risk management final ppt
TRANSCRIPT
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Use and benefits of tools for project risk management
T. Raz a and E. Michael
Presentation By:Naveen Kumar
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Presentation format..• Introduction• Problem Definitions????• Approach• Methodology• Individual tool contribution• Project management performance• Contribution of PRM process• Practical implications• Conclusions• References
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Introduction
• Risk management - one of the main areas of the P M Body of Knowledge (PMBOK) - Project Management Institute
• project risk management (PRM)- a process that accompanies the project from its definition through its planning, execution and con-trol phases up to its completion and closure.
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Intro….
Numerous Phases option among the different stages of project.
Identify risk factorsAssess risk probabilities and effectsDevelop strategies to mitigate identified risksMonitor risk factors Invoke a contingency plan;Manage the crisisRecover from the crisis.
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intro
Risks encountered @ Software Industries• Identification• Analysis• Response planning• Tracking and control
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Problem Definitions????
• A question of major relevance to any individual or organization considering the adoption or improvement of a PRM process is: which tools can provide the greatest benefits?
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Approach
surveying a sample of project managers in order to find out which tools are widely used
• tools - project management and effective
project risk management
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Methodology
• Questionnaire - personally or via e-mail to about 400 project managers from the software and high-tech sectors in Israel during April through June 1998.
• questionnaire consisted of three main sections
• a number of brief questions to be answered on a 0±5 scale.
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Methodology……cont’d• First section - Extent of the contribution of
individual PRM tools to the project success in general
Objective - identify the tools that were perceived as being the most valuable by the respondents.
• Second section - Effectiveness and efficiency of the manner in which projects are managed in the respondent's organization
Objective - investigate whether there is a relationship between the use of PRM tools and the level of performance of the project management process.
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Methodology……cont’d
• Third section - Contribution of a risk management process to overall project success
• Objective - learn about the differences in PRM tool usage between those project managers who believe that risk management is a valuable process, and those who do not
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Individual tool contribution
• 38 tools have been finalised• Tools were grouped according to the five stages
of the Software Engineering Institute Risk Management process
• Sixth group is also added for tools, processes and practices of a general nature
“background”• Objective - Affect the manner in which risks are managed
without being specifically related to one of the five stages in the PRM cycle
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Individual tool contribution….cont’d
• Respondents - Rate indicates the contribution of each tool to the PRM process by a value between 0 (no contribution at all) to 5 (critical contribution)
• Results for the 38 tools, divided into the six groups
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Individual tool contribution….cont’d
• Out of the ten tools that received the highest mean score, five @ `Background' group,tools in this group received scores above the overall average of 2.72
• Indicates risk management is related to other management practices
• Requirements management• Subcontractor management• Configuration control
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Individual tool contribution….cont’d
• During the execution of the project, managers are likely to neglect the risk control phase
• Risk control tools are used sporadically or not at all, and their contribution is rated as low
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Project management performance
• Six questions designed to represent the manner in which projects were managed at the respondent's organization
• Two complementary aspects of project management: efficiency and effectiveness
• Respondents @ indicate the extent to which the projects they manage exhibit the characteristics listed
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PMP Questions…..
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Project management performance…cont’d
• Project Management Performance (PMP) index as the average of the scores over the six items
• Plot the PMP index against total tool score. Each observation corresponds to one respondent.
• Positive relationship between the extent of tool use and the PMP score
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PMP Index VS Total tool score
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Project management performance…cont’d
• Co-efficient of correlation = 0.36 0.36 at a level of significance of 0.0008.
• Suggests that respondents who come from environments conducive to better project management performance are more likely to assign higher scores to project risk management tools.
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Project management performance…cont’d
• Exploring the relationship between individual tool scores and the PMP score
• 84 respondents are divided into two sets, based on their PMP index value.
• LOW set (43 respondents with PMP below 3)• HIGH set (41 respondents with PMP above 3)
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Project management performance…cont’d
• Using 0.05 as the threshold for rejecting the null hypothesis, highlighted with a star (*) the tools in which there is a statistically significant difference in score between the LOW and the HIGH populations
• Background groups - link between the organization-wide application of practices
Simulation (T30) Subcontractor Management (T33) Quality Management (T36) Training (T37) Customer Satisfaction Surveys (T38) Effective and efficient environment for managing projects.
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Project management performance…cont’d
• Analysis group - more extensive use of risk analysis tools is associated with better project management practice.
Risk Probability Assessment (T5) Risk Impact Assessment (T6) Risk Classification (T8) Ranking of Risks (T9)
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Contribution of PRM proces
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RMC Index vs Average tool score
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Contribution of PRM proces…cont’d
• Defined a composite index, Risk Management Contribution (RMC)
• Strong positive relationship, with the co-efficient of correlation equal to 0.67 at a level of significance of 0.0001
• Respondents - value of the risk management process as a contributor to overall project success are more likely to apply the tools in the list
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Contribution of PRM proces…cont’d
• 84 respondents- 2 sets, based on their RMC index value and threshold value was 3.5
• LOW set • HIGH set both of equal size (42)
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Contribution of PRM proces…cont’d
• As for the Planning group-significant differences in three of the less commonly used tools:
• Cost±Bene®t Analysis (T14), Cause and Effect Analysis (T15) and Project
Replanning for Risk Mitigation (T16).
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Practical implications
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Practical implications…cont’d
• Objective - to identify the tools that have the greatest potential for contribution to a project risk management process
• Adopt the tools for performing project management practices (PMP=HIGH)
(or)• Practitioners who already have a good risk
management process (RMC=HIGH)
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Practical implications…cont’d
• These two types of results, the ranking in Table 1 and the selected tools in Table 6, can also serve for diagnostic purposes
• Possible to identify areas of in sufficient coverage and to devise a course of action that will enhance the project risk management capabilities in the organization
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Conclusion
• Approach - extended to other aspects of the risk management process, such as assignment of roles and responsibilities, timing and frequency of risk management activities, and amount of effort applied
• Applied to other processes related to project management, and, as the benchmarking proponents advocate, to many aspects of the organization
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References• Boehm BW. Software risk management:
principles and practices. IEEE Software 1991;8:32±41
• http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V9V-41HHNG4-2&_user=450750&_coverDate=01/31/2001&_rdoc=1&_fmt=high&_orig=search&_origin=search&_sort=d&_docanchor=&view=c&_acct=C000021538&_version=1&_urlVersion=0&_userid=450750&md5=368ed4ff5553dc178269c974e18e7ebd&searchtype=a
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