Risk Management

www.relaxedprojectmanager.com

+Risk management


Deadlines


Initiation Feasibility Organisation

Execution Transfer

DeliverableLessons learnedRisk

• Project Charter

• Stakeholder Analysis

• Requirements

• Service/Product

• Risque Analysis

• WBS• PERT• GANTT• Project Plan

• Kanban Chart• Dashboard• Reporting• Test

• Lessons learned

• Workbreak-downchart/ Estimation23/03

• Sequencing Tactic/Strategy• Project Plan 30/03

• Project Control 11/04

• Meeting• Project Status• Scope Change• Test

• Requirements• 16/03• Risk• 21/03

• Project initiation 19/01 16/02

• Stakeholder

• 09/03

• Transfer 20/04• Lessons learned

Gate Review Gate Review Gate Review Gate ReviewGate Review

Topics

? What’s the project ?What are the

needs ? What’s thebest solution ?

How do we organisethe project ?

How can i keep the project on track ?

How can i make surethat the client will take

over the project ?


+What risks would you take ?


+What risks would you take ?

Exclude – Avoid - Transfer – Reduce - Accept




+What is project risk ?


+Risk process


+Risk management process

Identify risksAssign impact/ probability

Prioritize risk (risk ranking/ tolerance)

Develop strategies (mitigate, transfer, …)

Determine who’s responsible for the risk

Manage your risk during the project !



+What you know and don’t know



+What you know and don’t know


Something which has NEVER HAPPENED before and thus cannot be anticipated

Something we know EXISTS but we don‘t know when it will happen and how severe the consequences will be


+Ignorance Map


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Requirements

Stakeholder

Project charterPlanning

Skills

Soil

Strategy


+How to find the risks ?

Uniqueness

Project Documents

Skills

Organisational Culture

Timeline before during after


+How to find risks ?• What is unique about your project ?• What are you not used to deal with ?• What are typical risks linked to your

business ?• What are typical risks linked to the

product/service you want to provide ?• What will be out of your management

range ?• What kind of risks arises from the

stakeholders ?• What’s going to change in the next

month in your environment, your organization, your country ?« Project risk management is not about gathering all the possible risks,

the project manager needs to identify the risks that are linked to the uniqueness of the project, the product and the way

of managing the project »www.relaxedprojectmanager.com



+Sources of risques in international projects Distributed teams

Various languages

Different measures - Different technical standards

Reliability of infrastructure (technology, transport, etc.)

Ethnical and religious differences

Social violence and instability

Prejudice and nationalism

Different business practices and rules

Different feeling for time and punctuality

Different attitude towards risk in general

Divergent competency profiles and certificates

Government involvement and control

CostRisk !

QualityRisk !

TimeRisk !


+Sources of risques in construction projects Bureaucracy of government

Design variations

Excessive approval procedures in administrative

General safety accident occurrence

High performance or quality expectations

Inadequate or insufficient site information

Inadequate program scheduling

Incomplete or inaccurate cost estimate

Lack of coordination between project participants

Low management competency of subcontractors

Price inflation of construction materials

Serious noise pollution caused by construction

Tight project schedule

CostRisk !

QualityRisk !

TimeRisk !


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+Prioritize


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What’s the impact of risks on your project ?

Uniqueness Risk !

CostRisk !

QualityRisk !

TimeRisk !

ScopeRisk !

generatewww.relaxedprojectmanager.com



+New Tool to be introduced

Context : You first get some knowledge of how to use it. You then work with it using this basic knowledge. After some time you decide you need to learn more. Over an extended time you gain proficiency and it becomes part of your toolkit.

Impact : Too difficult to use, find problems in the tool, management thinks you will be more productive. Old tools are still used. Productivity drops.

Prevention : Requirements, training, guidelines, …


+Informal and wrong methods Context : falling in habits. 5% usage of functionalities

of a tool. First usage of a method slows down the work.

Impact : Confusion – Isolation – People divide the work into smaller chungs to avoid the « big method »

Prevention : Train method and then find out how people adapt the method to the culture of the organisation


+Project manager lacks experience Context : quick promotion after having taken a few basic

courses. Left to themselves. Failure. Standardised methods. Lack of sharing experience.

Impact : unrealistic and uncomplete project plan – pm does not recognise the severity and effect of issues that arise.

Prevention : Sharing experience – Rotate project leaders - Mentor


+Lack of teamwork Context: the only time for teamwok is at a meeting –

get the work done but don’t plan the work – don’t take into account the cultural factor – Understanding : if two people work together work is slowed down

Impact : Lack of knowledge and method sharing – Keep the problem to him/her self. Manager assumes things are fine – Last minute bad surprise

Prevention : Reward joint working from the start – move the ownership of an idea to the staff


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+How to use the risk matrix ?

Probability

Severness

b) Verify that your team is aware of these riskand that they can handle them

d) It’s up to your organisation to handle these risks

d) Manage these risks closely yourself

a) Forget about theses risks

High

HighLow



+How to manage risks ?

Risk (linked to

the specificity

of the project?)

Impact on the project(Cost, Delay,

Quality, Scope)

Probability

(that this risk occurs)

Event = Probabil

ity x Impact

Action (avoid,mitigate,

transfer, accept)

Status (disappeare

d, appeared,

latent)

Trend (is it

getting better or worse)




+Risk Form

Ref:Version:

Programme: Project:

RISK IDENTIFIER: Description and Impact: Risk Category:

Probability: Severness: Current Status:

Countermeasures:

Owner: Date Identified: Date of Last Update:



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+Hints for risk management ?

• Identify and qualify the risks in groups gathering people with different backgrounds

• Risk management is an on going process, so you need to put rules about meetings and outcomes in your project management plan

• Always check if the countermeasures you take are really working

• Risk breakdown structure is useful to build but it’s not a guarantee for finding all the relevant risks

• Working together with your team on risk management increases awareness and it’s a way to share responsibility

• Feedback is very important when a risk occurs your reporting system and your management should encourage feedback

• Concentrate on relevant risk specific to the uniqueness of your project



+Respond

Consider alternative courses and remedyHave a plan B for important risks (contingency plan) Install project buffer (extra time and money)

Continuously monitor the project‘s main risks!

RESPOND

Any feasible action to minimize or eliminate the risk, intensively involving all available technological, human and organizational resources

Reasonable for highly critical solutions!


+Eclude

• Avoid major risks by excluding those from your project • Hand the riskful task over to another project• Has to happen in the scoping phase • Down-scaling a project has limitations!



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+Transfer(risk response)

Shift risk consequences to another party

Do it if the other party is used

to deal with the risk

Choose the right contract type in order to cover yourself

Pay insurance


Externalize responsibility for potential damages by purchasing insurance, external consultants/experts, etc. Hiring externals has it‘s own risks (legal stuff, liability, etc.) Transferring risks is expensive!


+Mitigation(risk response)

reduce impact or probability of the risk

Do more testing

Use more qualifiedresources

Improve your communicationWith the subcontractor

Mange closely the resourcesWorking on the risky deliverable



+Avoidance(risk response)

avoid cause/source of the risk

Don’t let your subcontractor do the work, do it yourself

Reduce scope to deliverables you are

sure to produce

Change the way youdo your project

Work with technologies/productsyou know very well

Don’t do it yourself,get someone who is specialized



+Acceptance(risk response)

When you can’t find another response

1. Develop a contingency plan

2. Establish amount of reservebased on probability and severness

Understand the risk but take no preparationsReact, if it occurs (if costs are small, solve the problem) Alternatively, just live with the damage Applicable only for minor risks!



+Risk opportunity or threat?

Threat Opportunity

Find a way to avoid the risk

Find a way to transfer to another party

Find a way to mitigate the risk reducingProbability or Severness

Exploit

Share with another party

Enhance by increasing the effector the probability

Or accept and do nothing !

Risk



+How to handle the risk ?

Scope / WBSTactic (Sequencing)

What (new) task will mitigate, transfer, … the risk ?

Risk

Performance


Education

Risk Management