the shaded areas, the upgradedplant has a higher EMV of $46M – also the EMV of the overall decision. (This choice also represents the lowestrisk, avoiding the worst case possible outcome of a loss of $30M).


22/33

Cost Risk Simulation Results


23/33

Plan Risk Responses Plan Risk Responses is the process of developing options and actions

to enhance opportunities and to reduce threats to project objectives.

The key benefit of this process is that it addresses the risks by theirpriority, inserting resources and activities into the budget, scheduleand project management plan as needed.


Risk managementplan

Risk register

Strategies for negative risks orthreats

Strategies for positive risks oropportunities

Contingent response strategies

Expert judgment

Project management planupdates

Project documents updates

Plan Risk Responses Process


24/33

Plan Risk Response T&T

Strategies for Negative Risks or Threats

Avoidance – Change PMP to eliminate thethreat by eliminating the cause

Transference - Make another party responsible

for the risk through allocation, purchasing ofinsurance, or outsourcing the work

Mitigation – Reduction in the probability or

impact the risk Accept – This strategy is adopted because it is

seldom possible to eliminate all threats from a

project


25/33

Plan Risk Response T&T

Strategies for Positive Risks or Opportunities

Exploit – Ensures the opportunity is realized

Share – allocating ownership to a third partywho is best able to capture the opportunity

Enhance – Modifies the size of anopportunity by increasing the probability orpositive impacts

Accept


26/33

Control Risks Control Risks is the process of implementing risk response plans,

tracking identified risks, monitoring residual risks, identifying new

risks, and evaluating risk process effectiveness throughout the project.The key benefit of this process is that it improves efficiency of the riskapproach throughout the project life cycle to continuously optimizerisk responses.


Project management plan

Risk register

Work performance dataWork performance reports

Risk reassessment

Risk audits

Variance and trend analysis

Technical performance measurement

Reserve analysis

Meetings

Work performanceinformation

Change requests:

Project management planupdates

Project documents updates

Organizational processassets updates

Control Risks Process


27/33

Q U E S T I O N S

A N S W E R S


28/33

Resources Project Management Institute. (2013). A guide to the project management body of

knowledge ( 5th ed.). Newtown Square, PA: Project Management Institute.


29/33

Q & A on Project Risk Management1. Andrew has joined as the Project Manager of a project. One of the project documentsavailable to Andrew lists down all the risks in a hierarchical fashion. What is this document

called?1.Risk Management Plan.2.List of risks.3.Monte Carlo diagram.4.Risk Breakdown Structure.

2. Which of the following statements is true about risks?1.When evaluating risks their impact should be considered, however probability ofoccurrence is not important.2.Risks if they happen always have negative impact and not positive.3.Risk register documents all the risks in detail.4.Risk response plan is another name for Risk Management Plan.

3. Beta is the Project Manager of a Road construction project. During a project review, Betarealizes that one particular risk has occurred. To take appropriate action against risk thathas happened, Beta needs to refer to which document?

1.Risk response plan2.Risk management plan

3.Risk breakdown structure4.Risk register


30/33

Q & A on Project Risk Management4. During which stage of Risk planning are risks prioritized based on probability and impact?

Identify RisksPlan Risk responses

Perform Qualitative risk analysisPerform Quantitative risk analysis

5. During which stage of Risk planning are modeling techniques used to determine overall

effects of risks on project objectives for high probability, high impact risks?Identify RisksPlan Risk responsesPerform Qualitative risk analysisPerform Quantitative risk analysis

6. Andrew is a Project Manager for Green Valley project. A risk management plan has beenprepared for the project. Which of the following should Andrew do next?

Perform Qualitative risk analysisPerform Quantitative risk analysis

Identify RisksPlan Risk responses


31/33

Q & A on Project Risk Management7. Which of the following processes has risk register as the primary output?

Plan Risk ManagementIdentify Risks

Monitoring and Control RisksPerform Qualitative Risk Analysis

8. Five of the processes in Project Risk Management are from which process group?

InitiatingPlanningExecutingMonitoring and Control

9. John Strauss is a Project Manager for a reforestation project. To identify the risksinvolved, John sends a questionnaire to gather inputs from experts. Which technique isJohn using?

Delphi techniqueInterviews

Brain stormingDocumentation review


32/33

Q & A on Project Risk Management

10. Mathew is a Project Manager for software migration at a bank. A majorrisk that has been identified is attrition of resources. As a strategy torespond to this risk, Mathew, with support from Senior Management,provides good increments to his team members. What type of risk responseis Mathew following?

AcceptAvoid

TransferMitigate

11. Which of these is a valid response to positive risks?

ExploitMitigateEnhanceShare


33/33

Q & A on Project Risk Management

Answers1. d. Hierarchical description of risks is called Risk Breakdown structure.

2. c. Risk register documents the risks in detail.3. a. Beta needs to refer to the Risk response plan that documentsresponses to identified risks.4. c. Risk probability and impact are defined during Qualitative risk analysis.5. d.6. c. Risk identification is performed after performing the risk managementplan.7. b. Process of Identify Risks has Risk register as the major output.8. b. Five of the six processes in Project Risk Management are part of thePlanning process group.9. a. John is using the Delphi technique to identify risks.

10. d. Mathew is mitigating the risk by reducing the probability of riskhappening11. Risk mitigation is a response to negative risks and not positive risks.Positive risks may be responded by - "Exploit", "Enhance", "Share","Accept".

Date post:	08-Jul-2018
Category:	Documents
Upload:	ahmed-adel-abdellatif
View:	223 times
Download:	0 times

Ahmed El Antary - PMP Part 11- Risk 5th Ed - General

Documents