session 1 - project risk management

7/29/2019 Session 1 - Project Risk Management

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Project Risk Management

SZABISTMPM II A


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Teaching Pattern:

No Course BOOK

Course MaterialRegularin Class, Assignments &Slides

Each Class we have 2 Quizzes (Only one is marked)

Anytime between the class.

Class participationBonus Marks

Mid Term Exam *

Project & Presentation

Field Based

Research Based

All Slides & Assignments are available on e-Group

Need Your Participation Productive


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Introduction

Your Name & Select Object thatreflects your personality.

2 Min


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What is Risk?


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What is Risk?

A probability or threat ofdamage, injury,liability,loss, or any other negative occurrence that is

caused by external or internal vulnerabilities, and

that may be avoided through preemptive action.

Services/ goods not provided within budget

Political change

Change in interest rates

Loss of customer loyalty/ revenue Fraud

Project budget over-runs

Terrorist attack/ Bomb threat etc.


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What is Project Risk?

A risk is something that may happen and if it does,will have a positive ornegative impact on theproject.

A risk must also have a probability something above0%. It must be a chance to happen or it is not a risk.

Being late

Over Budget

Communication Breakdown

Employee turnover

Not Knowing What's Going On

Un-productivity

User Commitment


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Difference b/w RISK & ISSUE

Risk is an event offuture, if it occurs, may impactproject objectives in positive ornegative manner.

The key point is that the risk event has not happenedyet.

An issue is a result of an event that is happeningright now orhas already happened.

The key point is that issue event has alreadyhappened.

Risk is a future event that may have an impact ontriple constraint (Budget, scope and schedule).

A risk can become an issue, but issue is not risk - ithas already happened.


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RISK, Project RISK or ISSUE ???

We may not be able to complete the project on timeif the server we need does not arrive on time.

The system we are building is designed for 1000concurrent users, but if we get more than that itmight run slow or even crash.

Not recruiting a senior consultant for the project bythe second week could delay the project by a month.

If a staff member leaves the project, we have to actnow to replace her.


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RISK, Project RISK or ISSUE ???

We may not be able to complete the project on time if theserver we need does not arrive on time. Project Risk

The system we are building is designed for 1000

concurrent users, but if we get more than that it might runslow or even crash. RISK Non-Project Risk

Not recruiting a senior consultant for the project by the

second week could delay the project by a month. ProjectRisk

If a staff member leaves the project, we have to act now

to replace her. Issue


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What Is Risk Management?

Risk Management is the process ofidentifying,analyzing and responding to risk factors throughout

the life of a project and in the best interests of its

objectives.

Proper risk management implies control ofpossible

future events and is proactive rather than reactive.


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What Is Risk Management?

Risk Management is the process ofidentifying,analyzing and responding to risk factors throughout

the life of a project and in the best interests of its

objectives.

Proper risk management implies control ofpossible

future events and is proactive rather than reactive.

Case: An activity in a network requires that a newtechnology be developed. The schedule indicates six

months for this activity, but the technical employees

think that nine months is closer to the truth. What

you do?


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Case Study: Risk Management

An activity in a network requires that a new technologybe developed. The schedule indicates six months for thisactivity, but the technical employees think that ninemonths is closer to the truth.

If the project manager is proactive, the project team willdevelop a contingency plan right now. They will developsolutions to the problem of time before the project duedate.

However, if the project manager is reactive, then theteam will do nothing until the problem actually occurs.The project will approach its six month deadline, manytasks will still be uncompleted and the project managerwill react rapidly to the crisis, causing the team to losevaluable time.


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Why do Risk Management?

The purpose of risk management is to: Identify possible risks.

Reduce or allocate risks.

Provide a rational basis for better decision making in regards toall risks.

Plan

Ensure that high priority risks are aggressively managed and thatall risks are cost-effectively managed throughout the project.

Provide management at all levels with the information required tomake informed decisions on issues critical to project success.

If you don't actively attack risks, they will actively attackyou!!


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Risk Classification

Grouping of different risks according to theirestimated cost orlikely impact, likelihood of

occurrence, countermeasures required, etc.

Risks are normally classified:

Time (schedule) Cost (budget)

Scope

E:g; Credit risk, is classified according to the

likelihood of the collection of accounts receivable. Technological risks, is classified according to the

likelihood of the technology.


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Benefits of Risk Management

Risk management provides a clear and structured

approach to identifying risks.

Having a clear understanding of all risks allows an

organization to measure and prioritize them.

Take the appropriate actions to reduce losses. Other benefits for an organization:

Saving resources

Protecting the reputation and public image of the organization

Preventing or reducing legal liability and increasing the stability of

operations. Protecting people from harm.

Protecting the environment.

Enhancing the ability to prepare for various circumstances.

Reducing liabilities.


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Case Study: Positive Risk!

You have a software development project that isscheduled to take 90 days to complete.

Your business client would rather the project be

delivered earlier, and would get more value if it were

delivered earlier.

Positive Risk:

One of your team members has an idea: If you utilize

a new software-testing tool, its possible that you candeliver the project in 60 days instead of 90. If this

were a guaranteed solution, you would jump on it.


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Case Study: Negative Risk!

Negative Risk: There is negative risk:

It will be the first time youve used the tool.

You have to deal with a lack of expertise and alearning curve.

Its possible that if the tool doesnt work out, the

project could end up taking 110 days to deliver.

Your Decision???


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Conclusion:

What is Risk? What is Project Risk?

Difference b/w Risk & Issues?

How we identify?Is it Project Risk, Risk orIssue!!

Nature of Risk ManagementProactive-Reactive

Why do Risk Management?

Risk Classification

Benefits of Risk Management Positive & Negative Risk

Class Assignment ???


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Class Assignment

Question No.1: List down 12 Risks

8 Becomes Project Risk

5 Becomes Issues

Questions No. II:

Make a Case Study:

Positive Risk

Negative Risk

session 1 - project risk management

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