Project Management Professional

Dr. Ahmed Hassan, PgMP, PMP, RMP,PBA

PMP
 Plan Risk Management

Today Identify Risks

Outlines Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Responses

Implement Risk Responses

Monitor Risks
11. PROJECT
RISK MANAGEMENT

Presented by:

Dr. Ahmed Hassan

PMO Director, MCIT
Certified Project Managers Trainer
 332

Project Risk Management

Project Risk Management includes the processes of

conducting risk management planning, identification, analysis,
response planning, response implementation, and monitoring
risk on a project.

The objectives of project risk management are to increase the

probability and/or impact of positive risks and to decrease the
probability and/or impact of negative risks, in order to optimize
the chances of project success.
 Project Management Process Groups 22
Knowledge Areas Initiating Planning Executing Monitoring and Controlling Closing
4. Project Integration 4.1 Develop 3. Direct and Manage Project Work 5. Monitor and Control Project Work 4.7 Close
4.2 Develop Project Management Plan
Management Project Charter 4. Manage Project Knowledge 6. Perform Integrated Change Control Project
5.1 Plan Scope Management
5. Project Scope 5.2 Collect Requirements 5.5 Validate Scope
Management 5.3 Define Scope 5.6 Control Scope
5.4 Create WBS
6.1 Plan Schedule Management
6.2 Define Activities
6. Project Schedule
6.3 Sequence Activities 6.6 Control Schedule
Management
6.4 Estimate Activity Durations
6.5 Develop Schedule Management
7.1 Plan Cost Management
7. Project Cost
7.2 Estimate Costs 7.4 Control Costs
Management
7.3 Determine Budget
8. Project Quality
8.1 Plan Quality Management 8.2 Manage Quality 8.3 Control Quality
Management
9.3 Acquire Resources
9. Project Resource 9.1 Plan Resource Management
9.4 Develop Team 9.6 Control Resources
Management 9.2 Estimate Activity Resources
9.5 Manage Team
10. Project
Communications 10.1 Plan Communications Management 10.2 Manage Communications 10.3 Monitor Communications
Management
11.1 Plan Risk Management
11.2 Identify Risks
11. Project Risk
11.3 Perform Qualitative Risk Analysis 11.6 Implement Risk Responses 11.7 Monitor Risks
Management
11.4 Perform Quantitative Risk Analysis
11.5 Plan Risk Responses
12. Project Procurement
12.1 Plan Procurement Management 12.2 Conduct Procurements 12.3 Control Procurements
Management

13. Project Stakeholder 13.1 Identify

13.2 Plan Stakeholder Engagement 13.3 Manage Stakeholder Engagement 13.4 Monitor Stakeholder Engagement
Management Stakeholders

2 24 10 12 1
 334

Key concepts for Project Risk Management

• Project Risk Management processes address two levels of risk in projects:

o Individual project risk

o Overall project risk

• Project team needs to know what level of risk exposure is acceptable in pursuitof
the project objectives. ( Risk thresholds).

• Risk thresholds express the degree of acceptable variation around a project

objective.
 335

TAILORING CONSIDERATIONS

• Project size.
• Project complexity.
• Project importance.
• Development approach.
 336

CONSIDERATIONS FOR AGILE/ADAPTIVE ENVIRONMENTS

High-variability environments, by definition, incur more uncertainty and risk.

PM using adaptive approaches to accelerate knowledge sharing and ensure

that risk is understood and managed.

Risk is considered when selecting the content of each iteration, and riskswill
also be identified, analyzed, and managed during each iteration.

Work may be reprioritized as the project progresses, based on an improved

understanding of current risk exposure.
$
Planning
$
Executing Monitor & Control
 337

11.1 Plan Risk Management

Inputs Tools & Techniques Outputs

1. Project charter 1. Expert judgment .1 Risk management plan

2. Project management plan 2. Data analysis
• All components • Stakeholder analysis
3. Project documents .3 Meetings
• Stakeholder register
4. EEF
5. OPA
 338

11.1 Plan Risk Management Input

01 PROJECT CHARTER

02 PROJECT MANAGEMENT PLAN

• All components

03
PROJECT DOCUMENTS
• Stakeholder register

04 ENTERPRISE ENVIRONMENTAL FACTORS

05 ORGANIZATIONAL PROCESS ASSETS

 339

11.1 Plan Risk Management Tools & Techniques

01
EXPERT JUDGMENT

02 DATA ANALYSIS
• Stakeholder analysis

03 Meetings 33
%

95
%
95
%
 340

11.1 Plan Risk Management Output

01 RISK MANAGEMENT PLAN
Describes how risk management activities will be structured and performed.
Risk strategy.

Methodology.

Roles and responsibilities.

Funding.

Timing.

Risk categories.
 341

11.1 Plan Risk Management Output

Risk Breakdown
Structure (RBS)
 342

11.1 Plan Risk Management Output

Stakeholder risk appetite. The risk appetites of key stakeholders on the project are recordedin
the risk management plan, as they inform the details of the Plan Risk Management process
stakeholder risk appetite should be expressed as measurable risk thresholds

Definitions of risk probability and impacts. used to evaluate both threats and opportunities
by interpreting the impact definitions as negative for threats (delay, additional cost, and
performance shortfall) and positive for opportunities (reduced time or cost, and performance
enhancement).
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11.1 Plan Risk Management Output

Probability and impact matrix. Opportunities and threats are represented in a common probability
and impact matrix using positive definitions of impact for opportunities and negative impact definitions
for threats. Where numeric values are used, these can be multiplied to give a probability-impact score
for each risk,
 344

11.1 Plan Risk Management Output

Reporting formats. Reporting formats define how the outcomes of the Project Risk
Management process will be documented, analyzed, and communicated.

Tracking. Tracking documents how risk activities will be recorded and how risk
management processes will
be audited.
 345

11.2 Identify Risks

Inputs Tools & Techniques Outputs

1. Project management plan 1. Expert judgment

. 1 Risk register
• Requirements management plan 2. Data gathering
• Brainstorming 2. Risk report
• Schedule management plan
• Checklists 3. Project documents updates
• Cost management plan
• Interviews • Assumption log
• Quality management plan
3. Data analysis
• Resource management plan • Issue log
• Root cause analysis
• Risk management plan • Assumption and constraint • Lessons learned register
• Scope baseline analysis
• Schedule baseline • SWOT analysis
• Cost baseline • Document analysis
2. Project documents 1. Interpersonal and team skills
• Assumption log • Facilitation
• Cost estimates 2. Prompt lists
• Duration estimates 3. Meetings
• Issue log
• Lessons learned register
• Requirements documentation
• Resource requirements
• Stakeholder register
3. Agreements
4. Procurement documentation
5. EEF
6. OPA
 346

11.2 Identify Risks Input

01 PROJECT MANAGEMENT PLAN
• Requirements management plan • Risk management plan
• Schedule management plan • Scope baseline
• Cost management plan • Schedule baseline
• Quality management plan • Cost baseline
• Resource management plan

02
PROJECT DOCUMENTS
• Assumption log • Lessons learned register
• Cost estimates • Requirements documentation
• Duration estimates • Resource requirements
• Issue log • Stakeholder register

03
AGREEMENTS

04 PROCUREMENT DOCUMENTATION

05 ENTERPRISE ENVIRONMENTAL FACTORS

06 ORGANIZATIONAL PROCESS ASSETS

 347

11.2 Identify Risks Tools & Techniques

01 EXPERT JUDGMENT

02 DATA GATHERING
• Brainstorming. to obtain a comprehensive list of individual project risks and sources of
overall project risk.
• Checklists. developed based on historical information and knowledge that has been
accumulated from similar projects and from other sources ofinformation.
• Interviews. interviewing experienced participants, stakeholders, and subject matter
experts to identify risks

03 DATA ANALYSIS
• Root cause analysis. to discover the underlying causes that lead to a problem, and
develop preventive action.
• Assumption and constraint analysis. To explores the validity of assumptions and
constraints to determine which pose a risk to the project
33
• SWOT analysis. examines the project from each of the strengths, weaknesses,
%
opportunities, and threats (SWOT) perspectives.
• Document analysis.
95
%
 348

11.2 Identify Risks Tools & Techniques

04 INTERPERSONAL AND TEAM SKILLS

05 PROMPT LISTS
A prompt list is a predetermined list of risk categories that might give rise to individual
project risks and that could also act as sources of overall projectrisk.
common strategic frameworks for identifying sources of overall project risk
• PESTLE (political, economic, social, technological, legal, environmental),
• TECOP (technical, environmental, commercial, operational, political), or
• VUCA (volatility, uncertainty, complexity, ambiguity).

06 MEETINGS
(often called a risk workshop).

33
%

95
%
 350

11.2 Identify Risks Output

01 RISK REGISTER
The risk register captures details of identified individual project risks. include :
• List of identified risks.
• Potential risk owners.
• List of potential risk responses.

02 RISK REPORT

03 PROJECT DOCUMENTS UPDATES

• Assumption log.
• Issue log..
• Lessons learned register
 351

11.3 Perform Qualitative Risk Analysis

Inputs Tools & Techniques Outputs

1. Project management plan 1. Expert judgment 1. Project documents updates

• Risk management plan 2. Data gathering • Assumption log
2. Project documents • Interviews • Issue log
• Assumption log 3. Data analysis • Risk register
• Risk register •Risk data quality assessment • Risk report
•Risk probability and impact
• Stakeholder register
assessment
3. EEF
•Assessment of other risk
4. OPA
parameters
4. Interpersonal and team skills
• Facilitation
5. Risk categorization
6. Data representation
• Probability and impact matrix
• Hierarchical charts
7. Meetings
 352

11.3 Perform Qualitative Risk Analysis Input

01 PROJECT MANAGEMENT PLAN

• Risk management plan

02
PROJECT DOCUMENTS
• Assumption log
• Risk register
• Stakeholder register

03 ENTERPRISE ENVIRONMENTAL FACTORS

04 ORGANIZATIONAL PROCESS ASSETS

 353

11.3 Perform Qualitative Risk Analysis Tools & Techniques

01
EXPERT JUDGMENT

02
DATA GATHERING

03 DATA ANALYSIS

Risk data quality assessment. evaluates the degree to which the data about individual
project risks is accurate and reliable as a basis for qualitative risk analysis.

Risk probability and impact assessment. considers the likelihood that a specificrisk
will occur. Considers the potential effect project objectives ( schedule, cost, quality, or
performance). Impacts will be negative for threats and positive for opportunities.

33
%

95
%
 354

11.3 Perform Qualitative Risk Analysis Tools & Techniques

Assessment of other risk parameters.
Consider other characteristics of risk, like:
• Urgency. The period of time within which a response to the risk is to be implemented in order to
be effective.(A short period indicates high urgency.)
• Proximity. The period of time before the risk might have an impact on one or moreproject
objectives. (A short period indicates high proximity.)
• Dormancy. The period of time that may elapse after a risk has occurred before its impactis
discovered. (A short period indicates low dormancy.)
• Manageability. The ease with which the risk owner can manage the occurrence or impact of risk.
• Controllability. The degree to which the risk owner is able to control the risk’s outcome.
• Detectability. The ease with which the results of the risk occurring, or being about to occur, can
be detected and recognized.
• Connectivity. The extent to which the risk is related to other individual project risks.
• Strategic impact. The potential for the risk to have a positive or negative effect onthe
organization’s strategic goals
• Propinquity. The degree to which a risk is perceived to matter by one or more stakeholders. 33
Where a risk is perceived as very significant, propinquity is high. %

04 INTERPERSONAL AND TEAM SKILLS 95

%
 355

11.3 Perform Qualitative Risk Analysis Tools & Techniques

05
RISK CATEGORIZATION
Risks to the project can be categorized by sources of risk (RBS); or other useful categories
(e.g., project phase, project budget, and roles and responsibilities)

06 DATA REPRESENTATION
 Probability and impact matrix.
 Hierarchical Charts
Where risks have been categorized using more than two parameters.
Ex: Bubble chart which displays three dimensions of data, where each risk is plotted
(bubble), and the three parameters are represented by the x-axis value, the y-axis value,
and the bubble size.

07 MEETINGS

33
%

95
%
 356

11.3 Perform Qualitative Risk Analysis Tools & Techniques

Probability and impact matrix 33

%

95
%
 357

11.3 Perform Qualitative Risk Analysis Tools & Techniques

33
%

95
%
 358

11.3 Perform Qualitative Risk Analysis Output

01 PROJECT DOCUMENTS UPDATES
• Assumption log
• Issue log
• Risk register
• Risk report
 359

11.4 Perform Quantitative Risk Analysis

Inputs Tools & Techniques Outputs

1. Project management plan 1. Expert judgment 1. Project documents updates

• Risk management plan 2. Data gathering • Risk report
• Scope baseline • Interviews
• Schedule baseline 3. Interpersonal and team skills
• Cost baseline • Facilitation
2. Project documents 4. Representations of uncertainty
5. Data analysis
• Assumption log
• Simulations
• Basis of estimates
• Sensitivity analysis
• Cost estimates
• Cost forecasts • Decision tree analysis
• Duration estimates • Influence diagrams
• Milestone list
• Resource requirements
• Risk register
• Risk report
• Schedule forecasts
3. EEF
4. OPA
 360

11.4 Perform Quantitative Risk Analysis Input

01
PROJECT MANAGEMENT PLAN
• Risk management plan • Schedule baseline
• Scope baseline • Cost baseline

02
PROJECT DOCUMENTS
• Assumption log • Milestone list
• Basis of estimates • Resource requirements
• Cost estimates • Risk register
• Cost forecasts • Risk report
• Duration estimates • Schedule forecasts

03 ENTERPRISE ENVIRONMENTAL FACTORS

04
ORGANIZATIONAL PROCESS ASSETS
 361

11.4 Perform Quantitative Risk Analysis Tools & Techniques

01
EXPERT JUDGMENT 33
%
02
DATA GATHERING
95
03 INTERPERSONAL AND TEAM SKILLS % 9
%
04 REPRESENTATIONS OF UNCERTAINTY
This may take several forms. triangular, normal, lognormal, beta, uniform, or discrete distributions.
Care should be taken when selecting an appropriate probability distribution to reflect the range of
possible values for the planned activity.

05 DATA ANALYSIS
Influence diagrams. represents a project or situation within the project as a setof entities,
outcomes, and influences, together with the relationships and effects betweenthem.

Simulation. Simulates the combined effects of individual project risks and other sources of
uncertainty to evaluate their potential impact on achieving project objectives performed using a
Monte Carlo analysis.
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11.4 Perform Quantitative Risk Analysis Tools & Techniques

Influence Diagrams display a decision

problem with nodes representing the
decision, the objective, chance variables,
general variables, and the influence of
each on each other.

Influence Diagrams
 363

11.4 Perform Quantitative Risk Analysis Tools & Techniques

Monte Carlo analysis When

running a Monte Carlo analysis
for cost risk, the
simulation uses the project cost
estimates.

When running a Monte Carlo

analysis for schedule risk, the
schedule network diagram and
duration estimates are used.

Computer software is used to

iterate the quantitative risk
analysis model, The input
values (e.g., cost estimates,
duration estimates, or occurrence of
probabilistic branches)
 364

11.4 Perform Quantitative Risk Analysis Tools & Techniques

Sensitivity analysis. Helps to determine which individual project risks or other sources of
uncertainty have the most potential impact on project outcomes.

33
%

95
%
 365

11.4 Perform Quantitative Risk Analysis Tools & Techniques

Decision tree analysis. used to support selection of the best of several alternative coursesof
action.
 365

11.4 Perform Quantitative Risk Analysis Tools & Techniques

Decision tree analysis. used to support selection of the best of several alternative coursesof
action.
Failure: 35% Probability
Setup Cost= $ 200,000 and $ 120,000 impact

Prototype

A company is trying to
determine if prototyping Pass: No Impact
is worthwhile on the
Expected Monetary
project
Value : P * I

Prototype: Failure: 70% Probability and $

Setup Cost = $ 0 450,000 impact
35% * 120,000= 42,000
Do not
42,000 +200,000= 242,000 prototype

Do Not Prototype: Pass: No Impact

70% * 450,000= 315,000
 366
11.4 Perform Quantitative Risk Analysis Output

01 PROJECT DOCUMENTS UPDATES

• Assessment of overall project risk exposure
o Chances of project success.
o Degree of inherent variability remaining within the project at the time the analysiswas
conducted.
• Detailed probabilistic analysis of the project.
o Amount of contingency reserve needed to provide a specified level of confidence;
o Identification of individual project risks or other sources of uncertainty that have the greatest
effect on the project critical path.
o Major drivers of overall project risk, with the greatest influence on uncertainty in project
outcomes.

• Prioritized list of individual project risks.

• Trends in quantitative risk analysis results.

• Recommended risk responses.

 367

11.5 Plan Risk Responses

Inputs Tools & Techniques Outputs

1. Project management plan 1. Expert judgment 1. Change requests

• Resource management plan 2. Data gathering 2. Project management plan updates
• Risk management plan • Interviews • Schedule management plan
• Cost baseline 3. Interpersonal and team skills • Cost management plan
2. Project documents • Facilitation • Quality management plan
• Lessons learned register 4. Strategies for threats
• Resource management plan
5. Strategies for opportunities
• Project schedule • Procurement management plan
6. Contingent response strategies
• Project team assignments • Scope baseline
7. Strategies for overall project risk
• Resource calendars • Schedule baseline
• Risk register 8. Data analysis
• Cost baseline
• Risk report • Alternatives analysis
3. Project documents updates
• Stakeholder register • Cost-benefit analysis
• Assumption log
3. EEF 9. Decision making
• Cost forecasts
4. OPA • Multicriteria decision analysis
• Lessons learned register
• Project schedule
• Project team assignments
• Risk register
• Risk report
 368

11.5 Plan Risk Responses Input

01
PROJECT MANAGEMENT PLAN
• Resource management plan
• Risk management plan
• Cost baseline

02 PROJECT DOCUMENTS
• Lessons learned register • Risk register
• Project schedule • Risk report
• Project team assignments • Stakeholder register
• Resource calendars

03 ENTERPRISE ENVIRONMENTAL FACTORS

04
ORGANIZATIONAL PROCESS ASSETS
 369

11.5 Plan Risk Responses Tools & Techniques

01
EXPERT JUDGMENT

02
DATA GATHERING

03 INTERPERSONAL AND TEAM SKILLS

04 STRATEGIES FOR THREATS

1. Escalate. appropriate when a threat is outside the scope of the project. PM determines who should
be notified about the threat and communicates the details to it.

2. Avoid. when the project team acts to eliminate the threat or protect the project from its impact.
appropriate for high-priority threats with a high probability of occurrence and a largenegative impact.

3. Transfer. shifting ownership of a threat to a third party to manage therisk

4. Mitigate. action is taken to reduce the probability of occurrence and/or impact of a threat.

5. Accept. acknowledges the existence of a threat, but no proactive action is taken, appropriate for
low-priority threats.
 370

11.5 Plan Risk Responses Tools & Techniques

05 STRATEGIES FOR OPPORTUNITIES

1. Escalate.
2. Exploit. The exploit strategy may be selected for high-priority opportunities where the organization
wants to ensure that the opportunity is realized. by ensuring that it definitely happens, increasing the
probability of occurrence to 100%

3. Share. Sharing involves transferring ownership of an opportunity to a third party so that it shares
some of the benefit if the opportunity occurs.

4. Enhance. used to increase the probability and/or impact of an opportunity.

5. Accept. Accepting an opportunity acknowledges its existence but no proactive action is [Link]
strategy may be appropriate for low-priority opportunities.

06
CONTINGENT RESPONSE STRATEGIES
It is appropriate for the project team to make a response plan that will only be executed undercertain
predefined conditions.
 371

11.5 Plan Risk Responses Tools & Techniques

07
STRATEGIES FOR OVERALL PROJECT RISK
1. Avoid
2. Exploit.
3. Transfer/share.
4. Mitigate/enhance.
5. Accept

08 DATA ANALYSIS
• Alternatives analysis
• Cost-benefit analysis.

09
DECISION MAKING
 372

11.5 Plan Risk Responses Output

01 CHANGE REQUESTS

02
PROJECT MANAGEMENT PLAN UPDATES
• Schedule management plan • Procurement management plan
• Cost management plan • Scope baseline
• Quality management plan • Schedule baseline
• Resource management plan • Cost baseline

03 PROJECT DOCUMENTS UPDATES • Project team assignments

• Assumption log • Risk register
• Cost forecasts • Risk report
• Lessons learned register
• Project schedule
 373

11.6 Implement Risk Responses

Inputs Tools & Techniques Outputs

1. Project management plan 1. Expert judgment 1. Change requests

• Risk management plan 2. Interpersonal and team skills 2. Project documents updates
2. Project documents • Influencing • Issue log
• Lessons learned register .3 PMIS • Lessons learned register
• Risk register • Project team assignments
• Risk report • Risk register
3. OPA • Risk report
 374

11.6 Implement Risk Responses Input

01
PROJECT MANAGEMENT PLAN
• Risk management plan

02
PROJECT DOCUMENTS
• Lessons learned register
• Risk register
• Risk report

03 ORGANIZATIONAL PROCESS ASSETS

 375

11.6 Implement Risk Responses Tools & Techniques

01
EXPERT JUDGMENT

02 INTERPERSONAL AND TEAM SKILLS

• Influencing

03 PROJECT MANAGEMENT INFORMATION SYSTEM

33
%

95
%
95
%
 376
11.6 Implement Risk Responses Output
01 CHANGE REQUESTS

02 PROJECT DOCUMENTS UPDATES

• Issue log
• Lessons learned register
• Project team assignments
• Risk register
• Risk report
 377

11.7 Monitor Risks

Inputs Tools & Techniques Outputs

.1 Project management plan .1 Data analysis . 1 Work performance information

• Risk management plan •Technical performance
2. Change requests
.2 Project documents analysis
3. Project management plan updates
• Issue log •Reserve analysis • Any component
• Lessons learned register 2. Audits .4 Project documents updates
• Risk register 3. Meetings • Assumption log
• Risk report • Issue log
3. Work performance data • Lessons learned register
4. Work performance reports • Risk register
• Risk report
.5 OPA updates
 378

11.7 Monitor Risks Input

01
PROJECT MANAGEMENT PLAN
• Risk management plan

02
PROJECT DOCUMENTS
• Issue log
• Lessons learned register
• Risk register
• Risk report

03 WORK PERFORMANCE DATA

04 WORK PERFORMANCE REPORTS

 379

11.7 Monitor Risks Tools & Techniques

01
DATA ANALYSIS

• Technical performance analysis. compares technical accomplishments

during project execution to the schedule of technical achievement.

• Reserve analysis. compares the amount of the contingency reserves

remaining to the amount of risk remaining to determine if the remaining
reserve is adequate 33
%
02 AUDITS
95
03 MEETINGS %
95
%
 380

11.7 Monitor Risks Output

01 WORK PERFORMANCE INFORMATION
Change requests

02 PROJECT MANAGEMENT PLAN UPDATES

• Any component

03 PROJECT DOCUMENTS UPDATES

• Assumption log
• Issue log
• Lessons learned register
• Risk register
• Risk report

04
ORGANIZATIONAL PROCESS ASSETS UPDATES
Project Management Professional
(Thanks)

Presented by:

Dr. Ahmed Hassan

PMO Director, MCIT
Certified Project Managers Trainer