2. Connoisseur Solutions
What is Risk?
Project risk is an uncertain event that can have a positive or a negative impact
on the result
If a project risk materializes and has a negative impact on the project, it is
called “Threat” to the project e.g.
Unproven technology impacting project schedule
Loosing critical resource from project
If an uncertain event has a positive impact on the project, it is called
“opportunities”. E.g.
Emergence of new tool to increase productivity
New resource replacing the lost resource is a better one!
Not all risks are bad, however most of them are perceived as “Threat” to
success
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
3. Connoisseur Solutions
Risk Vs Issue
Risk
Risk is an uncertain event or event
that might happen in future
Once risk is identified, its impact
should be analyzed and the
response plan should be prepared
Examples:
Lack of Business/Application
knowledge which may impact
the quality of work products
Issue
Issue is an event that has already
occurred
Once the impact of Issue is
analyzed, the same should be
resolved or escalated
Examples:
Client contact is not providing
review comments on
deliverables in spite of
repeated reminders
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
4. Connoisseur Solutions
Project Risks – Key characteristics
Some of the risks are known risks e.g.
Working in a project with competitor (multi-vendor scenario)
Doing a project in a new geography (cultural differences)
Project attracting environmentalists attention
Accident during Travel
To manage “known risks”, risk response plan is prepared
Known risks are predicted / identified based on the past experience of
similar projects
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
5. Connoisseur Solutions
Project Risks – Key characteristics
All the risks can not be predicted and such risks are known as “unknown risks”.
e.g.
Natural disaster
Unknown risks cannot be managed proactively
Most of the organizations address such risks through “Business continuity” and
“Disaster Recovery” plan
What is the difference between “Risk” and “Issue”?
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
6. Connoisseur Solutions
Project Risk Management
Project Risk Management includes the processes of conducting risk
management planning, identification, analysis, response planning
and monitoring and control on a project. The objectives of Project
Risk Management are to increase the probability and impact of
positive events, and decrease the probability and impact of
negative events in the project.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
7. Connoisseur Solutions
Project Risk Management Processes
Process Process Group
Plan Risks Management,
Identify Risks, Perform
Qualitative Risk Analysis,
Perform Quantitative Risk
Analysis , Plan Risk Responses
Planning
Control Risks Monitoring and Controlling
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
8. Connoisseur Solutions
Plan Risk Management
Plan Risk Management is the process of defining how to conduct
risk management activities for a project. The Plan Risk
Management process should begin as a project is conceived and
should be completed early during project planning.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
9. Connoisseur Solutions
Plan Risk Management
Inputs Tools and Techniques Outputs
Project management
plan
Project charter
Stakeholder register
Enterprise
Environmental Factors
Organizational
Process Assets
Analytical techniques
Expert Judgment
Meetings
Risk management
plan
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
10. Connoisseur Solutions
Plan Risk Management - Inputs
Project Management Plan . All approved subsidiary plans and baselines should be
taken into consideration in order to make the risk management plan consistent with
them. The project management plan provides baseline or current state of risk-
affected areas including scope, schedule and cost.
Project Charter can provide various inputs such as high level risks, high – level
project descriptions and high – level requirements.
Stakeholder Register , which contains all details related to the project’s stakeholder
, provide an overview of their role.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
11. Connoisseur Solutions
Plan Risk Management - Inputs
Enterprise Environmental Factors include the company culture and existing systems
that are dealt with and used by the project manager to run the project. The other
factors that can influence this process are risk attitudes and tolerances that describe
the degree of risk that an organization will withstand
Organizational Process Assets that can influence this process include risk
categories, common definitions of concepts and terms, risk statement formats,
standard templates, roles and responsibilities, authority levels for decision making,
lessons learned and stakeholder register
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
12. Connoisseur Solutions
Plan Risk Management -Tools and Techniques
Analytical Techniques
Analytical techniques are used to understand and define the overall risk management
context of the project. Risk management context is a combination of stakeholder risk
attitudes and the strategic risk exposure of a given project based on the overall project
Context. Some of the examples of these techniques are , use of strategic risk scoring
Sheets, a stakeholder risk profile analysis may be performed to grade and qualify the
project stakeholder appetite and tolerance.
Expert Judgment
To ensure that a comprehensive risk management plan is developed expert advice
should be taken from groups or individuals with specialized knowledge on the subject
area.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
13. Connoisseur Solutions
Plan Risk Management -Tools and Techniques
Meetings helps in development of the risk management plan. The
meeting will consist of the project manager, project team members, selected relevant
Stakeholders, and anyone other than these who will be performing the risk management
Activities
The following decisions can be taken at the meeting
1. Basic plans for conducting the risk management
2. Risk, cost elements and schedule activities are developed for inclusion in the project
budget and schedule respectively
3. Risk contingency reserve application approaches may be established or reviewed
4. Risk management responsibilities should be assigned
5. General organizational templates for risk management will be tailored as per the
project
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
14. Connoisseur Solutions
Plan Risk Management - Outputs
Risk management plan describes the various risk management processes that will
be implemented, monitored and controlled throughout the project lifecycle. It can
include the following
1. Methodology – Defines the approaches, tools and the data sources that may be
used to perform risk management on the project
2. Roles and Responsibilities – Defines the lead, support and risk management
team membership for each type of activity in the risk management plan, assigns
people to these roles and clarifies their responsibilities
3. Budgeting - Assigns resources and estimates costs needed for risk management
for inclusion in the project cost baseline
4. Timing – Defines when and how often the risk management process will be
performed throughout the project life cycle and establishes risk management
activities to be included in the project schedule.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
15. Connoisseur Solutions
Plan Risk Management - Outputs
5. Risk Categories provides a structure that ensures a comprehensive process of
systematically identifying risks to a consistent level of detail and contributes to the
effectiveness and quality of Identify risks process.
An organization can use a previously prepared categorization of typical risk. A risk
breakdown structure (RBS) is one approach to providing such a structure, but it
can also be addressed by simply listing the various aspects of the project.
The risk categories may be revisited during the Identify risks process. A good practice
is to review the risk categories during the Risk Management Planning process prior to
their use in Identify risks process. Risk categories based on prior projects may need to
be tailored, adjusted or extended to new situations before those categories can be
used on the current project.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
16. Connoisseur Solutions
Plan Risk Management - Outputs
Source : PMI PMBOK® Fourth
Edition
Risk Breakdown Structure (RBS)
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
17. Connoisseur Solutions
Plan Risk Management - Outputs
Source : PMI PMBOK® Fourth
Edition
6. Definition of Risk Probability and
Impact
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
18. Connoisseur Solutions
Plan Risk Management - Outputs
7. Definition of Risk Probability and Impact matrix, A grid mapping of
probability of happening of risk and the impact if happens, Based on the probability
and impact values the risks are rated as High, Moderate and Low.
8. Revised stakeholder’s tolerance, based on the project may be revised in the risk
management process.
9. Reporting formats, define how the outcomes of the risk management process will
be documented , analyzed and communicated. It describes the content and format of
the risk register as well as any other risk report required.
10. Tracking. Tracking documents how risk activities will be recorded for the benefit
of the current project and how risk management processes will be audited.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
19. Connoisseur Solutions
Sources of Project Risks
Project
Risk
Project Initiation
C
om
m
unication
Human
Resource
Procurem
ent
Cost
Time
Q
uality
Scope
Lifecycle and
Environment Variables
Expectation
Feasibility
Requirement
Standards
Time Objectives
Restraints
Restraints
Cost Objectives
Performance
Services
Materials
Availability
Productivity
Ideas
Directives
Data Accuracy
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
20. Connoisseur Solutions
Identify Risks Process
Risk Identification process determines which risks may affect the project and
documenting their characteristics. It is an iterative process as risk can be identified at
any levels in the project. Irrespective of risks having positive or negative
consequences, all risks events and their consequences should be identified.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
21. Connoisseur Solutions
Identify Risks
Inputs Tools and Techniques Outputs
Risk management plan
Cost management plan
Schedule management
plan
Quality management plan
Human resource
management plan
Scope baseline
Activity cost estimates
Activity duration estimates
Stakeholder register
Project documents
Procurement documents
Enterprise environmental
factors
Organizational Process
Assets
Documentation reviews
Information gathering techniques
Checklist analysis
Assumptions analysis
Diagramming techniques
SWOT analysis
Expert Judgment
Risk Register
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
22. Connoisseur Solutions
Risk Management Plan provides inputs regarding the assignment of roles and
responsibilities, provision for risk management activities in the budget and schedule,
and categories of risk, which are sometimes expressed in a Risk Breakdown Structure.
Cost Management Plan provides processes and controls that can be used to help
identify risks across the project
Schedule Management Plan provides insight to project time / schedule objectives
and expectations which may be impacted by risks (Known and Unknown)
Quality management plan contains information related to the quality management
plan which is an important input to Identify risk process as the project specific
approach may generate or alleviate risk by its nature or structure
Identify Risks - Inputs
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
23. Connoisseur Solutions
Human Resource Management Plan . The human resource management plan
provides guidance on how project human resource should be defined , staffed , and
eventually released. It can also contain roles and responsibilities, project organization
charts, and the staffing management plan, which forms a key input to identify risk
process.
Scope baseline is a component of scope statement which should be evaluated as
potential causes of project risk
Activity Cost Estimates provide a quantitative assessment of likely cost to complete
schedule activities and ideally are expressed as a range, with the width indicating the
degree of risk
Activity duration estimates are useful in identifying risks related to the time
allowances for activities or project as a whole, with the width of the ranges of these
estimates indicating the relative degree of risk.
Stakeholder register contains information on stakeholders, which will be useful in
interviewing the key stakeholders for their inputs to this process
Identify Risks - Inputs
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
24. Connoisseur Solutions
Project Documents that may be useful while identifying risks are assumptions log,
work performance reports, network diagrams, baselines and other project information
that may be useful in identifying risks.
Procurement Documents , If the project requires external procurement of
resources , procurement documents become a key input to the identify Risks process.
The complexity and the level of detail of the procurement documents should be
consistent with the value of, and risks associated with, planned procurement.
Enterprise Environmental Factors that can influence this process are published
information which consists of commercial database, academic studies, published
checklists, benchmarking, industry studies and risk attitudes.
Organizational Process Assets that can influence this process are project files,
organizational and project process controls, risk statement templates and lessons
learned
Identify Risks - Inputs
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
25. Connoisseur Solutions
Identify Risks– Tools and Techniques
Documentation reviews includes structured review of the project documentation,
which may include project files, project plans, assumptions, historical information, and
other information from the project level as well as individual activity level. It is also
essential to identify the quantity of plans and the consistency between the plans
Information gathering techniques – There are five key techniques for information
gathering
□ Brainstorming session is conducted by a facilitator and a group of Subject Matter
Expert (SMEs), who perform brainstorming and arrive at a comprehensive list of
project risks. Identified risks are categorized by the type of risks. A risk breakdown
structure (RBS) can be used as a framework for risk identification.
□ Delphi Technique is conducted by a facilitator and a group of experts, who are
given a questionnaire to fill. The results are collected and summarized and the results
are again circulated to get feedback from the experts.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
26. Connoisseur Solutions
Identify Risks– Tools and Techniques
Interviewing is one of the main sources of risk gathering techniques where
experienced project managers, stakeholders and subject matter experts are
interviewed for risk identification.
Root Cause identification involves identifying the causes of risks and improves
the understanding of the risk. It sharpens the definition of the risk and allows
grouping risks by causes. Effective risk response can be developed if the root
cause of the risk is addressed
Checklist Analysis can be based on historical information gathered from previous
similar projects. The lowest level of Risk Breakdown Structure (RBS) can also be used
as a checklist. Checklists can be updated at the end of the project completion to add
new risks, if any. Checklists are not a very much efficient method of identifying risks.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
27. Connoisseur Solutions
Identify Risks– Tools and Techniques
Assumption Analysis reviews the validity of assumptions defined in the
project to ensure that risks are not missed due to inaccuracy or
incompleteness of the assumption. Assumptions are tested against their strength. The
consequences that might occur if the assumptions were false are also analyzed. In
such cases the assumptions are considered as risks.
Diagramming Techniques may include Cause and effect diagrams also known
as Ishikawa or fishbone diagrams, System or process flowcharts, and
influence diagrams, which are graphical representation of situations showing
causal influences
SWOT Analysis examines the project from its Strengths, Weaknesses,
Opportunities and Threats to identify the probable risk events.
Expert Judgment involves participation of SMEs based on their previous
experience and area of expertise
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
28. Connoisseur Solutions
Identify Risks– Outputs
Risks Register The identified risks are mentioned in the document called a Risk
Register, which becomes a component of the project management plan. Following
items can be included in the Risk Register
□ List of identified risks – The list can state the EVENT that may occur , the
IMPACT and if CAUSE, EVENT may occur , then listing of EFFECT. Root causes of
the risk events can also be listed
□ List of potential responses – If identified during the process of risk
identification, responses should be documented and it may be a useful input to the
plan Risk Responses process
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
29. Connoisseur Solutions
Perform Qualitative Risk Analysis
Prioritizing risks for further analysis or action by assessing and combining
their probability of occurrence and impact.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
30. Connoisseur Solutions
Perform Qualitative Risk Analysis
Inputs Tools and Techniques Outputs
Risk Management Plan
Scope baselines
Risk Register
Enterprise
environmental factors
Organizational Process
assets
Risk probability and impact
assessment
Probability and impact matrix
Risk data quality assessment
Risk categorization
Risk urgency assessment
Expert judgment
Project document
updates
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
31. Connoisseur Solutions
Risk Management Plan documents the roles and responsibilities for :
Budgets and schedule activities for risk management
Risk Categories
Definition of probability and impact
The probability and impact matrix
Revised stakeholder’s risk tolerances
These inputs are documented during Perform Qualitative Risk analysis if not defined
during the risk management process.
Scope Baseline mentions the project deliverables, assumptions and constraints.
Depending on the project type, i.e. whether it is a state-of-the-art project or a
common recurring project type, the risks and level of uncertainty can be evaluated. A
project which is more complex than the ones the team has handled earlier and where
the uncertainty level is high requires more diligence during the process.
Perform Qualitative Risk Analysis - Inputs
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
32. Connoisseur Solutions
Risk Register contains all the identified risks, it’s a component of the project
management plan
Enterprise Environmental Factors, may provide insight and context to the risk
assessment such as :
Industry studies of similar projects by risk specialists and
Risk databases that may be available from industry or proprietary sources
Organizational Process assets that can influence this process are information of
similar previous projects, studies of similar projects by risk specialists and risk
databases that may be available from industry or proprietary sources.
Perform Qualitative Risk Analysis - Inputs
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
33. Connoisseur Solutions
Perform Qualitative Risk Analysis– Tools and
Techniques
Risk probability and impact assessment examines the likelihood that each specific risk will
occur and evaluates the potential effect of any of the project objectives such as time, cost, scope
or quality. It also evaluates the positive opportunities and negative threats. To assess the
probability and impact of each risk, a meeting or interview with subject matter experts either
internal or external to the organization is conducted where levels are assigned to each risk and
also the potential effects of these risks is evaluated in case the risk occurs
Probability and impact matrix assigns ratings to each risk and classifies them for either
perform quantitative risk analysis or plan risk responses. Ratings are assigned to risks based on
the combination of probability and impact. The risk may guide in providing risk responses as
indicated below
□ Risks that have a negative impact on the project objectives if they occur (threats) and that are
in the high – risk (black zone of the matrix), may require priority action and aggressive response
strategies.
□ Threats in low – risk (medium gray zone) may not require proactive management action
beyond being placed on a watch list or adding a contingency reserve.
□ For opportunities, those in the high-risk (black zone) that can be obtained most easily and offer
the greatest benefit should, therefore be targeted first
□ Opportunities in the low-risk (Medium gray zone) should be monitored
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
34. Connoisseur Solutions
Perform Qualitative Risk Analysis– Tools and
Techniques
Probability Impact Matrix
Source : PMI PMBOK® Fourth Edition
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
35. Connoisseur Solutions
Perform Qualitative Risk Analysis– Tools and
Techniques
Risk data quality assessment involves determining the quality or usefulness of the data collected
to evaluate the risk as per the risk management plan. It involves examining degree to which the risk
is understood, and the accuracy, quality, reliability and integrity of the data about risk. If data quality
is unacceptable, it may be
necessary to gather higher-quality data.
Risk categorization – Project risks can be categorized by the source of risk (e.g., using the RBS),
areas of the project affected (e.g. ,using the WBS) or other useful category (e.g. , project phase,
etc.) to determine areas of the project most exposed to the effects of uncertainty. Grouping risks by
common root causes can lead to developing effective risk responses.
Risk urgency assessment determines how soon the potential risks may occur, and it also identifies
near- term responses for those risks.
Expert judgment is required to assess the probability and impact of each risk to determine its
location in the probability impact matrix
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
36. Connoisseur Solutions
Perform Qualitative Risk Analysis – Outputs
Risk Register Updates – Risk register is initiated during identify risk process ,and is updated with
information from Perform Qualitative Risk Analysis.
Following are the updates from Perform Quantitative Risk Analysis:
Relative ranking or priority list of the project risks. The probability and impact matrix can be
used to classify risks according to their individual significance. The project manager can then use the
prioritized list to focus attention on those items of high significance to the project, where responses
can lead to better project outcomes. Risk may be listed by priority separately for cost, time, scope
and quality as organizations may value one objective over another. A description of the basis for the
assessed probability and impact should also be included for the assessed risks.
Risk grouped by categories can reveal common root cause of the risk or project areas requiring
particular attention.
Cause of risk or project areas requiring particular attention. Discovering concentrations of
risk may improve the effectiveness of risk.
List of risks requiring response in the near-term. Those risks that require an urgent response
and those that can be handled at a later date may be put into different groups.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
37. Connoisseur Solutions
Perform Qualitative Risk Analysis – Outputs
List of risks for additional analysis and response. Some risks might warrant
more analysis , including perform qualitative risk analysis as well as response action
Watch-lists of low priority risks. Risks that are not assessed as important in the
Qualitative Risk Analysis process can be placed on a watch-list for continued
monitoring
Trends in qualitative risk analysis results. As the analysis is repeated , a trend
for particular risks may become apparent and can make risk response or further
analysis more or less urgent/important
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
38. Connoisseur Solutions
Perform Quantitative Risk Analysis Process
Numerically analyzing the effect of identified risks on overall
project objectives.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
39. Connoisseur Solutions
Perform Quantitative Risk Analysis Process
Inputs Tools and Techniques Outputs
Risk management plan
Cost management plan
Schedule management
plan
Risk register
Enterprise
environmental Factors
Organizational process
assets
Data gathering and
representation techniques
Quantitative risk analysis and
modeling techniques
Expert Judgment
Project document
updates
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
40. Connoisseur Solutions
Perform Quantitative Risk Analysis -Inputs
Risk management plan provides guidelines , methods and tools to be used in
quantitative risk analysis.
Cost management plan contains baseline data related to cost, this may help to
determine the approach for Quantitative analysis for the project.
Schedule management plan contains baseline data related to schedule, this may
help to determine the approach for Quantitative analysis for the project.
Risk register is used as a reference point for performing quantitative risk analysis
Organizational process assets that can influence this process are information of
previous projects, studies of similar projects by risk specialists and risk databases that
may be available from industry or proprietary sources.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
41. Connoisseur Solutions
Perform Quantitative Risk Analysis -Inputs
Enterprise Environmental Factors may provide insight and context to the risk
analysis, such as :
Industry studies of similar projects by risk specialists, and
Risk databases that may be available from industry or proprietary sources.
Organizational process assets that can influence this process are information of
previous projects, studies of similar projects by risk specialists and risk databases that
may be available from industry or proprietary sources.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
42. Connoisseur Solutions
Perform Quantitative Risk Analysis - Tools and
Techniques
Data gathering and representation techniques
Interviewing : Experienced project managers , stakeholders and subject matter
experts are interviewed to quantify the probability and impact of risks on project
objective. During interviewing different kind of probability distribution are used. In
case a triangular one is used then the three values for 3 point estimates are taken as
input from the SMEs which is used to quantify risk for each element.
Probability distributions : are basically of two types – Asymmetrical distribution
or Uniform distributions
Asymmetrical distribution depicts shape which are compatible with the data
typically developed during project risk analysis. Asymmetrical distributions are of two
types- Continuous probability distributions represent the uncertainty in values, such as
durations of schedule activities and costs of project components, whereas Discrete
probability distributions can be used to represent uncertain events, such as the
outcome of a test or a possible scenario in the decision tree.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
43. Connoisseur Solutions
Perform Quantitative Risk Analysis -Outputs
Uniform distributions can be used if there is no obvious value that is more likely
than any other between specified high and low bounds
Quantitative risk analysis and modeling techniques
Commonly used techniques in Quantitative Risk Analysis and Modeling techniques
include:
Sensitivity analysis. This aid in determining which risks have the most potential
impact on the project. It examines the extent to which the uncertainty of each project
element affects the objective being examined when all other uncertain elements are
held at their baseline values. Sensitivity analysis can be done by using the Tornado
diagram.
Expected monetary value (EMV) analysis is a statistical concept that calculates
the average outcome when the future includes scenarios that may or may not happen
(i.e. analysis under uncertainty). The EMV of opportunities will generally be expressed
as positive values while those of risks will be negative. EMV is calculated by
multiplying the value of each possible outcome by its probability of occurrence and
adding them together.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
47. Connoisseur Solutions
Perform Quantitative Risk Analysis –Tools and
Techniques
Modeling and simulation. A project simulation uses a model that translates the
uncertainties or potential risks specified at a detailed level of the project into their
potential impact on project objectives.
Simulation techniques compute the project model using the inputs such as cost or
schedule to determine the probability distribution. Simulation techniques should be the
preferred one for predicting schedule or cost risks as compared to other techniques
Simulations are typically performed using the Monte Carlo technique. In a simulation,
the project model is computed many times (iterated) with the input values randomized
from a probability distribution function (e.g. cost of project elements or duration of
schedule activities) chosen for each iteration from the probability distribution of each
variable. A probability distribution is then calculated.
Expert Judgment – Subject matter experts internal or external to the organization
such as Engineering or statistical experts are required to identify potential cost and
schedule impacts , to evaluate probability and to define inputs to tools
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
48. Connoisseur Solutions
Perform Quantitative Risk Analysis – Outputs
Risk Register Updates – The register initiated in the Identify Risks process and is updated in
Perform Qualitative Risk Analysis process. The risk register is a component of the
project management plan. Updates include the following components :
Probabilistic analysis of the project. Estimates are made of potential project schedule and
cost outcomes, listing the possible completion dates and costs with their associated confidence
levels. This output typically expressed as a cumulative distribution is used with stakeholder
risk tolerances to permit qualification of the cost and time contingency reserves
Probability of achieving cost and time objectives. With the project facing the risks, the
probability of achieving project objectives under the current plan can be estimated using
quantitative risk analysis results
Prioritized list of quantified risks. This list of risks includes those that pose the greatest
threat or present the greatest opportunity to the project. These include the risks that require
the greatest cost contingency and those that are most likely to influence the critical path.
Trends in quantitative risk analysis results. As the analysis is repeated a trend may
become apparent that leads to conclusions affecting risk responses
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
49. Connoisseur Solutions
Plan Risk Responses
Developing options and actions to enhance opportunities and
reduce threats to project objectives
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
50. Connoisseur Solutions
Inputs Tools and Techniques Outputs
Risk management
plan
Risk register
Strategies for negative risks or
threats
Strategies for positive risks or
opportunities
Contingent response strategy
Expert Judgment
Project
management plan
updates
Project document
updates
Plan Risk Responses
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
51. Connoisseur Solutions
Plan Risk Responses - Inputs
Risk management plan include roles and responsibilities, risk analysis definitions,
risk thresholds for low, moderate and high risks and the time and budget required to
conduct the project Risk Management Processes. Some components of the Risk
Management Plan that are important inputs to Plan Risk Responses may include risk
thresholds for low, moderate and high risks to help understand those risks for which
responses are needed, assignment of personnel and scheduling and budgeting for risk
response planning.
Risk register provides important inputs related to this process and this include the
relative rating or priority list of project risks, a list of risk for additional analysis and
response, trends in qualitative risk analysis results, root causes, risk grouped by
categories and a watch list of low priority risks.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
52. Connoisseur Solutions
Plan Risk Responses – Tools and Techniques
Strategies for negative risks or threats
Avoid. Risk avoidance involves changing the project management plan to eliminate the threat
posed by an adverse risk, to isolate the project objectives from the risk’s impact or to relax the
objective that is in jeopardy, such as extending the schedule or reducing scope. Some risks that
arise early in the project can be avoided by clarifying requirements, obtaining information, improving
communication or acquiring expertise.
Transfer. Risk transference requires shifting the negative impact of a threat, along with
ownership of the response to a third party. Transferring the risk simply gives another party
responsibility for its management, it doesn’t eliminate it. Risk transference nearly always involves
payment of a risk premium to the party taking on the risk. Transference tools can be quite diverse
and can include but are not limited to the use of insurance, performance, bonds, warranties,
guarantees etc.
Mitigate. Risk Mitigation implies a reduction in the probability and impact of an adverse risk event
to an acceptable threshold. E.g. Conducting more tests, a more stable supplier etc
Accept. This includes passive or active acceptance. Passive acceptance requires no action , the
most common active acceptance strategy is to establish a contingency reserves, including amounts
of money or resources to handle known or unknown threats/ opportunities
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
53. Connoisseur Solutions
Plan Risk Responses – Tools and Techniques
Strategies for positive risks or opportunities
Exploit .This strategy may be selected for risks with positive impacts where the organization
wishes to ensure that the opportunity is realized. This strategy seeks to eliminate the uncertainty
associated with a particular upside risk by making the opportunity definitely happen. Directly
exploiting responses include assigning more talented resources to the project to reduce time to
completion or to provide better quality than originally planned.
Share. Sharing a positive risk involves allocating ownership to a third party who is best able to
capture the opportunity for the benefit of the project. E.g. forming risk-sharing partnerships, teams,
special-purpose companies or joint ventures, which can be established with the express purpose of
managing opportunities.
Enhance . This strategy modifies the size of an opportunity by increasing probability and /or
positive impacts and by identifying and maximizing key drivers of these positive-impact risks.
Seeking to facilitate or strengthen the cause of the opportunity and proactively targeting and
reinforcing its trigger conditions, might increase the probability
Accept. Accepting an opportunity is being willing to take advantage of it if it comes along, but not
actively pursuing it.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
54. Connoisseur Solutions
Plan Risk Responses – Tools and Techniques
Contingent response strategy. Some responses are designed for use only if certain
events occur. For some risks, it is appropriate for the project team to make a response
plan that will only be executed under certain predefined conditions, if it is believed
that there will be sufficient warning to implement the plan. Events that trigger the
contingency response such as missing intermediate milestones or gaining higher
priority with a supplier, should be defined and tracked
Expert Judgment. Expertise may be provided by any group or person with
specialized education, knowledge, skill, experience or training in establishing risk
responses.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
55. Connoisseur Solutions
Plan Risk Responses – Outputs
Project Management Plan Updates- Elements of the project management plan that
may be updated include
Schedule management plan
Cost management plan
Quality management plan
Procurement management plan
Human resource management plan
Scope baseline
Schedule baseline
Cost baseline.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
56. Connoisseur Solutions
Plan Risk Responses – Outputs
Project Document Updates. This include components of the Risk register such as
Identified risks their descriptions, areas of the project (e.g. WBS element) affected,
their causes (e.g. RBS element) and how they may affect project objectives
Risk owners and their assigned responsibilities
Output from the Perform Qualitative and Perform Quantitative Risk Analysis
processes, including prioritized lists of project risks and probabilistic analysis of the
project
Agreed – upon response strategies
Specific actions to implement the chosen response strategy
Symptoms and warning signs of risks’ occurrence
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
57. Connoisseur Solutions
Plan Risk Responses – Outputs
Budget and schedule activities required to implement the chosen responses
Contingency reserves of time and cost designed to provide for stakeholders risk
tolerance.
Contingency plans and trigger that call for their execution
Fallback plans for use as a reaction to a risk that has occurred and the primary
response proves to be inadequate
Residual Risks that are expected to remain after planned response have been taken
as well as those that have been deliberately accepted
Secondary risks that arise as a direct outcome of implementing a risk response
Contingency reserves that are calculated based on the quantitative analysis of the
project and the organization’s risk thresholds.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
58. Connoisseur Solutions
Control Risks
Implementing risk response plans, tracking identified risks, monitoring
residual risks, identifying new risks, and evaluating risk process
effectiveness throughout the project.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
59. Connoisseur Solutions
Inputs Tools and Techniques Outputs
Project management plan
Risk register
Work performance data
Work performance reports
Risk reassessment
Risks audits
Variance and trend analysis
Technical performance measurement
Reserve analysis
Status meetings
Work Performance
Information
Change requests
Project management
plan updates
Project document
updates
Organizational process
assets updates
Control Risks
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
60. Connoisseur Solutions
Control Risks- Inputs
Project management plan consists of the risk management plan which includes the
assignment of people, time, and resources to the project risk management process.
Risk register which is a subset of the project management plan, includes a list of
identified risks agreed upon risk responses, specific implementation actions, symptoms
and warning signs of risk, residual and secondary risks, watch-list of low priority risks
and cost contingency reserves.
Work Performance Data includes information such as project deliverables status ,
schedule progress and incurred costs.
Work Performance reports gather and summarize the information required by the
stakeholders. This information is an analysis of the work performed during the
execution process vis-à-vis project baseline and is relevant to the risk management
process.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
61. Connoisseur Solutions
Control Risks- Tools and Techniques
Risk reassessment indicates reassessing the identified risks and identification of new risks as
defined in the risk management plan. Project risk reassessment should be performed regularly and it
can be included as an agenda item at the project status meetings.
Risks audits are scheduled audits that document the effectiveness of risk responses with respect to
their dealing with identified risks and their associated root causes. This aids in determining the
effectiveness of the risk management process.
Variance and trend analysis Performance data provides the data for variance and trend analysis.
Using this data and applying the earned value analysis and similar methods of project variance and
trend analysis; it is possible to monitor the overall project performance.
Technical performance measurement. This involves identifying the variance in the technical
performance from the planned technical schedule. Any variance from the defined milestone(s) can
aid the project team to forecast the degree of success in achieving the project’s scope.
Reserve analysis. During the planning phase, contingency reserves are defines as a part of risk
response plan. During execution some of the reserves get exhausted. This tool determines if the
remaining reserves are sufficient to tackle the remaining risks.
Meetings. Status review meetings help in monitoring the risks
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356
62. Connoisseur Solutions
Control Risks- Outputs
Work Performance Information , as a Control Risks output , provides a mechanism
to communicate and support decision making.
Change requests - During this process, there may be requested change due to
implementation of the contingency plans or workarounds. These changes are reviewed
and approved through the integrated change control process.
Project management plan updates may arise as a result of the approved change
requests
Project document updates- Project documents that may be updated as a result of
this process are assumptions log updates and technical documentation updates.
Organizational process assets updates- The risk management processes produce
information that should be documented for future reference. The organizational
process assets may be updated to include templates for the risk management plan,
including the probability and impact matrix and risk register, risk breakdown structure
and lessons learned from the project risk management activities.
Pankaj Sharma, 9810996356
Pankaj Sharma - Mobile No -919810996356