Project Risk Management EECS811: IT Project Management Presenter: Gavaskar Ramanathan

Overview Agenda [1] – PMBOK discussion Agenda [2] Case Study #1 – Project risk management methodology for small firms Case Study #2 – Driving agile architecting with cost and risk 2

Question What is risk ? – An uncertain event or condition which has negatively impact project cost, time or scope. What is risk management? – Systematic process of identifying, analyzing and responding to project risk. – It includes maximizing the probability and consequence of positive events and minimizing the probability and consequence of adverse events. 3

Summary 4

Overview 5

Process Explanation What is risk management planning ? – Deciding how to approach and plan risk management. What is risk identification ? – Which risks might affect the project and document them. What is qualitative risk analysis ? – Accessing the impact and likelihood of identified risks. What is quantitative risk analysis ? – Aims to analyze numerically the probability of each risk and the consequence on project objectives. 6

Process Explanation (Cont..) What is risk response planning ? – Developing options and determining actions to enhance opportunities and reduce threads to project objectives. What is risk monitoring and control? – Keeping track of the identified risks and monitoring and identifying new risks and ensuring the execution on risk plans and evaluation their effectiveness in reducing risk. 7

Risk Management Planning 8

Risk Identification 9

Qualitative Risk Analysis 10

Rating Impacts For A Risk 11

Probability – Impact Matrix 12

Quantitative Risk Analysis 13

Cost Estimates From Interview 14

Cost Risk Simulation 15

Decision Tree Analysis 16

Risk Response Planning 17

Risk Monitoring And Control 18

Agenda [2] Case Study #1 – Project risk management methodology for small firms Case Study #2 – Driving agile architecting with cost and risk 19

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 20

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 21

Project Risk Management Methodology For Small Firms 22 SME ( Small And Medium Enterprises) SMEs generate 66.7% of employment in European Union, employing over 90 million people.

Project RMM For Small Firms Introduction – SMEs are companies with limited resources due to their size. – Most of the time there are not using project management in some cases due to ignorance or complexity. The aim of this paper is to present a project risk management methodology designed specifically for these situations 23

Investigation Phases 24

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 25

Literature Review SMEs challenge – Growth accomplished through challenges – Raising capital and size of the company – Seeking access to new technologies – Strong capacity of innovation, however lack the resource to manage the innovation process. – Various standards such as APM, IPMA, ISO, PMBOK can be used only to large firms not SMEs 26

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 27

Identify Methodology Need & Characteristics First phase – Identify the difficulties that SME encounter when facing new project (7 different companies analyzed) – To confirm the information obtained in this first analysis, a boarder study was carried with consulting firm with another 72 SMEs – 17 Micro (24%) & 24 Small (33%) & 31 Medium (43%) – Sectors: Equipment (31%), services (15%), construction (13%) and automotive (10%) 28

Identify Methodology Need & Characteristics 29

First Phase - Conclusion Conclusion – SMEs overlooked the initial and final project phases. – Chosen project not matching with company Strategic point of view. – Hardly paying attention to closing phase of the project. – Lesson learned and project results. 30

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 31

New Methodology Phase And Tools Proposal: – Risk assessment should be more qualitative than quantitative. – Objectivity priorities the risks according to their potential impact. – Clear documentation, periodic review of risks and their status into dynamics of the company. – Risk checklist and strategies to mange common risks. 32

New Methodology Phase And Tools 33

New Methodology Phase And Tools 34

New Methodology Phase And Tools Project definition – Project environment analysis – Definition of project objectives – Identification of strategic risk with project 35

New Methodology Phase And Tools Project planning – Definition of risk management plan – Operational risk identification – Risk analysis and evaluation – Project risk communication – Closure and final project evaluation – Project result management – Lesson learned 36

Risk Classification Criteria 37 The RPI index value is calculated with the following formula: RPI = I x P = ( I c x I t X I s ) x P where: – I Risk impact – I c Cost impact – It Time impact – Is Scope impact – P Risk probability.

Phases & Activities & Techniques 38

Project RMM For Small Firms Introduction Literature review New risk management methodology design – Identification methodology need and characteristics – New methodology phases and tools Discussion and methodology validation – Implementation phases – Result discussion 39

Implementation Phases 40

Result Discussion 41

Conclusion 42 Less time spent on use of this methodology(< 85h) which is 3.77% of project time For shorter projects this % is increases because definition & planning and lesson learned and results management are the most time consuming and independent of project duration. Helps not only risk management, also other project management areas. Elimination of strategic risks and the correct definition of objectives, eliminating serious shortcomings in the project definition.

Agenda [2] Case study#1 – Project risk management methodology for small firms Case study#2 – Driving agile architecting with cost and risk 43

Question Does agility and architecture can coexist ? – We see agile methods that included architecting such as scaled agile framework. – Five pieces of advice can help architects become more effective in an agile world without having to implement new methods or frameworks. 44

Five Ideas Decision are your main deliverables Keep a backlog of architectural concerns Let economic impact determine your focus Keep it small Just enough anticipation. 45

Decision are your main deliverables 46

Keep a backlog of architectural concerns 47

Five Ideas Decision are your main deliverables Keep a backlog of architectural concerns Let economic impact determine your focus Keep it small Just enough anticipation. 48

References PMI—Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK), 4 th edition. Project Management Institute, Inc., USA. Sara Marcelino-Sadaba, Amaya Perez-Ezcurdia, Angel M. Echeverría Lazcano, Pedro Villanueva, 2013,Project risk management methodology for small firms”, International journal of project management, 32(2), pp Poort, E.R., 2014, Driving Agile Architecting with Cost and Risk, “IEEE Computer Society”, 31(5), pp