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Project ManagementCertifcate Program
Spring 2015PMCP II
Instructor: Ray Frohnhoefer
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Dilbert’s Risk Analsis
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Risk Components
Risk Components - Uncertainty, Likelihood, or Probability vsConse!uences, Impacts, Costs
Risk or "pportunity#
◦ $epends on the Conse!uences
Risks have negati!e conse!uences and should be avoided
"pportunities have positi!e conse!uences %bene&ts'and shouldbe (elcomed
Risk or Issue#
◦ $epends on the )imin*
+ Risk"pportunity has not et occurred may need preventiveaction %ne*ative' or encoura*ement %positiveopportunity'
+n issue has alrea" occurred %probability . /001' may needcorrective action %ne*ative' or celebration %positiveopportunity'
Universal Risks - may occur in any pro2ect, operation, or systemre*ardless of the type, or*ani3ation, or industry
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+ proactive rather than reactiveapproach
Reduces surprises and ne*ative
conse!uences Prepares the pro2ect mana*er to take
advanta*e of opportunities
Provides better control over thefuture
Improves chances of reachin* pro2ectob2ectives
#enefts $%& bot&er tring'
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Step 1( C&ange t&e C)lt)re
4uccess leaders react 55 to bad ne(s 6 encoura*e it tosurface 7ernard 8arr: 9hy 4uccessful People Love 7ade(s http:tco;a*+me/sRa %LinkedIn In<uencer'
=U psycholo*y research sho(s >mental contrastin*? or>if-then-else? thinkin* is necessary to self-re*ulate andmeet our *oals %see http:3enaidaloren3ocom'
Calculated risks are acceptable use the data of the risk
assessment frame(ork to *uide you $on@t bet the ranchA
>4ell? the opportunity sideA
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Step 2( S&o* +o* ,as it Can#e
Risk +ssessment Frame(ork
4calable, robust, tool (hich can be used to
perform a better risk analysis
"ptimi3e bene&ts
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%&at is Risk Management'
>B the art and science of identifyin*, assessin* andrespondin* to pro2ect risk throu*hout the life of apro2ect and in the best interests of its ob2ectives?
Identi&es factors of time, cost, performance, orscope that can ne*atively impact a pro2ect
uanti&es the results
Identi&es strate*ies to minimi3e risks and reco*ni3ethin*s (hich are out of the control of the pro2ectteam
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Risk Management is Pro-Acti!e
8iti*ation: early actions are taken to reduce theprobability or impact of a risk %proactive'
Four key strate*ies:o Accept: the team has accepted the risk and decidednot to alter plans %need to repair dama*e'
o A!oi": plans are chan*ed to eliminate a risk %dod*ethe bullet'
o .rans/er: the risk is not eliminated, but theconse!uences of the risk are shifted to a third party%de<ect or &nd a stand-in to take the bullet'
o S&are: the cost of the risk, risk event, or miti*ation isshared
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Risk .olerance
Commonly focuses on investments, but isan issue for *eneral risk mana*ement
Do( much risk can you tolerate#o + lot# othin* at stakeo Eery little# 1 *oals and your income depends
on it
◦ Gvery stakeholder andor stakeholder *roupshould have their risk tolerances understood
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%&en S&o)l" *e A!oi"Risk' Can@t aHord the losseposure too *reat
"dds are not in your favor or 2ust a >fair bet?
7ene&ts not identi&ed
)oo many alternatives
InsuJcient data to determine
Contin*encymiti*ation strate*y is not in place
$oesn@t support a strate*ic ob2ective
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Risk Assessmentrame*ork
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Risk Planning InputoContracts, 4"9, Pro2ect CharteroRisk )olerance +ssessmentoRisk Policieso+ssumptions and Limitations, Critical 4uccess Factors
ProcessoRevie( $ocumentationo Intervie( Participantso4tart a Risk Lo*
"utputo Initial Risk Lo* (ith Identi&ed RisksoCustomer GpectationsoRisk 8ana*ement Plan
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Risk I"entifcation
InputoCandidate RisksoCustomer Gpectations
ProcessoRevie( $ocumentationoUse )ools:
7rainstormin*$elphi 8ethod
Checklists
>Risk Radar?
"ther
"utputoCompleted List of Candidate Risks
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Risk Analsis InputoRisk 8ana*ement PlanoRisk lo* containin* candidate risks and opportunities
Processo+pply tools such as: Probability Impact Ratin* 8atri
$elphi Facilitation )echni!ue 4ee Frohnhoefer, R, Risk +ssessment Frame(ork Implementation
Kuide for a more complete list
"utputo
Completed +ssessment of Probability and Impact for Gach Risko )rendsoUpdated Risk Lo*o8eetin* 8inutesReports
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Risk Response Planning Input
oRisk 8ana*ement PlanoRisk 8ana*ement Lo*oCompleted +nalysis $ocuments
Processo$etermine 4trate*y %+void, 4hare, )ransfer, +ccept
Reduce impact or probabilityM'o8iti*ation 4trate*ies 5 Cost-7ene&t +nalysis for
si*ni&cant items
"utputoRevised Lo* 6 +nalysisoRisk Responses
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*From “Selecting Appropriate
Risk Response Strategy” by
Crispin ‘Kik’ Piney, PM !"rope
#$$#
)i"e to Selecting aStrateg
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Risk Monitoring
InputoRisk Lo*oRisk 8ana*ement PlanoPro2ect $ocumentation %bud*et, status reports,
schedules, etc' ProcessoPeriodic revie(so )rack as part of status reportin*
o8anual or automated revie( of pro2ect metrics "utputoUpdated plans, risk lo*, status reports, etc
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Risk ResponseImplementation InputoRisk 8ana*ement PlanoRisk Lo*oRisk 8iti*ation Plans
Processo Implement 8iti*ation Planso+nythin* hi*h in the upper ri*ht corner of *raph
may already be under(ay
"utputoRevised Lo*, Plans
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)hink about ho( the ri*or of your processchan*es as the cost of purchases increases:◦ Latte - NO
◦ Dousehold Furniture - NO,000
◦ 789 - NO0,000
◦ Dome - NO00,000
9e revie( costs, conse!uences, contetand choices
Scale t&e rame*orkAccor"ingl
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Risk Assessment %orks&op Facilitated meetin*%s' to
◦ Identify risks and opportunities
◦ +naly3e for probability and impact
◦ Prioriti3e
◦ Plan responses 4upportin* )ools
◦ +*enda )emplate
◦ Process "vervie( )emplate
◦ 9orkshop Report )emplate
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Inter!ie* %orks&eet Use to collect and assess initial attitudes
to(ard risks and opportunities:◦ 9hat risks and opportunities are there (ithin the
team#
◦ 9hat risks and opportunities are there (ithin thepro2ect#
◦ 9hat are the top risks and opportunities#
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RAID og
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+ risk breakdo(n structure %R74' or*ani3espotential sources of risk to the pro2ect
Functionin* much like a (ork breakdo(nstructure, an R74 arran*es cate*ories into ahierarchy
)his approach allo(s the pro2ect team tode&ne risk at very detailed levels
Risk #reak"o*n Str)ct)re
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#rainstorming
Facilitated meetin* Free <o( of ideas recorded o bad ideas, but facilitator should keep the
*roup on track 8ay re!uire more than one session 4ift throu*h the ideas for viable
re!uirements or solutions
7est ideas move for(ard
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#rains*arming3 Re!isite" Focuses on improved thinkin*
Ideas represented in annotated pictureform
Dundreds of solutions can be evaluated!uickly
http:d/2bvhpem/cQacloudfrontnet(p-contentuploadsIdeaPaint-)he-e(-+rt-of-7rains(armin*1G1SO1+-0/pdf#T*a//S00VSVO0/SQQQ
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Delp&i .ec&ni4)e
+nonymous poll of eperts 8oderator creates !uestionnaire, sends
out, and collects results +naly3e results statistically and
summari3e 4end out results and analysis (ith
additional !uestions %may branch on
result' Continue until consensus is reached
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• Look at thin*s pessimistically and cautiouslyW see (hy ideas(on@t (ork
• 4pots fatal <a(s, (eak points, and prepares contin*encyplans
7lack Dat
• Focus on data and factsW look for *aps in kno(led*e• +naly3e and etrapolate from historical data
9hite Dat
• Positive and optimistic• 4ee bene&ts and value of decision, and the opportunitiescreated
=ello( Dat
• Creative solutions• Free(heelin* thinkin*
Kreen Dat
• Process control or meetin* chair• $irect (earin* of hats %e* Kreen Dat (hen ideas run dry,7lack Dat for contin*ency plannin*'
7lue Dat
• Gmotional thinkin*
• Use intuition and *ut reaction,
Red Dat
Si +ats .&inking
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Risk S)r!es an"6)estionnaires
$ata collection instrument $etermine sources and identi&cation of
risks Collect opinion on miti*ation strate*ies 4takeholder involvement 4tatistical si*ni&cance of surveys eed to validate results
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Risk Assessment Matri
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Decision .ree
Node 1
Don't Automate $0
Node 1a
Low Demand (.5) -$90K
Medium Demand (.3) $40K
Hig Demand (.!) $300K
• "a#e$ into a%%ount &utu'e e(ent$ )* de%i$ion toda*• +a,%u,ate$ e-e%ted (a,ue in %om,e- %a$e$• /n(o,(e$ mutua, e-%,u$i(it*
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C&ecklists
Compensates for memory (eakness Gnsures de&nitive completion of tasks
Check a*ainst process compliance andstandards
8inimi3e risks associated (ith error
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7Risk Ra"ar8
$atabase of risks Delp to identify, prioriti3e and communicate
risks Can be used to (atch for risk events
!014 a* 2. 3'onoe&e' M5A 6M6 ++6
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Monte Carlo Sim)lation
Gvaluates the pro2ect, not the tasks Used to assess cost and schedule impacts
$one (ith a computer pro*ram Provides probabilities re*ardin* critical path Results in a probability distribution
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9se Cases
Captures intended usa*e of the product orpro2ect
$escribes usa*e in customer terms
Include photos, dia*rams, screenshots,story boards, or other >models? for clarity
Gssentially the start of a >user manual? Use cases can be in place before pro2ect
eecution
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Control C&arts
Kraphic displays of results over time 8onitors production and other processes Features
◦ Upper and lo(er control limits
◦ 8ean to sho( center of ran*e of acceptablevariations
◦ 4peci&cation limits
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Control C&arts :contin)e";
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.&ank <o)=
+s a >)hank =ou? for bein* a part of the class, you cando(nload the PPC Kroup, LLC Risk +ssessment ImplementationKuide )emplates and )ools at: http:bitly/yrFuC
)here is a Chan*e and Risk 8ana*ement ui3 %"9' 4tay tuned for more of classA 6+