Project and Risk Managers often struggle with performing risk management on their projects. In this value packed webinar, Bill Dow will guide you through his tricks and best practices of managing risks on your projects.
Main points covered:
• Major risk events
• Purpose of Risk Management
• Steps to effective Risk Management
• Risk Management methods
Presenter:
Bill Dow, PMP, is a recognized expert in Project Management by the Project Management Institute (PMI) for specifically developing and managing Project Management Offices (PMOs.) His extensive experience with Project Management and PMOs have enabled him to co-author several comprehensive books available through Amazon.com. Bill has taught at the college level for more than 20 years in Washington State, British Columbia and Ontario, Canada, and has worked at Microsoft for more than 12 years.
Link to YouTube video: https://youtu.be/u6UcZJD-MAw
The essential purpose of project risk management is to improve the project's performance by using systematic identification, appraisal, management and control of project risk. Not only should the focus be on reducing the possible threats and adverse outcomes, but especially on construction projects there should be a concentrated focus and effort to eliminate or at least lower any potential litigation and safety issues.
We think there should be 7 major processes for the best practices of managing project risk (One more than PMI). Whiich one is not a PMI process?
Although the list of processes is shown here as discrete, in practice they will overlap and interact with each other. They also interact with all the other areas of a project. Risk like communication is an integral part of all processes being preformed on any project
It is important to plan the risk management processes to ensure the level, the visibility, and the type of risk management to be applied on the project is appropriate. These elements have to match with the risk level and importance of the project. It makes no sense to incorporate a lot of risk effort and processes if the project is of a low risk nature and visa-versa.
An individual project risk is an uncertain event that generally has a negative effect on the project’s objectives and goals, although some risks can have a positive effect on the project (CC Myers and the Northridge earthquake or a light drizzle on curing concrete).
During this stage of the risk management process you should be involved in identifying which risk events might affect the project and determining their impact on the project's objectives and outcome. Almost every stakeholder needs to be involved to some extent in risk identification.
Risk identification is an iterative process that lasts throughout the life cycle of the project. We has found even simple and effective risk responses can be developed and implemented as soon as the risk event is identified.
This is one of our specialties. The process of assessing the impact and the probability of a risk actually happening on the project, can be used as a major team building experience. It allows risk events to be prioritized according to their potential impact on the project.
Qualitative risk analysis requires the probability and the impact of the risk event to be evaluated using the established qualitative-analysis tools. One of the tools used in this process is the probability/impact risk-rating matrix.
Not all risks need to be analyzed in detail. The quantitative risk analysis process uses the information gathered from the identification and qualitative processes. This step aims to analyze numerically the probability of each selected risk and the consequence on the project. This process uses tools and techniques such as sensitivity analysis, decision analysis and Monte Carlo simulation.
The main objectives of quantitative risk analysis are to:
1. Identify realistic and achievable cost, schedule, quality and scope goals.
2. Determine the probability of achieving a specific project objective.
3. Quantify the risk exposure of the project.
4. Determine the size of cost and schedule contingency that may be needed.
5. Identify risk events that require the most attention.
The effectiveness of risk response planning will directly determine whether risk decreases or increases for the project. The process of risk response planning is to develop alternatives to determine actions to reduce threats to the projects goals and objectives. Among other things it identifies and assigns individuals to take responsibility for each agreed upon risk response. This process assures that selected risks will be appropriately handled. Choosing the best risk response from several options is often required.
By the time this process is implemented the project is underway. Risk monitoring and control is the process of keeping track of selected risk events, continue monitoring on going risks, and identifying new ones. It also makes sure the risk event plans are being executed along with the evaluation of their effectiveness in reducing the over all project risk. This process records information that leads to the implementation of contingency plans and workarounds. Risk monitoring and control is a continuous ongoing effort through out the life of the project and sometimes beyond (warranties). As the project matures risks change, new risks are discovered and anticipated risks disappear.
Best practices in risk monitoring and control provide information that will assist with the making of effective decisions in advance of risks occurring, thus working in a proactive environment instead of a negative, reactive environment.
The major purpose of risk monitoring and control is to answer the following questions:
1. Have risk responses been implemented as planned?
2. Are risk response actions as effective as expected?
3. Should new risk responses be developed?
4. Are the project assumptions still valid?
5. With the analysis of trends has risk exposure changed from its prior state?
6. Has a risk trigger or warning occurred?
7. Are policies and procedures being followed?
8. Have risks and changes occurred that were not previously identified?
Risk control involves implementing contingency plans, taking corrective action, possibly choosing alternative strategies or even replanning the remaining portion of the project.
Risk project closeout and lessons learned process is sometimes called the risk review process. The major element of the risk closeout is the verification of the risk plan and how well the monitoring and control was performed. Another element is to make certain all portions of the project contract have been completed and closed with minimum litigation pending.
One of the concerns at project closeout for the risk process is the warranties, liabilities and liens against the project that will carry on after the project has closed. They must be identified.
A documented risk audit should be performed to enhance the lessons learned. Most lessons will be obvious. But a systematic study to draw out lessons that were not obvious is important. Missing important lessons means mistakes will be made again. We have found, if short risk lessons learned are documented each week during the execution of the project, the final document is simple to compile and rewarding for the next similar project.