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Project Risk Management

Practical Tips
by

Seldi Rubakanthas

on 18 December 2014

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Transcript of Project Risk Management

Risk Response Planning
Process of developing options and actions to enhance opportunities and reduce threats to the project’s objectives. Assigns parties to take responsibility for each risk response.
Risk Management Planning
Definition - Project Risk Management
Frameworks, processes and practices that are directed towards effective management of uncertainties affecting the project objectives

Project risk management - a scalable process, based on complexity, size of projects and risk tolerance of stakeholders
Qualitative Risk Analysis
Assesses the impact and likelihood of the identified risks and develops prioritized lists of these risks for further analysis or direct mitigation.
Quantitative Risk Analysis
A way of numerically estimating the probability that a project will meet its cost and time objectives. Quantitative analysis is based on a simultaneous evaluation of the impacts of all identified and quantified risks.
Dr Seldi Rubakantha
Project Risk Management
Benefits of Project Risk Management
Maximises project certainty
Contributes to project success /meet project objectives
Systematically analyses possible outcomes/deviations
Offers better project control
Helps senior management understand challenges in portfolio of projects
Risk Types and Project Risk
Enterprise Risk
Project Risk
Technical Risk
Safety Risk
Security Risk
Business Risk
Any uncertainty affecting the project objectives such as:

Time

Cost
Performance
Quality
Scope
Client satisfaction
Uncertainty that affects the technical objectives - performance
- functionality
- maintainability
- reliability
Uncertainties affecting business objectives such as:
Profitability
Market share, competitiveness,
Return of investment Internal Rate-
Reputation,-
Repeat work,
Share price
Uncertainty that affects one or more safety objectives:
- Max threshold of accidents
- Threshold for max lost days
- Insurance premiums- Regulatory compliance
Uncertainties that affect one or more security objectives:
- Information security
- Physical security
- Asset security- Personnel security
Project Risk Management Steps
Risk Management Planning
Risk Identification
Qualitative Risk Analysis
Risk Response Planning
Quantitative Risk Analysis
A systematic process of deciding how to approach, plan, and execute risk management activities throughout the life of a project
Risk Identification
Determining which risks might affect the project and documenting their characteristics. It may be a simple risk assessment organized by the project team or an outcome of a workshop process
Tracks identified risks, monitors residual risks, and identifies new risks. Ensuring the execution of risk plans, and evaluating their effectiveness in reducing risk. It is an on going process for the life of the project.
Risk Monitoring & Control
Monitoring and Control
Decide the level of activity- as a guide, for projects < £10m, use informal process and for projects >£20m, formal risk management process necessary
Incorporate into project management plan, allocate funds and time in accordance with level of activity
Make Risk Management an Agenda for project meetings, communicate to all project team and align the team to the benefits
Establish risk champions and leaders if the project is big, hence each section (geotech, structures, etc. has a risk lead)
Define clear project objectives, start early and continue the exercise throughout all projects stages - planning, scoping, design and construction
Use appropriate techniques, threshold setting for low /high risk (based on the scale of project)
Input data sources - previous database, brainstorming, questionnaires, surveys and checklists
Categorize - it is useful to categories and label the output. A detailed description of risk is necessary for wider adoption in the team.
Needs to include data, trigger, risk type, possible response, etc.
It is used when-
an initial screening or review of project riskswhen a quick assessment is desired
the preferred approach for some simpler and smaller projects where robust and/or lengthy quantitative analysis is not necessary.
Benefits include-
Prioritising risk and hence allocate resources for critical ones
Can be done with small groups and only inhouse specialist
Some Tips - Only invite the right participants, define terms, stay focussed & set time limit,prioritise the risk list
Quantitative risk assessment yields proportionate benefits for projects > £10m in author's experience
Quantitative techniques, Like Monte Carlo or Latin Hypercube, though powerful can be misleading if not used properly
Use survey questionnaires, formal/informal interviews, workshops for projects > £50m - frequency every 12m or at key milestones.
Workshop success depends on good pre-preparation, right subject experts participation and skilled facilitation (workshop style must be elicitation as opposed to interrogation)
Traditional risk response gets specific meaning in project risk
Avoid - relax project objectives, change project plan, change, clarify brief - may be the first response to try for all. Apply to high probability/impact risks.
Exploit - Opposite to avoid, apply only to high prob./impact risks. Ex. more resources to finish early
Transfer - Involves premium payment. Insurance, contracts, warranties, premium bonds.
Share - for opportunities, joint ventures, partnerships
Mitigate - reduce the trigger or impact. More preventive than reactive.
Enhance - increase the probability and impact hence the risk could materialise. If probability increased to 100%, then a sure opportunity.
Accept - it refers to risks that remains after all above steps. Sometimes allocate resources to deal with this if occurs.
This can be implemented by additional columns in the risk register for:
Type of strategy (e.g Mitigation)
Person responsible
Details of action to be taken, also update the PMP for the same action
Planned cost, Est cost avoided. Compare this with actual cost and actual cost avoided.
A continuous process, mainly in commissions that run for years. The risk profile will change year to year with risks that were successfully addressed and retired.

Thanks for viewing, any comments? pls email seldiru@gmail.com
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