JKR PROJECTJKR PROJECTRISK MANAGEMENTRISK MANAGEMENT

BENGKEL PENGURUSAN RISIKO

Untuk

UNIVERSITI DARUL IMAN,

KAMPUS BESUT

10 – 12 JANUARI 200910 – 12 JANUARI 2009

BACKGROUNDBACKGROUND

PROJECT MANAGED CHANGE MANAGEMENT PROGRAM

ESTABLISHMENT OF COMPLEX PROJECT MANAGEMENT DIVISION (PROKOM)

INSTITUTE BEST PRACTICE PROJECT MANAGEMENT WITHIN JKR

Benefits of Risk ManagementBenefits of Risk Management

Improve predictability and potential to meet deadlines. Prevents additional costs and potential for budget overruns

due to unforeseen and planned for events. Ensure projects and operations deliver promised functions. Achieve higher quality by increased conformance to

defined requirements. Achieve better stakeholder satisfaction by avoiding

damaging events of direct interest to them. Identify the requirement to prepare contingency plans

where necessary. Ability for earlier problem resolution. Early detection makes

risks less expensive to manage. Highlight options and trade-offs.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT FACILITATION GUIDELINES (RMFG)FACILITATION GUIDELINES (RMFG)

PURPOSEA guiding tool for Trainers and JKR

Project Managers to facilitate risk management workshops and activities

Provide information and methodology on the Risk Management Process

CONTENTS Introduction Risk Management – Framework, Benefits, PLC Risk Management Process Roles and Responsibilities Risk Management Plan Tools and Techniques Procedures for Risk Management Process Procedures for Risk Management Workshop Templates for Risk Management

JKR RISK MANAGEMENT JKR RISK MANAGEMENT FACILITATION GUIDELINESFACILITATION GUIDELINES

JKR RISK MANAGEMENT JKR RISK MANAGEMENT FRAMEWORKFRAMEWORK

RISK MANAGEMENT RISK MANAGEMENT IN JKR PROJECT LIFECYCLEIN JKR PROJECT LIFECYCLE

Letter of Authority, Project

Brief, Budget, Regulation, Standards

INPUT

Planning

Activity 1

Design

Activity 2

CompletedProject

OUTPUT

Procurement

Activity 3

Construction

Activity 4

Handover

Activity 5

Initial Project Risk

Assessment(Initial Risk Register)

Strategic Risks

emerging from program

proposals

Risk Register updated ex

Planning Phase – Treatment measures

developed for High Risks

Depending on project

classification/type risk

management plan developed

or section in PMP

Risk Register updated ex Design Phase – Treatment measures updated for High Risks

Risks monitored

and/or managed

during construction

PhaseResidual

Risks identified as

part of Handover process

Risk Register updated ex

Procurement Phase –

Treatment measures

updated for High Risks

Specific risks may also be

monitored with contractor –

dependent upon contract vehicle

(e.g. PPP) chosen

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

ESTABLISH CONTEXT RISK IDENTIFICATION RISK ANALYSIS RISK EVALUATION RISK TREATMENT RISK MONITORING & CONTROL COMMUNICATE & CONSULT

JKR RISK JKR RISK MANAGEMENT MANAGEMENT

PROCESSPROCESS

Establish the Context• The strategic context

• The organisational context• The risk management context

• Develop criteria• Decide the structure

Risk Identification• What can happen?• How can it happen?

Risk AnalysisDetermine existing controls

Risk Evaluation• Compare against criteria

• Set risk priorities

Risk Treatment• Identify treatment options

• Evaluate treatment options• Select treatment options • Prepare treatment plans

• Implement plans

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Mo

nit

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and

Rev

iew

Risk Assessment

Determineconsequences

Determinelikelihood

Estimate level of risk

Acceptrisks

Yes

No

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

ESTABLISH THE CONTEXTDetermine the environment in which the risks will be managed where the project operates. Prepares JKR for the procedures needed to manage risks and the structure for escalation of business risks to Senior Management.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

RISK IDENTIFICATIONAllows JKR to identify the various risks and categorise them according to a suitable and controllable structure. The result of this is a list of risky events or conditions grouped under a suitable classification.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

RISK ANALYSISAnalyses all events by assessing each against two major parameters, the likelihood that an event might take place and the impact of the event. Results in risk rating.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

RISK EVALUATIONConsidering the best method of handling the risks – reduce, accept, avoid or transfer. If risks are to be accepted, develop contingency plans

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

RISK TREATMENTIdentification, evaluation and selection of the appropriate treatment options and the development and implementation of the required plans.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

MONITORING & CONTROLPresents the procedures needed to monitor and track risky events, revising the Risk Register and learning from the various results.

JKR RISK MANAGEMENT JKR RISK MANAGEMENT PROCESSPROCESS

COMMUNICATE AND CONSULTStakeholders have significant impact on decisions pertaining to risks undertaken and should be continuously communicated over the risk process. Risk status must be reported to key stakeholders

Roles & ResponsibilitiesRoles & Responsibilities

Risk Owner

One whoever is best placed to manage the risk

Agrees to own the riskBe aware of the responsibility of

managing the risk

Roles & ResponsibilitiesRoles & Responsibilities

Risk ManagerResponsible for operating the project’s

risk management process Custodian of the Risk Management Plan

and Risk RegisterMonitoring the mitigation measures and

evaluating the effectivenessReports to the risk owner

JKR RISK CATEGORIESJKR RISK CATEGORIES

1. Political 9. Contractual

2. Scope 10. Technical

3. Schedule 11. Environmental

4. Financial 12. Suppliers

5. Human Resources 13. Industrial Relations

6. Quality 14. Organisational

7. Communications 15. Occupational Health & Safety

8. Other Resources 16. Cultural & Social

RISK DESCRIPTIONRISK DESCRIPTION

Risk need to be given a structured description so that it is fully understood :

Source of risk has a likelihood of causing an event which depending on the context will have an impact.

RISK STATEMENTSRISK STATEMENTS

Risk statements are generally written in one of two ways: An IF – THEN type of risk statement; or A CONDITION – CONSEQUENCE risk

statement.(Given the “condition”, there is a likelihood that “impact” will occur).

EXAMPLE OF RISK STATEMENTEXAMPLE OF RISK STATEMENT

Source Likelihood & Event Impact

There may be one or more sources …

… potentially causing a variety of events …

… leading to one or many impacts.

Loss of funding Will cause a reduction in available resources

Leading to project delays or reduction in agreed deliverables

LikelihoodLikelihood

Likelihood is classified as: rare, unlikely, possible, likely, almost certain

Example of Likelihood Example of Likelihood Assessment ScaleAssessment Scale

Descriptor Qualitative StatementProbability that the event will occur

Rare May occur in exceptional cases

< 10%

Unlikely Is unlikely to occur 10% - 30%

Possible May Occur 31% - 70%

Likely Will probably occur 71% – 90%

Almost Certain Can be expected to occur > 90%

ImpactImpact

Impact is classified as: insignificant, minor, moderate, major, severe

Example of Impact Assessment ScaleExample of Impact Assessment Scale

DescriptorFinancial

ImpactImage

ReputationEnvironment

Possible delay to

the Schedule

Community/

Stakeholder Response to the

Impact of the Event

Health & Safety

Insignificant <RM10,000.00 Brief Local Media Coverage

Short term damage < 2 days Minor complaint No injuries

Minor RM10,000 – RM50,000

Local Media Coverage

Limited but medium term negative

effects

2 – 5 days Formal correspondence

written by stakeholder

First aid required

Moderate RM50,000 – RM100,000

Regional Media Coverage

Major but recoverable

ecological damage

5 – 7 days Local political intervention

Medical treatment

Major RM100,000 – RM500,000

Sustained Regional Media

coverage

Heavy ecological damage, costly

restoration

7 – 10 days

Ministerial involvement Extensive injuries

Severe >RM500,000 National Media Coverage

Permanent widespread

ecological damage

> 10 days Political intervention Fatality

JKR Risk MatrixJKR Risk Matrix

InsignificantI

MinorII

ModerateIII

MajorIV

SevereV

IMPACT

5

4

3

2

1

Almost Certain

Likely

Possible

Unlikely

Rare

H

M

L

L

L

H

M

M

L

L

H

H

M

M

M

E

E

H

H

M

E

E

H

H

E

LIKELIHOOD

LOWRisk(L)

MEDIUMRisk(M)

HIGHRisk(H)

EXTREMERisk(E)

Tolerances:

Preferred

Acceptable

Undesirable

Unacceptable

Recommended Actions Recommended Actions

Ratings Risk Mitigation Actions Who

E

Extreme

Mitigation actions, to reduce the likelihood and impact, to be identified, costed and prioritised for implementation before the project commences or immediately as they arise during project execution.

Steering Committee/

Project Sponsor

H

High

Mitigation actions, to reduce the likelihood and impact, to be identified, costed and prioritised. Appropriate actions implemented during project execution

Steering Committee/

Project Manager

M

Medium

Mitigation actions, to reduce the likelihood and impact, to be identified and costed for possible action if funds permit

Project Manager

L

Low

To be noted; no action is needed unless grading increases over

time Project Manager

RISK DOCUMENTSRISK DOCUMENTS

RISK REGISTER

RISK ANALYSIS TEMPLATE

RISK MANAGEMENT PLAN

eg. 1

eg. 2

eg. 3

THE FUTURE ……….THE FUTURE ……….

Risk management an integral practice in project management

Risk management – developing specialist as Risk Managers

Venturing into high level risk management and further…