Friday, 7 August 2015

PMP- Chapter 11- Project Risk Management Notes

- increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.
- known risks that cannot be managed proactively, should assigned a Contingency reserve.
-unknown risks that cannot be managed proactively, should assigned a Management reserve.
-negative risk that has occurred is considered an issue.
-risk attitudes:

  • risk appetite- degree of uncertainty an entity is willing to take on of a reward
  • risk tolerance - degree, amount, or volume of risk will withstand
  • risk threshold - measures along level of uncertainty and impact

-positive(opportunities) and negative(threats) risk


11.1 Plan Risk Management 

  • how to conduct risk management activities for a project
  • inputs:-
    • project management plan
    • project charter (4.1)
    • stakeholder register (13.1)
    • EEF
    • OPA
  • tools and techniques:-
    • analytical techniques- understand and define the overall risk management context
    • expert judgement
    • meetings- high level plans. templates
  • outputs:-
    • Risk management plan- 
      • methodology, Roles and responsibilities, budgeting, timing, 
      • risk categories(grouping potential cause of risk), Risk breakdown structure(RBS)
      • definitions of risk probability and impact, probability and impact matrix
      • revised stakeholders' tolerance
      • reporting formats
      • tracking

11.2 Identify Risks

  • process of determining which risks may affect the project and documenting their characteristics.
  • iterative process, new risk may evolve or become known as project progresses.
  • inputs:-
    • Risk management plan
    • Cost management plan
    • Schedule management plan
    • Quality management plan
    • Human Resource management plan
    • Scope Baseline (WBS)
    • Activity Cost Estimates
    • Activity Duration Esimates
    • Stakeholder Register
    • Project documents(charter, schedule, network diagrams, issue log, quality checklist and others)
    • Procurement documents
    • EEF
    • OPA
  • tools and techniques:-
    • Documentation reviews
    • Information gathering techniques
      • Brainstorming
      • Delphi technique- expert participate anonymously. reduce bias.
      • Interviewing
      • Root cause analysis
    • Checklist analysis- historical information
    • Assumptions analysis
    • Diagramming techniques:
      • cause and effect diagrams- Ishikawa or fishbone diagrams
      • system or process flow charts
      • influence diagrams
    • SWOT analysis
    • Expert judgement
  • outputs:-
    • Risk register- result of risk analysis and risk response planning recorded
      • list of identified risks
      • list of potential responses

11.3 Perform Qualitative Risk Analysis

  • prioritizing risks for further analysis by assessing and combining their probability of occurrence and impact
  • focus on high priority risks
  • establishing priorities for plan risk responses and lays the foundation for perform quantitative risk analysis.
  • inputs:-
    • Risk management plan
    • Scope baseline
    • Risk register
    • EEF
    • OPA
  • tools and techniques:-
    • Risk Probability and Impact Assessment
    • Probability and Impact Matrix- risk rating rules.
      • high risk- priority action and aggressive response strategies
      • low risk- watch list or add contingency reserve.
    • Risk Data Quality Assessment
    • Risk Categorization(using RBS)
    • Risk Urgency Assessment(risk required near-term responses)
    • Expert Judgement
  • outputs:-
    • Project documents updates
      • risk register updates
      • assumptions log updates

11.4 Perform Quantitative Risk Analysis
  • numerically analyzing the effect of identified risks on overall proj. obj.
  • produce quantitative risk information to support decision making in order to reduce proj. uncertainty.
  • inputs:-
    • Risk management plan
    • Cost management plan
    • Schedule management plan
    • Risk register
    • EEF
    • OPA
  • tools and techniques:-
    • Data Gathering and Representation Techniques
      • Interviewing- experience and historical data to quantify P & I of risk, eg Three-point estimates
      • Probability distributions, eg Beta distribution, Triangular Distribution
    • Quantitative Risk Analysis and Modeling Techniques
      • Sensitivity analysis eg Tornado diagram
      • Expected monetary value analysis(EMV)- multiplying the value of each possible outcome by its probability of occurrence and adding the products together.
      • Modeling and simulation- Monte Carlo technique- conservative org. 75% likelihood of success.
      • Expert judgement
  • outputs:-
    • Project documents updates
      • probabilistics analysis of the project
      • probiliity of achieving cost and time obj.
      • prioritized list of quantified risks
      • trends in quantitative risk analysis results
11.5 Plan Risk Responses

  • process of developing options and actions to enhance opportunities and to reduce threats to project obj.
  • inputs:-
    • Risk management plan
    • Risk register
  • tools and techniques:-
    • Strategies for negative risks or threats
      • avoid - acts to eliminate the threat or protect the project from its impact
      • transfer - shifts the impact of the threat to a third party, together with ownership of the response. involves payment. eg, insurance, performance bonds, warranties, guarantees.
      • mitigate- project team acts to reduce the probability of occurrence or impact of a risk. eg, choosing more stable suppliers, prototype development, designing redundancy.
      • accept - project team decides to acknowledge the risk and not taken any action unless risk occurs.
    • Strategies for positive risks or opportunities
      • exploit - ensure that opportunity is realized.
      • enhance - increase the probability and/or the positive impact of an opportunity.
      • share - involves allocating some or all the ownership of the opportunity to a third party who is best able to capture the opportunity for the benefits of the project.
      • accept -  accepting the opportunity if it arises. not active.
    • Contingent Response Strategies - fallback plans/contingency plans
    • Expert Judgement
  • outputs:- 
    • project management plan updates
    • project documents updates

11.6 Control Risks

  • implementing risk response plans, tracking identifies risks, monitoring residual risks, identifying new risks, and evaluating process effectiveness
  • inputs:-
    • project management plan
    • risk register
    • work performance data
    • work performance reports
  • tools and techniques:-
    • risk reassessment
    • risk audit
    • variance and trend analysis- earn value analysis
    • technical performance measurement
    • reserve analysis- determine reserve is adequate
    • meetings
  • outputs:-
    • work performance information
    • change request
      • recommended corrective actions
      • recommended preventive actions
    • project management plan updates
    • project documents updates
      • outcomes of risk reassessment, risk audits, and periodic risk reviews.
      • actual outcomes of the project's risk and of the risk responses
    • OPA updates


Reference: PMI PMBOK 5th Edition

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