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PROJECT RISK MANAGEMENT
METHODOLOGY AND APPLICATION
Author: Marco De Santis, PMP, 2014
Author: Marco De Santis, PMP, 2014
2
Agenda
Introduction to the Risk Management
FOCUS on 6 RISK MANAGEMENT processes, PMBOK Guide ®, Fifth Edition
Guidelines for project risks management
Practical application with an use case
Attachments
Examples of the operational tools for Risk Management
Glossary
The risk model is based on the existence of one or more causes with an unknown probability of
occurrence and one or more effects that will appear due to the occurrence of the event.
In practice, both the known and unknown risks are addressed with a reactive approach. The
difference is that the paradigm underlying the risk management provides the responsive
approach, limited to the unknown risks, in addiction to the proactive approach reserved to a
known risk.
Introduction to the Risk Management
3
Author: Marco De Santis, PMP, 2014
One of the most common mistakes is
to confuse a risk with the impact:
the phrase "we risk to incur in a
penalty" is related to the impact and
not to the risk (which can be caused
to a lack of performance testing of
the information system that we are
developing for our customer).
The risk, in the common sense, is the possibility of suffering harm or achieving an
advantage, due to certain circumstances, more or less predictable.
The way in which the organization and its stakeholders perceive risk and relate with it (the risk
attitude) is influenced by three main factors :
1. risk appetite: the level of an acceptable uncertainty in view of a future benefit
2. risk tollerance: the grade, size or amount of risk that an individual or an organization can
tolerate
3. risk threshold: the measure of the level of uncertainty or the impact in which a stakeholder
may have a specific interest. Only below this threshold, the organization will accept the risk
There are four risk macro-categories (universal) which helps us to support and guide the
management of the risk on the basis of the risk attitude, such as:
4
Author: Marco De Santis, PMP, 2014
Therefore, managing the risk means to adopt an attitude, more or less
consciously, in order to protect yourself against a negative event (threat)
and/or to take advantage of a positive event (opportunity) as long as you
have identified and understood the scenario before the event happens.
Introduction to the Risk Management
Let's start with two assumptions: the first is
that there isn't a project without a risk, and
the second is that, in spite of a "perfect"
planning, the use of estimates implies an
indeterminacy related to their probabilistic
nature.
The uncertainties may relate to the existence
and the duration of activities, to the cost of
resources and activities, to the presence or the
absence of adequate resources, to the
management of supplies. There are also
external factors that contribute positively or
negatively to a project’s destiny.
5
Author: Marco De Santis, PMP, 2014
The project risk, then, is defined as an
uncertain event or a condition that, if it were
to occur, would have a positive or negative
effect on one or more objectives of the project
such as scope, schedule, cost and quality.
The project risk management is the systematic
process of identifying, analyzing and
responding to project risks in order to increase
the probability and/or the impact of positive
events and to decrease the probability and/or
the impact of negative events in accordance
with the constraints.
The project risk management is based on an
integrated analysis of the uncertainties of the
project that leads to a different approach
based on the probability that certain situations
could happen or not, conducting, therefore, to
probabilistic outcomes.
past present future
Introduction to the Risk Management
The Risk management in a project throughout its lifetime, must be iterative and
appropriate because while it reduces the likelihood of a project failure and/or
increases the chances of success, at the same time, if it’s perceived as "the dark side
"project, it can cause the paralysis of the project.
6
Author: Marco De Santis, PMP, 2014
By way of example and in applying the concept of appropriateness for
software projects have been identified the following seven risk "universal"
1. User involvement and support of the management
2. Inflationary / uncontrolled rise of the requirements (or scope creep)
3. Difficulties in the sharing and understanding of the specifications and
requirements
4. Errors in planning
5. Unrealistic expectations
6. Changes in project teams
7. Inefficient Project Management
7
The Project Manager is responsible for the management of risk and
he’s the one who will have to gain the support of stakeholders both in
the identification of risks and in the planning and the implementation of
the necessary responses’ measures through a comprehensive and
timely flow of the communication and the documentation.
Introduction to the Risk Management
7
Source: The Standish Group Report CHAOS, © 2014 Project Smart
Author: Marco De Santis, PMP, 2014
FOCUS on 6 RISK MANAGEMENT processes
PMBOK Guide®, Fifth Edition
8
Author: Marco De Santis, PMP, 2014
The process of defining the rules for the development of the risk management plan, which includes:
methodology, responsibility, definition and management of reserves and changes
The process of identifying project risks, accurately describing and giving a first response hypothesis
Risks are classified by importance, in order to define a priority based on a Risk Factor (RF)
The overall effect of the project risks (Expected Monetary Value, EMV) is measured numerically. The
contingency reserve, which is the pre-reserve economic response to the risks , will be defined
Here are being planned necessary responses
for facing the threats in order to reduce the
probability and / or the impact of threats and
/ or to amplify those opportunities
The process of implementing the responses, of updating the status of the risks (identified, secondary, residual
and new) and evaluating the effectiveness of the risk management.
PLANNING
MONTIORINGAND
CONTROLING
1. Plan Risk
Management
2. Identify Risks
3. Perform Qualitative
Risk Analysis
4. Perform
Quantitative Risk
Analysis
5. Plan Risk Responses
6. Control Risks
Based on "Corso di preparazione all'esame PMP", TI HR Services - Eureka Service, Roma, 2013
Threats Risk Strategy Opportunity
Avoid Uncertaincy removal Exploit
Transfer
Reallocation of
responsibilities Enhance
Mitigate
Exposition level
modification Share
Accept Current management Accept
Following the Risk Management diagram presented in the previous slide, the activities that the
project team must ensure are:
1. Plan Risk Management: is the decision-making process on how to approach and how to plan
the activities of the risk management. A plan of the risk management is defined (or re-used
and customized appropriately, if already available in the company) for this purpose, where is
being formalized:
a. if any, the collecting of the risk information identified in the project
approval and presented in the Business Case
b. the applied methodology, roles and responsibilities
c. the budget and the timing of the implementation of the management
processes
d. the categories of risks impacting the project (technical, external,
organizational, management, other)
e. the definitions of the risk probability and the impact (ref. attachments, the
probability scale, the impact scale) and the probability and the impact
matrix (ref. attachments)
f. the Risk Breakdown Structure (ref. attachments), that breaks the risks
universe identified in the Company and represents the basis for creating the
structure for a specific project
g. The rules to manage and release the contingency reserve
Guidelines for project risks management
9
Author: Marco De Santis, PMP, 2014
2. Identify the risks: it is the process of determining the risks that may affect the project and
documenting their characteristics, starting, if available, from the initial list of risks contained
in the Project Charter authorizing the start of the project. For effective risk identification it is
recommended that you have defined the scope of the project.
The identification of project risks starts while trying go get the support of as many
stakeholders as possible and through the use of tools (if necessary, by multiple choice,
depending on the nature and type of the participants) such as:
 documentation reviews, checklist and project assumption analysis
 information gathering techniques: brainstorming, nominal group, delphi,
interviews, route cause analysis
 diagramming techniques: Ishikawa diagram, process/system flow chart,
influence diagrams
 SWOT (Strengths, Weakness, Opportunities, Threats)
 expert judgment
The list of identified risks is presented in the document "risk register" which will also include
the triggers that indicate the approach or the occurrence of the event which took place.
It is advisable to also indicate the WBS code and appoint the assigned risk owners, if
available.
Guidelines for project risks management
10
Author: Marco De Santis, PMP, 2014
3. Perform Qualitative Risk Analysis: it is the process of prioritizing
risks for further analysis or action by assessing and combining the
probability of occurrence of the risk and its impact.
The list can be subject to a pre-skimming through the Pareto diagram
with the objective to proceed with the treatment of "significant"
risks with the aim of defining a first classification on the basis of the
Risk Factor of risks through the use of the stairs probability and
impact.
The temporal proximity of the risk (risk proximity) is considered
another decisional factor for taking charge of risk (risk urgency);
risks to be monitored and those with low risk, which will be kept
under observation (watch list) are also identified during the
execution phase of the project through the matrix probability and
the impact.
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Author: Marco De Santis, PMP, 2014
In this moment, we evaluate the opportunity to continue by using the quantitative analysis
(which implies high costs and the time consuming) or to go directly to the response plan.
The risk register is updated based on new informations, along with other project
documents.
Guidelines for project risks management
4. Perform Quantitative Risk Analysis: it is the process of numerical
analysis of the effect of the identified risks (which were to be
monitored, as decided in qualitative analysis) on the general
objectives of the project.
12
Author: Marco De Santis, PMP, 2014
Through the investigation and with the involvement of experts and stakeholders is defined
as the economic impact on the project.
The tools available for the analysis are:
 data gathering and representation techniques, through interviews with
stakeholders and experts
 quantitative risk analysis and modeling techniques: sensitivity analysis, expected
monetary value (EMV) analysis and decision trees, modeling and simulation
 expert judgment
In this phase, the basis for the definition of contingency reserves (through EVM) is being
prepared and the statistical analysis on the likelihood of success of the project is being
consolidated.
A new classification of the risk prioritization (based on quantitative data) is drawn up and
the risk register is updated, along with other project documents.
Guidelines for project risks management
13
Author: Marco De Santis, PMP, 2014
5. Plan Risk Responses: it is the development process of options and actions whose
aim is to enhance opportunities and reduce threats for the project objectives.
This process needs a strong involvement of the project stakeholders.
The goal is to ensure "buy in" to those who will have to ensure the answers
and/or finance them, and the strategies may include:
 avoid, transfer, mitigate, and accept (actively / passively) the downside risks
 exploit potential, share and accept (actively / passively) the positive risks
The plan of response actions is defined based on the results of the analysis of the EMV and
the decision tree between the identified alternative responses. In front of the response plan,
the changes are being proposed, and mainly they are relate to costs, the scope (WBS) and
the planning .
The contingency reserve (which is to cover the contingency plan and the fall back plan)
necessary for the definition of the project budget and for the revision of the schedule is
being set up and the residual risks and the secondary risks arising from the implementation
of plan and actions are being identified; and the quantitative analysis of the risks can be
executed again.
The risk register is updated, along with the other project documents and the management
plan of the project.
Guidelines for project risks management
Project Execution: In carrying out the project (there are no dedicated processes), by using the
full version of the risk register (ref. attachments), during the project meetings, the Project
Manager should always include in the agenda the task of re-evaluation of the risks that:
a) if present, check the triggers (alarms defined in the initial version of the
risk register which report the occurrence or the approach of the event),
and if necessary, activate response plans!
b) communicate to all stakeholders the status of project risks!
c) monitor your watch list!
d) locate new risks!
e) evaluate the management efficiency!
f) enrich the DB risk on a company level!
14
Author: Marco De Santis, PMP, 2014
Guidelines for project risks management
6. Control Risks: it is the process of the response plans implementation, of the identified risks
tracking, of the residual risks monitoring, of the new risks identification and of the
effectiveness assessment of the risk management processes throughout the project.
The revaluation results of the identified risks and audits on the management
effectiveness of "end to end" Risk Project are being evaluated.
Possibile new risks are being managed and brought to the 2° trial (perform a qualitative
analysis of the risks), and the residual risks are being monitor, no more verifiable risks
are being closed.
A best practice is to run again the quantitative analysis of existing risks during this process.
The unused reserve (contingency and management) release can happen even in the case of
a no longer verifiable risk or at the end of the project (it is a business decision and it’s
defined in the risk management plan).
15
Author: Marco De Santis, PMP, 2014
If necessary, the improvement changes or corrections are being required.
The use of contingency and management reserves is being assessed and, where
appropriate, an action is taken in order to restore the proper use through the
proposed change request.
Possible changes which are to include in the project documents and in the
management plan of the project are being undertaken at this point.
Guidelines for project risks management
Practical application with use case
As an example of practical application of the Risk Management will use the design of a
specialized course.
PMP Certification Course
Step 1: we re-use the corporate risk management plan (existing and proven fitness for my
project) with the following characterizations: the release of the reserve is at the end of the
project.
Step 2: identify the risks at the time "t0" jointly using techniques such as brainstorming,
Ishikawa diagram, histogram, Pareto, delphi, and SWOT to consider the opportunities, too. The
result is the risk register that contains:
R1 – unavailability classrooms
R2 – funding block
R3 – unavailability teacher
R4 – poor learning material
R5 – absence of participants
R6 – unavailable simulator
R3 and R6 were considered as non-impacting because the contract already provides a reaction
plan.
16
Author: Marco De Santis, PMP, 2014
Step 3: we start from the consistency of risk register to create a cause-event-effect matrix using
the five-why technique (we ask ourselves a reason why of each cause and we proceed
backwards 5 times untill we arrive at the route cause)
Fon any given cause, it's suggested to use the WBS code and to mention the assigned risk owner, if the information is available.
CAUSE EVENT EFFECT
Period of
occurrence
Trigger
Uncorrect planning
Unavailability classrooms Time The entire course
The unavailability classrooms
detected 15 days before the
date of the lesson
Courses overlapping
Classrooms inagibility
Huge absence of participants
Funding block Quality, Cost The entire course
The receipt of payment from
the bank wasn't receivedGovernance
Not adequated budget
Poor didactic material Quality The entire course
A lot's of difficulties was faced
in reading and use of the
material
Tender at lower price
Strike transportation (bus)
Absence of participants Quality The entire course
No participants above 30% for
two consecutive lessons
Teachers quality
Lack of information
Corporate issues
(task overlapping)
Participants personal issues
Practical application with use case
17
Author: Marco De Santis, PMP, 2014
Step 4: we group the (homogeneous) causes and customize the RiBS (Risk Breakdown
Structure) of our project, that allow the Project Manager to identify which category affects
mainly the project. The Risk Management Plan will be updated by inserting the project RiBS .
Applicazione pratica con use case
18
Author: Marco De Santis, PMP, 2014
RiBS "PMP Certification Course" project
OrganizationalExternalTechnical
Strike transportation
(bus)
Participants personal
issues
Corporate course
planning
Human Resource
management
(particpants)
Finanacial Governance
Procurament
management
Project
Management
Planning
Budget
Teachers quality
Communications
Classrooms inagibility
Absence of participants
Step 5: we proceed with the qualitative analysis (based on scale probability x impact defined in
the management plan), and we define the ranking of risks, through the matrix probability and
impact. In this way we define the risks that must be managed and the ones included in the watch
list.
Practical application with use case
19
Author: Marco De Santis, PMP, 2014
Probability Impact
Risk Factor
scale value scale value
R1 M 0,6 M 0,2 0,12
R2 L 0,3 M 0,2 0,6
R4 L 0,3 L 0,1 0,3
R5 M 0,6 H 0,4 0,24
Probability Impact
Risk Factor
scale value scale value
R5 M 0,6 H 0,4 0,24
R1 M 0,6 M 0,2 0,12
R2 L 0,3 M 0,2 0,6
R4 L 0,3 L 0,1 0,3 In watch list
to be managed
to be managed
to be managed
Step 6: now we proceed with the determination of the economic impact of the risks to be
managed (EMV Expected Monetary Value) and the new risks ranking, by using one of the
quantitative risk analysis methods.
Assumption: independent risks
Practical application with use case
20
Author: Marco De Santis, PMP, 2014
Probable damage
Total Project
damageProbability that all
3 events occur
Probability Impact
EMV
Value Value
R5 20% 50k€ 12k€
R1 10% 20k€ 2k€
R2 2% 50k€ 1k€
0,0004% 120k€ 13k€
Step 7: we define the level of risk responses that in our use case - just as an example - is the
"Absence of participants" (taking charge of the risk management with the highest EMV, as in the
table above).
In order to select the best answer we perform a cost-benefit analysis: the real action cost (the
certain one) versus the least (probable) impact, and in our example, the Virtual Class is the best
solution.
Applicazione pratica con use case
21
Author: Marco De Santis, PMP, 2014
Code Event Probability Impact EMV Strategy Selected actions
Cost of
action
Post risk response scenario
Probability Impact EMV
R5
Absence of
participants
20% 50k€ 10k€ Mitigation
Communications plan with the
request of the participant
feedback 500 € 10% 50k€ 5k€
Notification of dates to
functional managers (bosses) 500 € 10% 50k€ 5k€
Virtual class
1.000 € 5% 50k€ 2,5k€
By choosing the "Virtual Class", the immediate cost is € 1,000, the "S" curve rears for 1.000€ and
further 2,500€ are to be set up as a contingency reserve and added to the cost baseline.
So we add the activity in the GANTT project, we propose a change requests to the project
documents and, if not already indicated in the risk register, we formalize the risk owner, the
person who assumes the ownership of the management of the end-to-end response. No action
has fielded at this time. Upon the occurrence of the trigger foreseen in the initial risk register, in
the process of monitoring and control of the project, the answers will be activated.
The residual risk in the risk analysis, compared with the response plan is 5% (ref. previous table).
The change caused by the new activity (response plan) impacts the project in term of costs,
scope (WBS) and schedule.
Then we move on to the analysis of an eventual secondary risk derivated by the introduction of a
new mitigation activity (risk response) and a check if any response actions are necessary.
If the plan fails, I could already predict a fallback plan and it could be financed always and only by
the contingency reserve (no extra cost could be added).
Practical application with use case
22
Author: Marco De Santis, PMP, 2014
Step 8: in Monitoring and Control:
 we implement the response plan "Virtual Class" if the expected trigger "no participant
more than 50% for two consecutive lessons" occurred
 we evaluate the effectiveness of the risk management plan "end to end" through the
analysis of the process and the results of the provided actions
 we manage possible new risks, bringing them to the process of qualitative analysis
 we re-evaluate the existing risks and monitor the residual risks, by intercepting
significant changes in the Risk Factor and / or nell'EMV
 we close the risks no longer verifiable while communicating that event to
stakeholders
 we measure the level of the use of the contingency reserve to ensure a proper usage
and to ensure a necessary availability during the life of the project
Step 9: At the end of the project:
 we ensure that the DB of the risks and gathered lessons learned during the risk
management are incorporated in updating project documents
 we release the contingency reserve for risks that have not occurred (consistently with
the requirements in the Risk Management Plan)
Practical application with use case
23
Author: Marco De Santis, PMP, 2014
Attachments
Definitions of risk probability and impact
Probability and impact matrix
Risk Breakdown Structure (RiBS)
Risk Register
Examplesoftheoperationaltools
forRiskManagement
25
Definitions of risk probability and impact
Risk Factor
determination
(P x I)
Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , tab.11-1, p. 318
26
Author: Marco De Santis, PMP, 2014
Definition of probabilty scale
Definition of impact scale
Probability and impact matrix
Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , fig. 11-10, p. 331
27
Author: Marco De Santis, PMP, 2014
Negative and positive risks ranking
Action on negative risks
Action on positive risks
Risk Breakdown Structure (RiBS)
Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , fig. 11-4, p. 317
The risk categories and the Risk Breakdown Structure (RiBS) are two assets defined by the
Company and included in the Risk Management Plan. According to the risk identification results
the risk are aggregated by categories and the updated RiBS will be generated. This asset will be
part of the Risk Management Plan.
28
Author: Marco De Santis, PMP, 2014
Project
1. Technical 2. External 3. Organizational
4. Project
Management
1.1 Requirements
1.2 Technology
1.3 Complexity
and Interfaces
1.4 Performances
and Reliability
1.5 Quality
2.1 Sub
contractors and
Suppliers
2.2 Regulatory
2.3 Market
2.4 Customer
2.5 Weather
3.1 Project
Dependencies
3.2 Resources
3.3 Funding
3.4 Priorization
4.1 Estimating
4.2 Planning
4.3 Controlling
4.4
Communications
Risk Register
Below is an example of a full risk register. Starting from the identification information of the risk,
the risk register will be enriched with the informations gathered during the entire Risk
Management project (qualitative risk analysis, quantitative risk analysis, plan risk response).
According to the timing stated by the Risk Management Plan, the risk informations shall be
promptly updated and in any case, the Project Manager has to guarantee the alignment with
the real stratus of the project
Please, click on the hyperlink or send me an email to: marco1.desantis@yahoo.it to request the risk register in Microsoft Excel version.
29
Author: Marco De Santis, PMP, 2014
Glossary
Activity. A distinct, scheduled portion of work performed during the course of project.
Assumptions Analysis. A technique that explores the accuracy of assumptions and identifies risks to the project from inaccuracy,
inconsistency, or incompleteness of assumptions.
Baseline. The approved portion of work product that can be changed only through formal change control procedure and is used as a
basis for comparison.
Brainstorming. A general data gathering and creativity technique that can be used to identify risks, ideas, or solutions to issues by
using a group of team member or subject matter expert.
Business Case. A documented economic feasibility study used to establish validity of the benefits of a selected component lacking
sufficient definition and that is used as a basis for the authorization of further project management activities.
Change Request. A formal proposal to modify any document, deliverable, or baseline.
Checklist Analysis. A technique for systematically reviewing materials using a list for accuracy and completeness.
Contingency Reserve. Budget within the cost baseline or performance measurement baseline that is allocated for identified risks
that are accepted and for which contingent or mitigating responses are developed.
DB Risk. Homogenous collection of business risks, useful to support risk analysis on projects.
Decision Tree Analysis. A diagramming and calculation technique for evaluating the implications of a chain of multiple options in the
presence of uncertainty.
Delphi Technique. An information gathering technique used a way to reach a consensus of expert on a subject. Experts on the
subject participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project
points related to the subject. The responses are summarized and are then recirculated to the expert for further comment.
Consensus may be reached in a few round of this process. The Delphi technique helps reduce bias in the data and keeps any one
person from having undue influence on the outcome.
Earned Monetary Value (EMV). A methodology that combines scope, schedule, and resource measurements to assess project
performance and progress.
GANTT Diagram. bar chart with information about the schedule in which the assets are listed on the vertical axis, the dates are
shown on the horizontal axis and task durations are indicated as horizontal bars positioned according to the dates of beginning and
end.
31
Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
GANTT Diagram. bar chart with information about the schedule in which the assets are listed on the vertical axis, the dates are
shown on the horizontal axis and task durations are indicated as horizontal bars positioned according to the dates of beginning and
end.
Influence Diagram. A graphical representation of situations showing causal influences, time ordering of events, and other
relationships among variables and outcomes.
Interviews. A formal or informal approach to elicit informations from stakeholders by talking to them directly.
Ishikawa Diagram. Diagramming technique through which the causes of the low risk are identified starting from the effects on the
size of the project and that will be defined by these project risks.
Lesson Learned. The knowledge gained during a project which shows how project events were addressed or should be addressed in
the future with the purpose of improving future performance.
Management Reserve. An amount of the project budget withheld for management control purposes. These are budgets reserved
for unforeseen work that is within scope of the project. The management reserve is not included in the performance measurement
baseline (PMB).
Nominal Group. A technique that enhance brainstorming with a voting process used to rank the most useful ideas for further
brainstorming or for priorization.
Process. A systematic series of activities directed towards causing an end result such that one or more inputs will be acted upon to
create one or more outputs.
Process/System Flow chart. The depiction in a diagram format of the inputs, process actions, and outputs of one or more processes
within a system.
Project. A temporary endeavor undertaken to create a unique product, service or result.
Project Budget. The approved estimate for the project or any work breakdown structure component or any schedule activity
Project Management. The application of knowledge, skills, tools, and techniques to project activities to meet the project
requirements.
Reserve. A provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g.
management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.
Residual Risk. A risk that remains after risk responses have been implemented. 32
Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
Risk Attitude. The answer is choice of an individual or a group in a climate of uncertainty and that is driven by the perception.
Risk Factor. Result obtained by multiplying the probability and impact during the Qualitative Risk Analysis that allows you to make a
first classification of the identified risks.
Risk Owner. A team member or an external person that helps the Project Manager during the risk management and that takes care
directly of the management and tracking of the risk responses that have been assigned to him.
Risk Reassessment. Risk reassessment is the identification of new risks, reassessment of current risks, and the closing of risks that
are outdated.
Risk Threshold. Measure of the level on uncertainty or the level at which a stakeholder may have a specific interest. Below that risk
threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk.
Risk Tolerance. The degree, amount, or volume of risk that an organization or individual withstand.
Risk Urgency Assessment. Review and determination of the timing of actions that may need to occur sooner than other risk items.
Route Cause Analysis. An analytical technique used to determine the basic underlying reason that causes a variance or a defect or a
risk. A root cause may underline more than one variance or defect or risk.
Secondary Risk. A risk that arise as a direct result of implementing a risk response.
Sensitivity Analysis. A quantitative risk analysis and modelling technique used to help determine 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. The typical display of results is in the form of a tornado diagram.
Stakeholder. An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision,
activity, or outcome of a project.
SWOT Analysis. Analysis of strengths, weaknesses, opportunities and threats of an organizations, project , or option.
Trigger Condition. An event or condition that indicates that a risk is about to occur.
Watch List. List of risks to be monitored, but on which no response strategy has not been provided.
WBS. A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project
objectives and create the required deliverables.
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Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
34
Bibliography
Guida al Project Management Body of Knowledge (Guida al
PMBOK®), Quinta Edizione, Project Management Institute,
2013
Professione Project Manager, M. Martinati, A. Caccamese,
Franco Angeli, 2013
Dispense Corso di preparazione alla certificazione PMP, TI HR
Services and Eureka Service, 2013
Project risk management - Methodology and application

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Project risk management - Methodology and application

  • 1. PROJECT RISK MANAGEMENT METHODOLOGY AND APPLICATION Author: Marco De Santis, PMP, 2014
  • 2. Author: Marco De Santis, PMP, 2014 2 Agenda Introduction to the Risk Management FOCUS on 6 RISK MANAGEMENT processes, PMBOK Guide ®, Fifth Edition Guidelines for project risks management Practical application with an use case Attachments Examples of the operational tools for Risk Management Glossary
  • 3. The risk model is based on the existence of one or more causes with an unknown probability of occurrence and one or more effects that will appear due to the occurrence of the event. In practice, both the known and unknown risks are addressed with a reactive approach. The difference is that the paradigm underlying the risk management provides the responsive approach, limited to the unknown risks, in addiction to the proactive approach reserved to a known risk. Introduction to the Risk Management 3 Author: Marco De Santis, PMP, 2014 One of the most common mistakes is to confuse a risk with the impact: the phrase "we risk to incur in a penalty" is related to the impact and not to the risk (which can be caused to a lack of performance testing of the information system that we are developing for our customer). The risk, in the common sense, is the possibility of suffering harm or achieving an advantage, due to certain circumstances, more or less predictable.
  • 4. The way in which the organization and its stakeholders perceive risk and relate with it (the risk attitude) is influenced by three main factors : 1. risk appetite: the level of an acceptable uncertainty in view of a future benefit 2. risk tollerance: the grade, size or amount of risk that an individual or an organization can tolerate 3. risk threshold: the measure of the level of uncertainty or the impact in which a stakeholder may have a specific interest. Only below this threshold, the organization will accept the risk There are four risk macro-categories (universal) which helps us to support and guide the management of the risk on the basis of the risk attitude, such as: 4 Author: Marco De Santis, PMP, 2014 Therefore, managing the risk means to adopt an attitude, more or less consciously, in order to protect yourself against a negative event (threat) and/or to take advantage of a positive event (opportunity) as long as you have identified and understood the scenario before the event happens. Introduction to the Risk Management
  • 5. Let's start with two assumptions: the first is that there isn't a project without a risk, and the second is that, in spite of a "perfect" planning, the use of estimates implies an indeterminacy related to their probabilistic nature. The uncertainties may relate to the existence and the duration of activities, to the cost of resources and activities, to the presence or the absence of adequate resources, to the management of supplies. There are also external factors that contribute positively or negatively to a project’s destiny. 5 Author: Marco De Santis, PMP, 2014 The project risk, then, is defined as an uncertain event or a condition that, if it were to occur, would have a positive or negative effect on one or more objectives of the project such as scope, schedule, cost and quality. The project risk management is the systematic process of identifying, analyzing and responding to project risks in order to increase the probability and/or the impact of positive events and to decrease the probability and/or the impact of negative events in accordance with the constraints. The project risk management is based on an integrated analysis of the uncertainties of the project that leads to a different approach based on the probability that certain situations could happen or not, conducting, therefore, to probabilistic outcomes. past present future Introduction to the Risk Management
  • 6. The Risk management in a project throughout its lifetime, must be iterative and appropriate because while it reduces the likelihood of a project failure and/or increases the chances of success, at the same time, if it’s perceived as "the dark side "project, it can cause the paralysis of the project. 6 Author: Marco De Santis, PMP, 2014 By way of example and in applying the concept of appropriateness for software projects have been identified the following seven risk "universal" 1. User involvement and support of the management 2. Inflationary / uncontrolled rise of the requirements (or scope creep) 3. Difficulties in the sharing and understanding of the specifications and requirements 4. Errors in planning 5. Unrealistic expectations 6. Changes in project teams 7. Inefficient Project Management 7 The Project Manager is responsible for the management of risk and he’s the one who will have to gain the support of stakeholders both in the identification of risks and in the planning and the implementation of the necessary responses’ measures through a comprehensive and timely flow of the communication and the documentation. Introduction to the Risk Management
  • 7. 7 Source: The Standish Group Report CHAOS, © 2014 Project Smart Author: Marco De Santis, PMP, 2014
  • 8. FOCUS on 6 RISK MANAGEMENT processes PMBOK Guide®, Fifth Edition 8 Author: Marco De Santis, PMP, 2014 The process of defining the rules for the development of the risk management plan, which includes: methodology, responsibility, definition and management of reserves and changes The process of identifying project risks, accurately describing and giving a first response hypothesis Risks are classified by importance, in order to define a priority based on a Risk Factor (RF) The overall effect of the project risks (Expected Monetary Value, EMV) is measured numerically. The contingency reserve, which is the pre-reserve economic response to the risks , will be defined Here are being planned necessary responses for facing the threats in order to reduce the probability and / or the impact of threats and / or to amplify those opportunities The process of implementing the responses, of updating the status of the risks (identified, secondary, residual and new) and evaluating the effectiveness of the risk management. PLANNING MONTIORINGAND CONTROLING 1. Plan Risk Management 2. Identify Risks 3. Perform Qualitative Risk Analysis 4. Perform Quantitative Risk Analysis 5. Plan Risk Responses 6. Control Risks Based on "Corso di preparazione all'esame PMP", TI HR Services - Eureka Service, Roma, 2013 Threats Risk Strategy Opportunity Avoid Uncertaincy removal Exploit Transfer Reallocation of responsibilities Enhance Mitigate Exposition level modification Share Accept Current management Accept
  • 9. Following the Risk Management diagram presented in the previous slide, the activities that the project team must ensure are: 1. Plan Risk Management: is the decision-making process on how to approach and how to plan the activities of the risk management. A plan of the risk management is defined (or re-used and customized appropriately, if already available in the company) for this purpose, where is being formalized: a. if any, the collecting of the risk information identified in the project approval and presented in the Business Case b. the applied methodology, roles and responsibilities c. the budget and the timing of the implementation of the management processes d. the categories of risks impacting the project (technical, external, organizational, management, other) e. the definitions of the risk probability and the impact (ref. attachments, the probability scale, the impact scale) and the probability and the impact matrix (ref. attachments) f. the Risk Breakdown Structure (ref. attachments), that breaks the risks universe identified in the Company and represents the basis for creating the structure for a specific project g. The rules to manage and release the contingency reserve Guidelines for project risks management 9 Author: Marco De Santis, PMP, 2014
  • 10. 2. Identify the risks: it is the process of determining the risks that may affect the project and documenting their characteristics, starting, if available, from the initial list of risks contained in the Project Charter authorizing the start of the project. For effective risk identification it is recommended that you have defined the scope of the project. The identification of project risks starts while trying go get the support of as many stakeholders as possible and through the use of tools (if necessary, by multiple choice, depending on the nature and type of the participants) such as:  documentation reviews, checklist and project assumption analysis  information gathering techniques: brainstorming, nominal group, delphi, interviews, route cause analysis  diagramming techniques: Ishikawa diagram, process/system flow chart, influence diagrams  SWOT (Strengths, Weakness, Opportunities, Threats)  expert judgment The list of identified risks is presented in the document "risk register" which will also include the triggers that indicate the approach or the occurrence of the event which took place. It is advisable to also indicate the WBS code and appoint the assigned risk owners, if available. Guidelines for project risks management 10 Author: Marco De Santis, PMP, 2014
  • 11. 3. Perform Qualitative Risk Analysis: it is the process of prioritizing risks for further analysis or action by assessing and combining the probability of occurrence of the risk and its impact. The list can be subject to a pre-skimming through the Pareto diagram with the objective to proceed with the treatment of "significant" risks with the aim of defining a first classification on the basis of the Risk Factor of risks through the use of the stairs probability and impact. The temporal proximity of the risk (risk proximity) is considered another decisional factor for taking charge of risk (risk urgency); risks to be monitored and those with low risk, which will be kept under observation (watch list) are also identified during the execution phase of the project through the matrix probability and the impact. 11 Author: Marco De Santis, PMP, 2014 In this moment, we evaluate the opportunity to continue by using the quantitative analysis (which implies high costs and the time consuming) or to go directly to the response plan. The risk register is updated based on new informations, along with other project documents. Guidelines for project risks management
  • 12. 4. Perform Quantitative Risk Analysis: it is the process of numerical analysis of the effect of the identified risks (which were to be monitored, as decided in qualitative analysis) on the general objectives of the project. 12 Author: Marco De Santis, PMP, 2014 Through the investigation and with the involvement of experts and stakeholders is defined as the economic impact on the project. The tools available for the analysis are:  data gathering and representation techniques, through interviews with stakeholders and experts  quantitative risk analysis and modeling techniques: sensitivity analysis, expected monetary value (EMV) analysis and decision trees, modeling and simulation  expert judgment In this phase, the basis for the definition of contingency reserves (through EVM) is being prepared and the statistical analysis on the likelihood of success of the project is being consolidated. A new classification of the risk prioritization (based on quantitative data) is drawn up and the risk register is updated, along with other project documents. Guidelines for project risks management
  • 13. 13 Author: Marco De Santis, PMP, 2014 5. Plan Risk Responses: it is the development process of options and actions whose aim is to enhance opportunities and reduce threats for the project objectives. This process needs a strong involvement of the project stakeholders. The goal is to ensure "buy in" to those who will have to ensure the answers and/or finance them, and the strategies may include:  avoid, transfer, mitigate, and accept (actively / passively) the downside risks  exploit potential, share and accept (actively / passively) the positive risks The plan of response actions is defined based on the results of the analysis of the EMV and the decision tree between the identified alternative responses. In front of the response plan, the changes are being proposed, and mainly they are relate to costs, the scope (WBS) and the planning . The contingency reserve (which is to cover the contingency plan and the fall back plan) necessary for the definition of the project budget and for the revision of the schedule is being set up and the residual risks and the secondary risks arising from the implementation of plan and actions are being identified; and the quantitative analysis of the risks can be executed again. The risk register is updated, along with the other project documents and the management plan of the project. Guidelines for project risks management
  • 14. Project Execution: In carrying out the project (there are no dedicated processes), by using the full version of the risk register (ref. attachments), during the project meetings, the Project Manager should always include in the agenda the task of re-evaluation of the risks that: a) if present, check the triggers (alarms defined in the initial version of the risk register which report the occurrence or the approach of the event), and if necessary, activate response plans! b) communicate to all stakeholders the status of project risks! c) monitor your watch list! d) locate new risks! e) evaluate the management efficiency! f) enrich the DB risk on a company level! 14 Author: Marco De Santis, PMP, 2014 Guidelines for project risks management
  • 15. 6. Control Risks: it is the process of the response plans implementation, of the identified risks tracking, of the residual risks monitoring, of the new risks identification and of the effectiveness assessment of the risk management processes throughout the project. The revaluation results of the identified risks and audits on the management effectiveness of "end to end" Risk Project are being evaluated. Possibile new risks are being managed and brought to the 2° trial (perform a qualitative analysis of the risks), and the residual risks are being monitor, no more verifiable risks are being closed. A best practice is to run again the quantitative analysis of existing risks during this process. The unused reserve (contingency and management) release can happen even in the case of a no longer verifiable risk or at the end of the project (it is a business decision and it’s defined in the risk management plan). 15 Author: Marco De Santis, PMP, 2014 If necessary, the improvement changes or corrections are being required. The use of contingency and management reserves is being assessed and, where appropriate, an action is taken in order to restore the proper use through the proposed change request. Possible changes which are to include in the project documents and in the management plan of the project are being undertaken at this point. Guidelines for project risks management
  • 16. Practical application with use case As an example of practical application of the Risk Management will use the design of a specialized course. PMP Certification Course Step 1: we re-use the corporate risk management plan (existing and proven fitness for my project) with the following characterizations: the release of the reserve is at the end of the project. Step 2: identify the risks at the time "t0" jointly using techniques such as brainstorming, Ishikawa diagram, histogram, Pareto, delphi, and SWOT to consider the opportunities, too. The result is the risk register that contains: R1 – unavailability classrooms R2 – funding block R3 – unavailability teacher R4 – poor learning material R5 – absence of participants R6 – unavailable simulator R3 and R6 were considered as non-impacting because the contract already provides a reaction plan. 16 Author: Marco De Santis, PMP, 2014
  • 17. Step 3: we start from the consistency of risk register to create a cause-event-effect matrix using the five-why technique (we ask ourselves a reason why of each cause and we proceed backwards 5 times untill we arrive at the route cause) Fon any given cause, it's suggested to use the WBS code and to mention the assigned risk owner, if the information is available. CAUSE EVENT EFFECT Period of occurrence Trigger Uncorrect planning Unavailability classrooms Time The entire course The unavailability classrooms detected 15 days before the date of the lesson Courses overlapping Classrooms inagibility Huge absence of participants Funding block Quality, Cost The entire course The receipt of payment from the bank wasn't receivedGovernance Not adequated budget Poor didactic material Quality The entire course A lot's of difficulties was faced in reading and use of the material Tender at lower price Strike transportation (bus) Absence of participants Quality The entire course No participants above 30% for two consecutive lessons Teachers quality Lack of information Corporate issues (task overlapping) Participants personal issues Practical application with use case 17 Author: Marco De Santis, PMP, 2014
  • 18. Step 4: we group the (homogeneous) causes and customize the RiBS (Risk Breakdown Structure) of our project, that allow the Project Manager to identify which category affects mainly the project. The Risk Management Plan will be updated by inserting the project RiBS . Applicazione pratica con use case 18 Author: Marco De Santis, PMP, 2014 RiBS "PMP Certification Course" project OrganizationalExternalTechnical Strike transportation (bus) Participants personal issues Corporate course planning Human Resource management (particpants) Finanacial Governance Procurament management Project Management Planning Budget Teachers quality Communications Classrooms inagibility Absence of participants
  • 19. Step 5: we proceed with the qualitative analysis (based on scale probability x impact defined in the management plan), and we define the ranking of risks, through the matrix probability and impact. In this way we define the risks that must be managed and the ones included in the watch list. Practical application with use case 19 Author: Marco De Santis, PMP, 2014 Probability Impact Risk Factor scale value scale value R1 M 0,6 M 0,2 0,12 R2 L 0,3 M 0,2 0,6 R4 L 0,3 L 0,1 0,3 R5 M 0,6 H 0,4 0,24 Probability Impact Risk Factor scale value scale value R5 M 0,6 H 0,4 0,24 R1 M 0,6 M 0,2 0,12 R2 L 0,3 M 0,2 0,6 R4 L 0,3 L 0,1 0,3 In watch list to be managed to be managed to be managed
  • 20. Step 6: now we proceed with the determination of the economic impact of the risks to be managed (EMV Expected Monetary Value) and the new risks ranking, by using one of the quantitative risk analysis methods. Assumption: independent risks Practical application with use case 20 Author: Marco De Santis, PMP, 2014 Probable damage Total Project damageProbability that all 3 events occur Probability Impact EMV Value Value R5 20% 50k€ 12k€ R1 10% 20k€ 2k€ R2 2% 50k€ 1k€ 0,0004% 120k€ 13k€
  • 21. Step 7: we define the level of risk responses that in our use case - just as an example - is the "Absence of participants" (taking charge of the risk management with the highest EMV, as in the table above). In order to select the best answer we perform a cost-benefit analysis: the real action cost (the certain one) versus the least (probable) impact, and in our example, the Virtual Class is the best solution. Applicazione pratica con use case 21 Author: Marco De Santis, PMP, 2014 Code Event Probability Impact EMV Strategy Selected actions Cost of action Post risk response scenario Probability Impact EMV R5 Absence of participants 20% 50k€ 10k€ Mitigation Communications plan with the request of the participant feedback 500 € 10% 50k€ 5k€ Notification of dates to functional managers (bosses) 500 € 10% 50k€ 5k€ Virtual class 1.000 € 5% 50k€ 2,5k€
  • 22. By choosing the "Virtual Class", the immediate cost is € 1,000, the "S" curve rears for 1.000€ and further 2,500€ are to be set up as a contingency reserve and added to the cost baseline. So we add the activity in the GANTT project, we propose a change requests to the project documents and, if not already indicated in the risk register, we formalize the risk owner, the person who assumes the ownership of the management of the end-to-end response. No action has fielded at this time. Upon the occurrence of the trigger foreseen in the initial risk register, in the process of monitoring and control of the project, the answers will be activated. The residual risk in the risk analysis, compared with the response plan is 5% (ref. previous table). The change caused by the new activity (response plan) impacts the project in term of costs, scope (WBS) and schedule. Then we move on to the analysis of an eventual secondary risk derivated by the introduction of a new mitigation activity (risk response) and a check if any response actions are necessary. If the plan fails, I could already predict a fallback plan and it could be financed always and only by the contingency reserve (no extra cost could be added). Practical application with use case 22 Author: Marco De Santis, PMP, 2014
  • 23. Step 8: in Monitoring and Control:  we implement the response plan "Virtual Class" if the expected trigger "no participant more than 50% for two consecutive lessons" occurred  we evaluate the effectiveness of the risk management plan "end to end" through the analysis of the process and the results of the provided actions  we manage possible new risks, bringing them to the process of qualitative analysis  we re-evaluate the existing risks and monitor the residual risks, by intercepting significant changes in the Risk Factor and / or nell'EMV  we close the risks no longer verifiable while communicating that event to stakeholders  we measure the level of the use of the contingency reserve to ensure a proper usage and to ensure a necessary availability during the life of the project Step 9: At the end of the project:  we ensure that the DB of the risks and gathered lessons learned during the risk management are incorporated in updating project documents  we release the contingency reserve for risks that have not occurred (consistently with the requirements in the Risk Management Plan) Practical application with use case 23 Author: Marco De Santis, PMP, 2014
  • 25. Definitions of risk probability and impact Probability and impact matrix Risk Breakdown Structure (RiBS) Risk Register Examplesoftheoperationaltools forRiskManagement 25
  • 26. Definitions of risk probability and impact Risk Factor determination (P x I) Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , tab.11-1, p. 318 26 Author: Marco De Santis, PMP, 2014 Definition of probabilty scale Definition of impact scale
  • 27. Probability and impact matrix Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , fig. 11-10, p. 331 27 Author: Marco De Santis, PMP, 2014 Negative and positive risks ranking Action on negative risks Action on positive risks
  • 28. Risk Breakdown Structure (RiBS) Based on "A Guide to the Project Management Body Of Knowledge (PMBOK Guide®)", Project Management Institute, Fifth Edition, 2012 , fig. 11-4, p. 317 The risk categories and the Risk Breakdown Structure (RiBS) are two assets defined by the Company and included in the Risk Management Plan. According to the risk identification results the risk are aggregated by categories and the updated RiBS will be generated. This asset will be part of the Risk Management Plan. 28 Author: Marco De Santis, PMP, 2014 Project 1. Technical 2. External 3. Organizational 4. Project Management 1.1 Requirements 1.2 Technology 1.3 Complexity and Interfaces 1.4 Performances and Reliability 1.5 Quality 2.1 Sub contractors and Suppliers 2.2 Regulatory 2.3 Market 2.4 Customer 2.5 Weather 3.1 Project Dependencies 3.2 Resources 3.3 Funding 3.4 Priorization 4.1 Estimating 4.2 Planning 4.3 Controlling 4.4 Communications
  • 29. Risk Register Below is an example of a full risk register. Starting from the identification information of the risk, the risk register will be enriched with the informations gathered during the entire Risk Management project (qualitative risk analysis, quantitative risk analysis, plan risk response). According to the timing stated by the Risk Management Plan, the risk informations shall be promptly updated and in any case, the Project Manager has to guarantee the alignment with the real stratus of the project Please, click on the hyperlink or send me an email to: marco1.desantis@yahoo.it to request the risk register in Microsoft Excel version. 29 Author: Marco De Santis, PMP, 2014
  • 31. Activity. A distinct, scheduled portion of work performed during the course of project. Assumptions Analysis. A technique that explores the accuracy of assumptions and identifies risks to the project from inaccuracy, inconsistency, or incompleteness of assumptions. Baseline. The approved portion of work product that can be changed only through formal change control procedure and is used as a basis for comparison. Brainstorming. A general data gathering and creativity technique that can be used to identify risks, ideas, or solutions to issues by using a group of team member or subject matter expert. Business Case. A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities. Change Request. A formal proposal to modify any document, deliverable, or baseline. Checklist Analysis. A technique for systematically reviewing materials using a list for accuracy and completeness. Contingency Reserve. Budget within the cost baseline or performance measurement baseline that is allocated for identified risks that are accepted and for which contingent or mitigating responses are developed. DB Risk. Homogenous collection of business risks, useful to support risk analysis on projects. Decision Tree Analysis. A diagramming and calculation technique for evaluating the implications of a chain of multiple options in the presence of uncertainty. Delphi Technique. An information gathering technique used a way to reach a consensus of expert on a subject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire to solicit ideas about the important project points related to the subject. The responses are summarized and are then recirculated to the expert for further comment. Consensus may be reached in a few round of this process. The Delphi technique helps reduce bias in the data and keeps any one person from having undue influence on the outcome. Earned Monetary Value (EMV). A methodology that combines scope, schedule, and resource measurements to assess project performance and progress. GANTT Diagram. bar chart with information about the schedule in which the assets are listed on the vertical axis, the dates are shown on the horizontal axis and task durations are indicated as horizontal bars positioned according to the dates of beginning and end. 31 Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
  • 32. GANTT Diagram. bar chart with information about the schedule in which the assets are listed on the vertical axis, the dates are shown on the horizontal axis and task durations are indicated as horizontal bars positioned according to the dates of beginning and end. Influence Diagram. A graphical representation of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes. Interviews. A formal or informal approach to elicit informations from stakeholders by talking to them directly. Ishikawa Diagram. Diagramming technique through which the causes of the low risk are identified starting from the effects on the size of the project and that will be defined by these project risks. Lesson Learned. The knowledge gained during a project which shows how project events were addressed or should be addressed in the future with the purpose of improving future performance. Management Reserve. An amount of the project budget withheld for management control purposes. These are budgets reserved for unforeseen work that is within scope of the project. The management reserve is not included in the performance measurement baseline (PMB). Nominal Group. A technique that enhance brainstorming with a voting process used to rank the most useful ideas for further brainstorming or for priorization. Process. A systematic series of activities directed towards causing an end result such that one or more inputs will be acted upon to create one or more outputs. Process/System Flow chart. The depiction in a diagram format of the inputs, process actions, and outputs of one or more processes within a system. Project. A temporary endeavor undertaken to create a unique product, service or result. Project Budget. The approved estimate for the project or any work breakdown structure component or any schedule activity Project Management. The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Reserve. A provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g. management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated. Residual Risk. A risk that remains after risk responses have been implemented. 32 Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
  • 33. Risk Attitude. The answer is choice of an individual or a group in a climate of uncertainty and that is driven by the perception. Risk Factor. Result obtained by multiplying the probability and impact during the Qualitative Risk Analysis that allows you to make a first classification of the identified risks. Risk Owner. A team member or an external person that helps the Project Manager during the risk management and that takes care directly of the management and tracking of the risk responses that have been assigned to him. Risk Reassessment. Risk reassessment is the identification of new risks, reassessment of current risks, and the closing of risks that are outdated. Risk Threshold. Measure of the level on uncertainty or the level at which a stakeholder may have a specific interest. Below that risk threshold, the organization will accept the risk. Above that risk threshold, the organization will not tolerate the risk. Risk Tolerance. The degree, amount, or volume of risk that an organization or individual withstand. Risk Urgency Assessment. Review and determination of the timing of actions that may need to occur sooner than other risk items. Route Cause Analysis. An analytical technique used to determine the basic underlying reason that causes a variance or a defect or a risk. A root cause may underline more than one variance or defect or risk. Secondary Risk. A risk that arise as a direct result of implementing a risk response. Sensitivity Analysis. A quantitative risk analysis and modelling technique used to help determine 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. The typical display of results is in the form of a tornado diagram. Stakeholder. An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project. SWOT Analysis. Analysis of strengths, weaknesses, opportunities and threats of an organizations, project , or option. Trigger Condition. An event or condition that indicates that a risk is about to occur. Watch List. List of risks to be monitored, but on which no response strategy has not been provided. WBS. A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables. 33 Basato su "Guida al Project Management Body Of Knowledge (Guida al PMBOK®)", Project Management Institute, Quinta Edizione, 2012
  • 34. 34 Bibliography Guida al Project Management Body of Knowledge (Guida al PMBOK®), Quinta Edizione, Project Management Institute, 2013 Professione Project Manager, M. Martinati, A. Caccamese, Franco Angeli, 2013 Dispense Corso di preparazione alla certificazione PMP, TI HR Services and Eureka Service, 2013