session 1 - project risk management
TRANSCRIPT
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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