IT Project Management: Chapter 5 Risk Managemnt

8/18/2019 IT Project Management: Chapter 5 Risk Managemnt

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IT PROJECT MANAGEMENTDr. Zeeshan BhattiMPhil (IT)Chapter 4

Institute of Information and Communication TechnologyUniversity of Sindh, Jamshoro

Risk Management

BY: DR. ZEESHAN BHATTI 1


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ShareLessonsLearned

EvaluateSuccess

ConductClose-Out

Meeting

Roadmap to Project Management Success

FormProject

Team

Statementof WorkPurpose

Project Background

Project Deliverables

WorkBreakdownStructure

ResponsibilityMatrix

R A

A

S SR

Network Gantt ResourcePlan

UpdatePlan

ResolveIssues

ManageChange

TrackProgress

PerformTasks

Budget

TIME

LEADERSHIP

COMMUNICATION

P R O J E

C T N

O T E B O O K M E E

T I N G S

R E P O

R T S

L E S S O N S L E A R N E D

P L A N

I M P L E

M E N T

C L O S E

- O U T



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WHAT IS RISK?

Risk can be defined as:

“Any threat to project success.”



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Schedule

Within

AvailableResources

Project Scope

Project Risk



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RISK MANAGEMENT PROCESS

RiskUncertain or chance events that planning can not overcome or control.

Risk ManagementA proactive attempt to recognize and manage internal events and external threatsthat affect the likelihood of a project’s success.

What can go wrong (risk event).

How to minimize the risk event’s impact (consequences).

What can be done before an event occurs (anticipation).

What to do when an event occurs (contingency plans).

BY: DR. ZEESHAN BHATTI


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THE RISK EVENT GRAPH

FIGURE 7.1



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RISK MANAGEMENT’S BENEFITSA proactive rather than reactive approach.

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 andon time.



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THE RISK MANAGEMENPROCESS

FIGURE 7.2



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MANAGING RISK

Step 1: Risk IdentificationGenerate a list of possible risks through brainstorming, problemidentification and risk profiling.

Macro risks first, then specific events

Step 2: Risk AssessmentScenario analysis for event probability and impactRisk assessment matrix

Failure Mode and Effects Analysis (FMEA)Probability analysis

Decision trees, NPV, and PERT

Semiquantitative scenario analysis



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THE RISK BREAKDOWN STRUCTURE (RBS)



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PARTIAL RISK PROFILE FOR PRODUCT DEVELOPMENT PROJECT

FIGURE 7.4



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DEFINED CONDITIONS FOR IMPACT SCALES OF A RISK ON MAJOROBJECTIVES (EXAMPLES FOR NEGATIVE IMPACTS ONLY)

FIGURE 7.5



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RISK ASSESSMENT FORM

FIGURE 7.6

Failure Mode and Effects Analysis (FMEA)Impact × Probability × Detection = Risk Value



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RISK SEVERITY MATRIX

Failure Mode and Effects Analysis (FMEA)

Impact × Probability × Detection = Risk Value



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MANAGING RISK (CONT’D)

Step 3: Risk Response DevelopmentMitigating Risk

Reducing the likelihood an adverse event will occur.

Reducing impact of adverse event.

Avoiding RiskChanging the project plan to eliminate the risk or condition.

Transferring RiskPaying a premium to pass the risk to another party.

Requiring Build-Own-Operate-Transfer (BOOT) provisions.

Retaining RiskMaking a conscious decision to accept the risk.



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CONTINGENCY PLANNING

Contingency PlanAn alternative plan that will be used if a possible foreseen risk event actually occurs.

A plan of actions that will reduce or mitigate the negative impact (consequences) of arisk event.

Risks of Not Having a Contingency PlanHaving no plan may slow managerial response.

Decisions made under pressure can be potentially dangerous and costly.



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RISK AND CONTINGENCY PLANNING

Technical RisksBackup strategies if chosen technology fails.Assessing whether technical uncertaintiescan be resolved.

Schedule RisksUse of slack increases the risk of a late project finish.Imposed duration dates (absolute project finish date)Compression of project schedules due to a shortened project duration date.



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RISK RESPONSE MATRIX



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RISK AND CONTINGENCY PLANNING

(CONT’D)Costs Risks

Time/cost dependency links: costs increase when problems take longer to solve thanexpected.

Deciding to use the schedule to solve cash flow problems should be avoided.

Price protection risks (a rise in input costs) increase if the duration of a project isincreased.

Funding RisksChanges in the supply of funds for the project can dramatically affect the likelihoodof implementation or successful completion of a project.



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OPPORTUNITY MANAGEMENT TACT

ExploitSeeking to eliminate the uncertainty associated with an opportunity toensure that it definitely happens.

ShareAllocating some or all of the ownership of an opportunity to anotherparty who is best able to capture the opportunity for the benefit of theproject.

EnhanceTaking action to increase the probability and/or the positive impact ofan opportunity.

AcceptBeing willing to take advantage of an opportunity if it occurs, but nottaking action to pursue it.



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MANAGING RISK (CONT’D)

Step 4: Risk Response ControlRisk control

Execution of the risk response strategy

Monitoring of triggering events

Initiating contingency plans

Watching for new risks

Establishing a Change Management SystemMonitoring, tracking, and reporting risk

Fostering an open organization environment

Repeating risk identification/assessment exercises

Assigning and documenting responsibility for managing risk



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CHANGE MANAGEMENT CONTROL

Sources of ChangeProject scope changes

Implementation of contingency plansImprovement changes



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CHANGE CONTROL SYSTEM PROCES1. Identify proposed changes.2. List expected effects of proposed changes

on schedule and budget.

3. Review, evaluate, and approve or disapproveof changes formally.

4. Negotiate and resolve conflicts of change, condition,and cost.

5. Communicate changes to parties affected.

6. Assign responsibility for implementing change.7. Adjust master schedule and budget.

8. Track all changes that are to be implemented



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THE CHANGE CONTROL PROCESS

FIGURE 7.9



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BENEFITS OF A CHANGE CONTROL S1. Inconsequential changes are discouraged

by the formal process.2. Costs of changes are maintained in a log.

3. Integrity of the WBS and performance measuresis maintained.

4. Allocation and use of budget and management reserve fundsare tracked.

5. Responsibility for implementation is clarified.

6. Effect of changes is visible to all parties involved.

7. Implementation of change is monitored.

8. Scope changes will be quickly reflected in baseline andperformance measures.



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SAMPLE CHANGEREQUEST FORM

FIGURE 7.10



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CHANGE REQUESTLOG

FIGURE 7.11



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KEY TERMSAvoiding risk

Budget reserve

Change management system

Contingency plan

Management reserve

Mitigating risk

OpportunityRisk

Risk breakdown structure (RBS)

Risk register

Risk profile

Risk severity matrix

Scenario analysis

Sharing risk

Time buffer

Transferring risk



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ShareLessonsLearned

EvaluateSuccess

ConductClose-Out

Meeting

Roadmap to Project Management Success

FormProjectTeam

Statementof Work

ResponsibilityMatrix

Purpose

Project Background

Project Deliverables

WorkBreakdownStructure

R A

A

SS

R

Network Gantt BudgetResourcePlan

UpdatePlan

ResolveIssues

ManageChange

TrackProgress

PerformTasks

LEADERSHIP

COMMUNICATION

TIME

P R O J E C

T N O

T E B O O K

M E E T I N

G S

R E P O R T S

L E S S O

N S L E A R N E D

P L A N

I M P L E

M E N T

C L

O S E - O U T



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REFERRED NOTESA Short Course in ProjectManagement, by Nayda G.Santiago

REFERRED BOOK



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THANK YOU!!!!

BY DR ZEESHAN BHATTI 31

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IT Project Management: Chapter 5 Risk Managemnt