EGR 312 - 22

1

Risk Management

What is it?

Assessing, reducing, and controlling risks so that project objectives are met without requiring excessive schedules or resource budgets.

Note, all project planning can be consider risk management; however, this topic discusses specific actions to plan for risk.

EGR 312 - 22

2

Risk Assessment

• Identifying risks– Risks concerned with the tasks

themselves– Risks that occur between tasks

• Estimating consequences– Monetary cost of shortfall– Impact to schedule overrun– Shortfall on cost and schedule

overrun

EGR 312 - 22

3

Risk Reduction

• Reduce uncertainty– Prototyping,

simulation, modeling – Planning in detail,

including mitigation plans

– Parallel alternative developments

• Reduce consequence– Decoupling related

items– Providing margins or

reserves

– Checking references– Using trained or

certified staff– Using proven

technology– Verifying suitability of

inputs

EGR 312 - 22

4

Other risk management techniques

Risk Avoidance

• Reducing requirements• Increasing budget (locally)• Extending schedule (locally)

Risk Transfer

• Insurance• Aligning responsibility and

authority

EGR 312 - 22

5

Problem ResolutionProblems are inherent in complex projects.

Problem Sources• Motivation• Conflict• Technology• Poor Planning• Mother Nature

Problem Solving• Communication• Root cause analysis• Obtain advice

EGR 312 - 22

6

Project Ethics (see attached)

• Applicable codes of ethics:– Project Management Institute (PMI) Member Ethical

Standards– Code of Ethics for Engineers (NSPE)– other professional codes of ethics

• Let’s compare PMI and NSPE codes …

EGR 312 - 22

7

Project Ethics

Are there always clear answers to ethical questions?

Sample discussion questions:

Should you quote projects for less than the estimated cost?

If you do under-quote a project should you go back and ask for additional funds?

Should you ever go back and ask for additional funds?

EGR 312 - 22

8

Project Ethics

Discussion questions continued:

If in your opinion, the specifications are in excess of what is required, should you design to a more realistic set of specifications in order to save the customer money?

If there is an opportunity to save the customer money even though it may mean smaller profits for yourself, should you inform the customer?

Should you give more attention to the “squeaky wheel”?

EGR 312 - 22

9

Project Ethics

Discussion questions continued:

Should you pay one worker more than another, even though they do equivalent work?

If you make an agreement to purchase materials from a vendor, but find a lower price elsewhere, should you buy from the new source?

Other situational questions from the class….

EGR 312 - 22

10

Ethics Resources

Examples of codes of ethics for project managers can be found at the following web sites:

http://www.iappm.org/code.htm - International Association of Project and Program Management (IAPPM)

http://www.pmi.org/PDF/ap_pmicodeofethics.pdf– Project Management Institute

http://www.infra.kth.se/courses/1H1146/Files/codeofethics.pdf – “generic” code of ethics for project management professionals