1 Project Risk Management Project Risk Management Dr. Said Abu Jalala

2 Introduction Project risk is the cumulative effect of the chances of uncertain occurrences adversely affecting project objectives Project risk management is a planned and systematic process of identifying, assessing and monitoring, and controlling risk throughout the life cycle of a project in the best interests of its objectives

3 Project Risk Management: Basic Approach Analysis of Project –Identification of Risks For Each Risk: –Impact and Probability Analysis What is the Nature of the Risk? –Avoidance/Mitigation Plans How Can We Minimize the Risk? –Contingency Plans What Do We Do if it Occurs?

4 Project Risk Management Process The steps in the project risk management process are: 1.Risk management planning 2.Risk identification 3.Qualitative risk analysis 4.Quantitative risk analysis 5.Risk response planning 6.Risk monitoring & control

5 Risk Management Planning “Deciding how to approach and plan the risk activities for the project”

6 Risk Identification “Determining which risks might affect the project and documenting their chances” Risk vs. uncertainty Likelihood and impact Expecting the unexpected A measure of what could happen, or the probable outcome of uncertain activities

7 Qualitative Risk Analysis “Performing a qualitative analysis of risks and conditions to prioritize their effects on project objectives” Requires that the probability and consequences of risks be evaluated using established methods and tools

8 Quantitative Risk Analysis “Analysis process uses numerically the probability of EACH risk and its consequences on project objectives as well as the extent of overall project risk” Uses historical information and expert judgment

9 Quantitative Risk Analysis High risks that should be resolved in the baseline plan. The best managers should be assigned. Additional resources should be applied. With some of these risks, project de-scoping might be considered. Moderate risks that can be addressed with plans that balance the cost of risk management with the risk- adjusted impact on the project. Contingency plans can be applied to these risks. Low risks, which can often be left to the project team to address as they arise during the project.

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30 Risks in project management The achievement of project objectives is always subject to influences beyond project manager’s direct control (assumptions and risks) It is important to monitor this ‘external’ environment to identify whether or not the assumptions that have already been made are likely to hold true, what new risks may be emerging, and to take action to manage or mitigate these risks where possible

31 Project Risk Management: Top 10 Risks Personnel Shortfalls –Staffing with Top Talent –Job Matching –Team Building –Morale Building –Cross-Training –Pre-scheduling Key People

32 Project Risk Management: Top 10 Risks Unrealistic Schedules and Budgets and/or Underestimating Problem Complexity –Detailed multisource cost and schedule estimation –Design to Cost –Incremental Development –Software Reuse –Requirements Scrubbing

33 Project Risk Management: Top 10 Risks Developing the Wrong Software Functions –Domain Analysis (Organizational Analysis/Mission Analysis) –Operational Concept Formulation –User Surveys –Prototyping –Early User Manuals

34 Project Risk Management: Top 10 Risks Developing the Wrong User Interface –Prototyping –Scenerios –Task Analysis Gold Plating –Requirements Scrubbing –Prototyping –Cost-Benefit Analysis –Design to Cost

35 Project Risk Management: Top 10 Risks Continuing Stream of Requirements –High Change Threshold –Information Hiding –Incremental Development (defer changes to later increments)

36 Project Risk Management: Top 10 Risks Shortfalls in Externally Performed Tasks –Reference Checking –Pre-award Audits –Award-fee Contracts –Competitive design or prototyping –Team Building

37 Project Risk Management: Top 10 Risks Shortfalls in Externally Furnished Components –Benchmarking –Inspections –Reference Checking –Compatability Analysis –Examples: Compilers Development Environments Target Hardware

38 Project Risk Management: Top 10 Risks Real-Time Performance Shortfalls –Simulation –Benchmarking –Modeling –Prototyping –Instrumentation –Tuning –Performance Parameter Allocations

39 Project Risk Management: Top 10 Risks Straining Computer Science Capabilities or Introduction of New Technology to an Organization –Technical Analysis –Cost-Benefit Analysis –Prototyping –Reference Checking –Staff Training –Example: Use of a new language, tool, or method