MGMT8370 RISK & ISSUE MANAGEMENT

WEEK 2: PART 1 ISSUES VS RISKS & ISSUE LOGS

PROFESSOR LISA POLLARD
AGENDA
• Review
• Issues vs. Risks
• Issue Management
• Decision Making
• Problem Solving Process
RISK RECAP

1. What is a risk?

2. What is risk management?

3. Why do risk management?

3
 Project • Does the risk warrant pursuing this
Selection project?
WHEN DOES RISK
IDENTIFICATION AND
Planning • Time allocated to identify risks ANALYSIS OCCUR
Project • Continually scan the environment
Lifecycle for new risks
Monitoring
• Continually evaluate risks and
and Risk management is continuous
watch for triggers
Controlling
WHAT IS AN ISSUE?

A current condition or situation that may have

an impact on the project objectives

PMBOK® 6th Edition Page 709

MORE ABOUT ISSUES

Issues • Problems, gaps, conflicts

Impact • Significant if unresolved

Risks • Unidentified
RISK VS ISSUE

• Uncertain
• Event has
event or Risk Issue occurred
condition

• Plan for
• Create a
possible Proactive Reactive workaround
outcomes
RISK VS ISSUE
• Project or • Project or
Risk Issue Product
Product
Deliverables Impacts Impacts Deliverables

• Greater than 0%
and less than Probability Probability • Must be 100%
100%

• Must be in the
future
Timing Timing • Typically now
 Avoid
RISKS OFFER
OPTIONS
Transfer
Risk

Mitigate
Evaluate probability and impact to
determine priority

Accept Create contingency and fallback plans

 Avoid
ISSUES ALLOW
FEWER OPTIONS
Transfer
Issues

Mitigate
Issues are 100% probability meaning
impact must be determined

Accept? Possibly Accept

Workaround solutions are typically
required
 13

THINK ABOUT IT

Not all Issues are Risks but

All Risks are Issues
EXAMPLE: RISK VS ISSUE
RISK: PROACTIVE
▪ Typically advanced insight
there is a cause for concern.
For example
• The project is unable to find
qualified staff
ISSUE: REACTIVE
▪ Typically less predictable – can
arise without warning
For example
▪ A project resources is in a car
accident, and hospitalized for
three weeks
DOCUMENTING ISSUES

1. Where are issues recorded?

2. Why do we manage issues?

3. Are you able to generate 7 reasons to
manage issues?

13
 ISSUES LOG – EXAMPLE TEMPLATE
ID Description Priority Assigned Target Action Plan / Status Final Solution
(H/M/L) To Date Actions Taken

1 Details on what Pre- The person Date Describe and track the Based on Brief summary of
happened and the defined responsible actions taken and pre-defined resolution.
potential impact to criteria planned. Including the standards
project objectives similar to dates as status is
*Summary risk collected is important
*Background
*Details
*Impact
2 The cabinet maker High Frank April 3/20 Mar 29: Issue identified Open TBD
delivered the white Mar 30: Contacted Investigating
cabinets instead of grey cabinet maker to
for the custom kitchen. determine delivery date.
The change order was Mar 30: Advised
not processed correctly. customer service of new
Ordering new cabinets issue
at this late date may Apr 1: Receive response
delay the house closing from cabinet maker on
date
ISSUES LOG – (SUBSET)
Issue Description Priority Assigned Target Action Plan / Status Final Solution
ID (H/M/L) To Date Actions Taken

Priority
Establish the priority based on evaluating the impact, typically organizations use a
high, medium and low categorization
Status
Track the progress of the issue resolution including overall status
• Open – issue has been identified but no action has been taken
• Investigating – issue, and possible solutions, are being investigated
• Implementing – issue resolution is in process
• Escalated – issue has been raised to management / project sponsor and
directions or approval of a solution is pending
• Closed – issue is resolved
ISSUES LOG BENEFITS
Documented history of issues

Method of communication

System to maintain status

Facilitate the issues management process

Capture priority

Promote ownership and accountability

Collateral for lessons learned

DECISION LEVELS

Source: Text Book Page 44 Table 15.1 Decision levels Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd.
THREE CATEGORIES OF ISSUES/PROBLEMS

Deviation Improvement Open-ended

Problems Problems Problems
• Your business • Your business • Problems
or project is is doing okay that don’t
falling short but you want have an
of its to do better apparent
expected
targets
IDENTIFYING THE PROBLEM
Symptoms are not the Problem!
The key to a good problem definition is ensuring that you deal with the real
problem – not its symptoms

Review this statement

Performance in your department is substandard
Symptom or Problem
Is this due to
Carelessness
Lack of motivation
Not enough training
Unreasonable workload ....
GENERATE THE PROBLEM STATEMENT
Look out for… defining the problem that’s really a solution
Poor problem statement:
“We have to find a way of disciplining people who do substandard work”

Almost:
"We have a problem with substandard work."

Better:
"We have a problem with increased volumes of work and this is causing
substandard results."
PROBLEM STATEMENT STRATEGY
Key elements of an effective problem statement include:
▪ Gap: Identify the gap (pain) that exists today.
▪ Timeframe, location and trend: Describe when and where the
problem was first observed and what kind of trend it is
following.
▪ Impact: Quantify the gap (cost, time, quality, environmental,
personal, etc.)
▪ Importance: To the organization, the individual, etc. to better
understand the urgency.

Source: Source: https://www.isixsigma.com/new-to-six-sigma/getting-started/how-to-write-an-effective-problem-statement/

SAMPLE PROBLEM STATEMENT
The Humane Society is in need of additional funds to
support their pet adoption program. The funds are
needed to cover staff and medical costs associated with
boarding pets and ensure they are in good shape for
adoption. If additional funds are not available, more
potential pets will be destroyed. The Humane Society
Volunteer Team is responsible for implementing a fund
raising event with a goal to raise $10K. Staff are available
to assist with the event planning but their efforts are
limited to 5 hours per week.
Six-Step Approach
1.Problem identified, defined and
cause analysis
2.Develop criteria to assess
potential alternatives
3.Develop and assess alternatives
4.Select from Alternatives
5.Implement the solution (decision)
6.Monitor and evaluate
PROBLEM SOLVING
There are many
methodologies or
approaches to problem
solving. Look through this
weeks material for additional
examples. During the second
half of the course we will
examine techniques that will
aid in selecting alternatives.
SIX-STEP APPROACH
Step 1 (Identify)
▪ Identify the problem or issue that
exists today
▪ Determine causes
▪ Define the problem
Step 3 (Alternatives)
▪ Use consultative approaches to
generative alternatives.
▪ Productive and lateral thinking
techniques work well
Step 5 (Implement)
▪ Leverage project management
principles
▪ Plan and communicate
Step 2 (Criteria)
▪ Enable fair comparison & serves as a guide
▪ Must align to standards of performance
▪ At minimum ‘must’ versus ‘nice’ have
▪ Simple Y/N criteria OR numeric ranking 1-5
Step 4 (Selection)
▪ Guided by ranking
▪ Remember the stakeholder
▪ Consider internal and external project
perspectives
Step 6 (Monitor)
▪ Compare the outcome to expected
results
▪ Utilize quantitative and qualitative data.
COMMON “PITFALLS”
▪ Two or more objectives
▪ Focusing on past
▪ Defining problem with specific solution
▪ Confusing opinions with fact
▪ Confusing symptoms with causes
▪ Discussing solutions before decisions defined
▪ Evaluating solutions before all causes are identified or defined
▪ Choosing solutions that are more complicated/risky
SUMMARY
• Review of risk basics
• Introduction to issue
• Compared issues and risks
• Introduction to the Issue Log
• Introduction to decision levels and
categories of problem
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 3: PROBLEM SOLVING & DECISION MAKING
PROFESSOR LISA POLLARD
AGENDA
▪ Objectives & Review
▪ Problem Solving & Decision Making
▪ Good Decisions & Planning
▪ Productive Thinking
▪ Using Problem Solving Techniques

2
REVIEW

▪ Differences between risks & issues

▪ Reasons and benefits of creating an Issue Log
▪ 6 steps to problem solving
▪ Decision levels
▪ Types of decisions

3
 Decision Levels
Strategic Tactical Operational
Types of Problems

Performance
Not in Target numbers – call
Deviation Working hours
Market answer rate or
software perf. DECISION &
PROBLEM GRID
Reduce
Improve Customer Working conditions
Improvement Emissions OR
Satisfaction (EG: desk location)
Better Productivity
Match the problem type located in
the rows to the decision level by
column

Better team Short term staffing

Open-ended Better Widget
collaboration problems
Risk Management Problem Solving
PROBLEM SOLVING
CONTEXT
• Plan

▪ Payoff Matrix
• Identify • Define the problem
▪ Decision Trees
▪ Paired Comparison
• Analysis Qualitative/ • Define the problem ▪ Implication Wheels
Quantitative) • Establish Criteria ▪ Good Planning
▪ Productive Thinking
▪ Faster Thinking
• Generate alternatives ▪ Brainstorming
• Plan response
• Select response ▪ Root Cause
▪ Divide & Conquer
▪ Trial & Error
• Implement
• Monitor & Control ▪ Force Field Analysis
• Monitor
▪ Checklists

5
MAKING GOOD DECISIONS

Planning
Creates a proactive environment

Determines the end state

Provides guidelines and goals

6
IMPACT OF POOR PLANNING
ON DECISION MAKING WHEN IT IS THE NORM
▪ Reactive ▪ Chaos
▪ Minimal alternatives ▪ Stress
▪ Under developed solutions ▪ Conflict

7
 Timely
Sound MAKING GOOD
DECISIONS

Collaborative

Good Decisions

8
BENEFITS OF PLANNING

Articulate Identify Create

choices resources measures

Specific Intentional
actions resolution
Isn’t this Risk Management?
9
DECISION MAKING

“Although it has its shortcomings, some combination of intuition and

rational analysis may be the best way for managers to make decisions in
uncertain and fast-moving times”

Hudson (2008 p28) as credited in the text book on page 55

Reflect
▪ Intuition
▪ Rational analysis
▪ What works best and why

10
PRODUCTIVE THINKING & DECISIONS
Productive Thinking Model (Hurson) Decision Making Methods
Consensus
Faster Decision Making ▪ Everyone agrees
▪ Challenges traditional models
Majority
Speed thinking tools
▪ Half or more agree
▪ Head & Heart
▪ Nine Perspectives Authoritative
▪ Usual and Radical Alternatives ▪ One person makes the decision
▪ Evaluate on passion only
 Promote
the
LATERAL THINKING (EDWARD DE BONO)
unobvious

Avoid
Hindsight Goal: traditional
step-by-
step logic
To change
concepts and
perception
Shift away
Accept all from
results predictable
thinking

12
Each 'Thinking Hat' is a different style of thinking

▪ Move away from habits

▪ Well rounded ideas

▪ Minimize confrontations

▪ Aids cohesion
14
PROBLEM SOLVING TECHNIQUES

Brainstorming
Root cause analysis
Divide and conquer
Trial and error
BRAINSTORMING

Focus on All ideas

Unusual Duplicate
Quantity ideas ideas

Withhold Avoid Avoid Avoid

Criticism analyzing critiquing justifying
BRAINSTORMING STEPS…

Step 4: Group and

Step 2: Present
• Meeting location • Encourage all ideas Identify Ideas • Possible solutions
• Background • Engage all participants • Simple prioritization
information • Share the problem • Tools, affinity diagram
• Discourage criticism • Pros and Cons
• Participants & Roles • Identify criteria • Expert judgment
• Agree
• Visibility • Reinforce best practices

Step 3: Guide Step 5: Evaluate and

Step 1: Prepare
Discussion Select Alternatives

17
COMMON BRAINSTORMING PITFALLS
PITFALL 1

• Disorganized conversations that don’t generate usable ideas

PITFALL 2

• Idea-trashing from nay-sayer

PITFALL 3

• Domination by the same loud voices and not enough from anyone else

PITFALL 4

• Same old ideas and worn out brainstormers

18
TRIAL AND ERROR
• Solution oriented
Key Features • Problem specific
• General knowledge required

• Small simple problems

Most Useful • Cause-and-effect known

• Tedious
Challenges • Time-consuming
• Prone to error
 DIVIDE AND CONQUER

Challenging
Problem

Decompose

Leverage
Multiple
multiple
Streams
techniques
ROOT CAUSE ANALYSIS
Detailed technique for
Focus beyond reaction and
identifying the underlying
symptom descriptions
cause of variation

Identify Primary
Cause

Focuses on systems and Shifts causes away from

processes individuals or groups
ROOT CAUSE ANALYSIS (CONTINUED)

When to conduct Root Cause Analysis?

Significant or Repetitive Performance Corrective

Repetitive
consequential equipment below desired action
human errors
events failures standard required
DETERMINING THE
ROOT CAUSE
USEFUL TOOLS FOR DETERMINING ROOT CAUSE

The “5 Whys” Tree Diagrams Brainstorming

Pareto Analysis
Flow Charts / Process Mapping
(80/20)

Tool complexity varies

TREE DIAGRAM
Result Cause/Result Cause/Result Cause

Result Primary Secondary Tertiary

Causes Causes Causes
SUMMARY
• Making good decisions
• Planning problem solving
• Productive and fast thinking
approaches
• Problem solving techniques
• *Remember to complete the self study
work
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 4: RISK IDENTIFICATION
PROFESSOR LISA POLLARD
LEARNING OUTCOMES: PART 1
Upon completion of this module, you will be able to:

2.1 Discuss the importance of effective risk identification.

2.2 Discuss the application of the Risk Breakdown Structure
2.3 Discuss the concept of Life-cycle risk identification.
2.4 Discuss Checklist Analysis and Assumptions Analysis.
2.5 Discuss the use of Brainstorming, Interviewing, Root Cause Analysis and
SWOT Analysis to identify risks.
1.6 Discuss how the risk management plan relates to stakeholder buy-in and
the level of support needed for effective risk management
ADDITIONAL OUTCOMES: PART 2
In support of risk analysis:

▪ Risk identification outputs

▪ Differentiating between event, cause, and effect
▪ Introduction to creating a risk statement
IDENTIFY RISKS

“…identifying individual
project risks as well as
source of overall project risk
and documenting their
characteristics.”

PMBOK ® (6th), page 409

4
 Minimize
Threats WHY IDENTIFY RISKS

Document & Maximize

Communicate Opportunities

Make “There is no shame in not

Plan knowing the shame lies in
Decisions
not finding out.”

Calculate Prioritize
"Assyrian Proverb Quotes." Quotes.net. STANDS4
LLC, 2018. Web. 16 May 2018.
<https://www.quotes.net/quote/16582

5
 6

LOOKING FOR RISKS

• Subsidiary Plans
Project • Requirements Management Plan, Schedule
Management Plan Management Plan, Cost Management Plan, Quality
Management Plan, Resource Management Plan, Risk
Management Plan, Scope Baseline, Cost Baseline

• Assumptions, Cost & Duration Estimates, Issue Log ,

Project Documents
Stakeholder register, Scope Statement, etc.
Procurement
• Contracts, material sourcing agreements, etc.
Documents

Enterprise • Internal or external

environmental • Organizational changes, change management process,
factors pending strikes, exchange rates, etc.
Organizational
• Lessons learned databases
process assets
 HOW TO: TOOLS
Data Analysis
Expert Judgement
• Communication
AND TECHNIQUES
• Root cause analysis • Interpersonal
• Assumption and • Meetings
constraints analysis • Prompt Lists
• SWOT • Stakeholders
• Document Analysis • Sponsor
• RBS/WBS

Data Gathering
• Brainstorming
• Checklists
• Interviews
• Risk profiles

7
SUBJECTIVE VS. OBJECTIVE TOOLS
OBJECTIVE:
▪ “not influenced by
personal feelings or
opinions in considering and
representing facts.”
SUBJECTIVE:
▪ “based on or influenced by
personal feelings, tastes, or
opinions.”

8
OTHER CONSIDERATIONS

▪ Time for Risk ID

▪ What about opportunities
▪ How many risks
▪ Limits of checklist and forms

Conestoga College MGMT1170 - W 2012 9

END RESULT

Techniques
• Many • Risk
benefits • Approaches Register

Identify Risks Output

RISK CATEGORIES
▪ Within risk management plan
▪ Group potential causes
▪ Risk Breakdown Structure (RBS)
RISK BREAKDOWN
STRUCTURE

PMBOK® Guide Sixth Edition

12
 RBS ALTERNATIVE

Project Name
Categories
Sub-Categories

Or
Project Name
Primary
Secondary

Source: https://online.visual-paradigm.com/knowledge/breakdown-structure/what-is-risk-breakdown-structure/
CHECKLIST ANALYSIS
Risk Category Detail Y/N
Business Suppliers Is there an existing contract with the supplier
Business Suppliers Is the supplier set up in the procurement
system
Business Suppliers Do the payment terms for this supplier align
with the project budget
Business Suppliers Does the shipping timeframe support the
project schedule
Business Suppliers Does the supplier carry all the necessary
components

14
 Category Issue Name Problem/Success Impact Recommendation
Procurement Contract The PM was not fully All requirements were not included in PM must be fully engaged in all
Management Requirements engaged in the contract the initial contract award. A contract contract processes. This must be
process. modification was required which added communicated to both PM and
a week to the project. contract personnel.

Human Resources Award Plan There was no plan for Toward the end of the project morale The PM should institute and
LESSONS LEARNED

Management providing awards and was low among the project team. There communicate an
recognition to team was increased conflict and team awards/recognition program for
members. members were asking to leave the every project.
project.

Scope Scope Creep Stakeholders continuously The PM did not have a plan for The PM must have an approval
Management tried adding to the project addressing scope creep and allowed process for any proposed scope
scope throughout the some requirements to be added until changes and communicate this
project lifecycle. the sponsor stopped it. Overall project process to all stakeholders.
delay of 3 weeks was the result.
Quality Building Material A process for determining This allowed the project team to work Always plan quality standards and
Management acceptable building with the contractors to smoothly ensure allowances into the project plan.
material quality was all materials were of acceptable quality This helps avoid delays and cost
planned into the project. and avoided any re-work and delays overruns.
associated with substandard material.
Risk Management Zoning Approval A risk was identified that Impact was minimal because the PM Always consider external impacts
there may be delays in included potential zoning delays into the on the project cost and schedule.
receiving approval from project schedule. This must be continuous
the county zoning board. throughout the project lifecycle.
This was a success because
it was identified early and
planned for.
Source: https://www.projectmanagementdocs.com/template/project-closure/lessons-learned/#ixzz6OPzepinT
 PROJECT ASSUMPTIONS

▪Business Case
▪Project Charter
▪Scope Statement

This Photo by Unknown Author is licensed under CC BY

 ASSUMPTION
ANALYSIS
One method of approaching
assumptions

https://papyr.com/hypertextbooks/comp2/assume.htm
ASSUMPTION ANALYSIS
Forward Thinking
▪ Deductive reasoning or bottom-up
▪ Continue to address assumptions until
only the outcome remains
Forward Backward Thinking
Thinking Backward
Thinking ▪ Inductive reasoning or top-down
▪ Assess information until a conclusion is
reached
 FLOWCHART
Read Get
Recipe Ingredients
Mix ▪ Systems
▪ Process
▪ What is implied
Chocolate
Risk Add Chips
Chips?
▪ What is explicit
▪ Where does the risk lay
Form
Cookies

Eat Cool Bake

Sample Flow Chart

19
 STAKEHOLDER ENGAGEMENT

This Photo by Unknown Author is licensed under CC BY https://www.pmi.org/learning/library/stakeholder-management-strategies-

applying-risk-management-7479
SUMMARY
▪ Why risk are identified
▪ Where to look & how to identify
▪ Subjective & Objective
▪ Risk Breakdown Structure
▪ Tools & Techniques
▪ Stakeholder engagement
UP NEXT
Part 2
▪ Risk Statements
▪ Risk outputs
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 4: RISK IDENTIFICATION
PROFESSOR LISA POLLARD
ADDITIONAL OUTCOMES: PART 2
In support of risk analysis:

▪ Differentiating between event, cause, and effect

▪ Introduction to creating a risk statement
▪ Risk identification outputs
 RISKS

“Uncertainty that matters”

….David Hillson

This Photo by Unknown Author is licensed under CC BY-NC

3
 Risk Statement
Clear, concise, well Plain simple Specific to each Threats and
defined language risk opportunities
• Supports decision • All levels across the • Multiple risks, • Opportunities are
making organization multiple risk important too
• Supports, planning, • Utilize an appendix statements
reporting, audit, etc. when warranted • Risk categorization
• Raises awareness
• Supports risk
response
development

https://www.canada.ca/en/treasury-board-secretariat/corporate/risk-management/guide-risk-statements.html
 5

ANATOMY OF A RISK STATEMENT

Cause Event Effect

OR

Event Cause Effect

RISK STATEMENTS (EVENT, CAUSE, IMPACT)
THREATS
If (event) occurs due to (cause), the
consequences could result in (negative
impact).
Example: Significant delays in retrieving
records due to current tools for data
storage and retrieval practices may leave
the department unable to adequately
respond to Access to Information
requests and e–discovery exercises.
OPPORTUNITIES
If (event) occurs due to (driver), the
consequences could result in (positive
impact).
Example: The organization may be able
to leverage regional office capacity
through the new regional structure to
increase the organization’s operational
ability to respond to emergencies and
support national leadership in
emergency management training.
THERE IS A RISK THAT:

▪ The export license may not be granted …. effect

▪ Ground conditions may not be suitable for …. effect
▪ There may not be the physical space for the
required equipment ... effect
 8

COMMON PITFALLS
Focusing on the objective rather than the events

Example:
▪ There is a risk the schedule / budget may not be met

Consider:
If the brick layers go on strike it is likely home
construction will be affected, delaying the customer
move in date
 9

IDENTIFY RISKS OUTPUTS

Primary Output - Risk Register
▪ List of identified risks (Cause, Event, Impact)
▪ Categories
▪ Probability & Impact
▪ Timeframes
▪ Triggers/Transition Indicators
▪ List of potential responses
SUBSET OF RISK REGISTER*
No. Risk Definite Uncertain Effect (Impact) on
Category Cause Event Objective
1

* Risk Identification Statement elements only. It does not include * Does not include Risk Response, Triggers, Probability,
Impact assessment

10
SUMMARY
▪ Benefits of concise risk statements
▪ Cause, event, effect
▪ Introduction to the Risk Register
 1

Agenda
• Objectives
• Risk Management Plan revisited
• Risk Control Process

• Risk variance and trend analysis (Part 3)

• Risk Reserve analysis
• Communication and consultation
 2

Objectives for unit 9

6. Monitoring and Controlling Risks
6.2 Discuss the use of monitoring techniques
including:

6.2.1 Earned value (EV)

6.2.2 Program metrics

6.2.3 Schedule performance monitoring

6.2.4 Technical performance measurement

 3

Variance and Trend Analysis

• Program Metrics
• These are measures of performance or progress
• Typically delivered a regular frequency (EG: weekly status)
• Monitor corrective actions.

• Metrics may include

• Financial data
• Schedule data
• Scope/performance data
• Quality data
• Resource data
 4

Variance and Trend Analysis

• Consider financial or schedule data
• Earned Value or EV
• It measures cost and schedule performance
• It compares actual costs /schedule to baselined costs / schedule
• The data allows the project team to see trends
• Relationship to Risk?
• May be used as a trigger in the risk register
• EV metrics are one method to establish whether the risk
responses effective
 5

Earned Value Indicators

ETC EAC

TCPI TCPI
Get back on Budget Meet Budget
 6

Earned Value Indicators

CPI > Under Budget

1
SPI > Ahead of Schedule
1
Baseline Budget and Schedule

Over Budget
CPI <
Behind Schedule 1
SPI <
 7

Variance and Trend Analysis

Harold Kerzner. (2017), p. 518. Project Management : A Systems Approach to Planning, Scheduling, and Controlling (12th Edition)
[2.5.6292.0] Retrieved from http://texidium.com
 8

Variance and Trend Analysis

Earned Value Chart
35

30

25
$000 dollars

20

15

10

0
1 2 3 4 5 6 7 8 9 10
Week

PV EV AC
 9

Monitor Risks Tools and Techniques

1. Data Analysis (PMBOK® Guide section 11.7.2.1)
• Technical performance analysis
• Reserve analysis
2. Risk audits (PMBOK® Guide section 11.7.2.2)
3. Meetings (PMBOK® Guide section 11.7.2.3)
 1

Agenda
• Objectives
• Risk Management Plan revisited
• Risk Control Process
• Risk variance and trend analysis
• Risk Reserve analysis

• Communication and consultation (Part 5)

 2

Communication & Consultation

• Routine part of end to end project activities
• Helps to establish risk context
• Ensure stakeholders interests are understood
• Get input from various perspectives to help ensure comprehensive
identification
• Consensus on best response
 3

Communication & Consultation

• Meetings

• How would you structure meetings

• When, where and who would be invited
• What would your communication look like
• What may happen if risk is not part of the regular and routine
communication?
 4

Meetings
 5

Case Study
• Read Case Study 1: Consultative Problem Solving on page 59
of the custom text
• As you read think about these questions

1. What made the meeting between Nancy and Chris such

success.
2. Do you agree or disagree with Alex and his perspective
on consultation and effective problem solving. Think of
at least 3 points.
 6

Complete the Quiz

Read the Ten Golden Rules of Project
Management (Jutt, N.D.) on page 37 of your
custom course text

Complete the 10 Golden Rules matching

practice quiz.

Benefits to you? Reinforcing important risk

concepts
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 1: INTRODUCTION

MGMT 8370 – WEEK 1

PRESENTED BY PROFESSOR SHAILA ARANHA RN MSCN PMP
AGENDA
▪ Welcome
▪ Course Administration
▪ Course Overview
COURSE LEARNING MATERIAL
Primary
▪ Project Management, The Managerial Process 8E, Larson and Gray
▪ Via McGraw Hill

▪ Custom Text Book: Project Risk and Issues Management

▪ eText via Texidium

Supplemental
▪ Guide to the Project Management Body of Knowledge (PMBOK® Guide Sixth Edition)
▪ Online version available at the Conestoga Library

▪ Articles and documents

▪ Audio and video material
REMOTE DELIVERY

STUDENTS
▪ Complete the assigned readings before
workshops
▪ View and listen to all the material
provided each week
▪ Join virtual workshop sessions for
support
▪ Complete assignments as instructed
and submit by due dates
▪ Complete practice exercises
PROFESSOR
▪ Provide course material weekly via
eConestoga
▪ Provide a virtual platform for open
communication via Teams
▪ Provide a weekly virtual workshop
COURSE TOOLS
▪ eConestoga ▪ Microsoft Teams or Zoom ▪ Texidium
▪ Content ▪ Weekly Workshops ▪ Access to custom text
▪ Assignment Folders ▪ Class chat
▪ McGraw Hill
▪ Group workplace
▪ Access to Text
EVALUATIONS

▪ Online Quizzes (10%)

▪ Individual Assignments (40%)
▪ Case Study (10%)
▪ Final Individual and Cumulative Assessment (40%)
*Refer to the Instructional Plan for due dates
ASSIGNMENT POLICIES

▪ Assignments are expected to be completed by the due date

▪ Late assignments will received a 10% penalty for each day late
▪ After 3 days the assignment will not be accepted

▪ Online Quizzes
▪ Open at least 8 days in advance and close on Sundays at 11:59 PM
▪ Extensions will not be granted unless documented arrangements made in advance

▪ Final Cumulative Assessments

▪ Students are expected to complete the final assessments within the window allocated by the
program. Exceptions will follow Conestoga’s examination policy.

▪ Instruction Plan
▪ Refer to the instructional plan for due dates
 WHAT IS A WORKSHOP?

Workshops will be conducted in Zoom Weekly during your regularly scheduled class
Section 6 is Wed. 7 to 8:30 am
Section 8 is Thurs. 5 to 6.30 pm
Students attend their specific course time for MGMT 8370.
INTRODUCTION
Successful completion of this course will enable you to:
1. Explain the importance of project risk management and the benefits of planning.
2. Identify risks, and develop clear, concise and well defined risk statements.
3. Develop effective risk response strategies and plans utilizing sound decision making
strategies.
4. Analyze project risks using qualitative and quantitative methods in order to perform
individual and overall risk prioritization.
5. Create contingency plans for the identified risks, and analyze the impact of residual
and secondary risks.
6. Explain processes and apply techniques to effectively manage project risks and issues.
7. Apply critical thinking skills and decision making strategies for effective risk and issue
management.
8. Identify issues and have the ability to differentiate between risks and issues.
MORE THAN RISK MANAGEMENT…

Risk Management
Decision
Problems & Issues
Making

Tools &
Processes Context
Technique
COURSE OVERVIEW
• Course administration
Introduction • Introduction to risk management

• Problem solving techniques

Problem Solving & Issues • Introduction to issues

Risk Identification • Risk identification

• Qualitative & Quantitative analysis

Risk Analysis • Risk Management Plan

• Good decision making strategies

Decision Making Strategies & Tools • Decision making tools

• Risk response strategies

Risk Response • Developing responses to risk analysis and contingencies

Monitoring & Controlling Risks & • Monitoring and controlling risks

Issues • Monitoring and controlling issues
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 1: INTRODUCTION TO RISK MANAGEMENT

MGMT 8370 – WEEK 1 -B

PRESENTED BY PROFESSOR SHAILA ARANHA RN MSCN PMP
AGENDA
▪ What is Risk & Risk Management
▪ Risk Context
GET THE BALL ROLLING
▪ Think about your day or perhaps the last week.
▪ What didn’t go as expected?
▪ Why do you think that happened?
▪ How did you respond?
▪ What will you do differently next time?

3
WHAT IS RISK?
▪ Definition of RISK… Merriam-Webster online
(noun)
1 : possibility of loss or injury : PERIL
2 : someone or something that creates or suggests a hazard
3 : the chance of loss or the perils to the subject matter of an insurance contract; also : the degree of
probability of such loss
4 : the chance that an investment (as a stock or commodity) will lose value

(transitive verb)
1: to expose to hazard or danger <risked her life>
2: to incur the risk or danger of <risked breaking his neck>

(medical definition of RISK)

1 : possibility of loss, injury, disease, or death<hypertension increases the risk of stroke>
2 : a person considered in terms of the possible bad effects of a particular course of treatment <a
poor surgical risk>

4
Opportunity
Threat
WHAT IS RISK?
“Project Risk is an uncertain event or condition that, if it occurs, has
a positive or negative effect on one or more project objectives.
PMI Lexicon of Project Management Terms (Version 3.2)

▪ Project objectives may include scope, schedule, cost, and quality

*Risk events impact objectives and

deliverables. Objectives do not cause
risk.

5
WHERE IS RISK?
“Risk exists at two levels within every project…
▪ Individual project risk
is an uncertain event or condition that, if it occurs, has a positive or negative
effect on one or more project objectives.
▪ Overall project risk
is the effect of uncertainty on the project as a whole…”
▪ Internal and External
may be caused by or impact the project
may be caused by or impact the organization

PMBOK® Guide (6th edition) page 397

6
WHERE IS RISK End
to
End

7
WHAT IS PROJECT RISK MANAGEMENT?

“Includes the processes concerned with

conducting risk management planning,
identification, analysis, responses, and
monitoring and control on a project.”

PMBOK ® guide, page 309

8
WHAT IS RISK?
Two main components:
▪ Probability
High Probability High Probability
▪ Impact Low Impact High Impact

Low Probability Low Probability

Low Impact High Impact
BENEFITS RISK MANAGEMENT
Project Understanding risk helps set realistic goals and
Objectives expectations
Contain failures, minimizing impacts OR
Control
enhance opportunities

Prioritize
Focus attention where it is needed most

Monitor
Avoid surprises, be proactive, communicate
Crisis management is exhausting and
Manage
demoralizing to the team
RISK TERMS & CONCEPTS

Context Reward Uncertainty

Profiles Tolerance

Conceptualizing Risk
RISK AND UNCERTAINTY
Risk = ƒ(probability, impacts)

…a notion of “uncertainty” in achieving a project goal

…what will happen in the future?

This Photo by Unknown Author is licensed under CC BY-NC-ND

This Photo by Unknown Author is licensed under CC BY-SA

 RISK CONTEXT
Industry &
Organization

Business Planning
& Project Selection

Attitude Organizational
Culture

13
RISK ATTITUDE
the degree of uncertainty an entity is willing to take on in
Appetite anticipation of a reward

the degree, amount, or volume of risk that an organization or

Tolerance individual will withstand

refers to measures along the level of uncertainty or the level of

impact at which a stakeholder may have a specific interest. Below
Threshold that risk threshold, the organization will accept the risk. Above that
risk threshold, the organization will not tolerate the risk
PMBOK ® Guide page 311
14
 ANOTHER VIEW OF RISK ATTITUDE
Level of Uncertainty & Potential Reward

Risk Tolerance

Risk Appetite
LOW HIGH
RISK RISK
Risk Threshold

Adapted from: Marks, N. (May 3, 2011) “Do you know the difference between Risk Tolerance and Risk Appetite?” Retrieved From
http://www.cmswire.com/cms/featured-articles/do-you-know-the-difference-between-risk-tolerance-and-risk-appetite-011069.php

15
RISK TOLERANCE
▪ One size does NOT fit all

▪ Which are you?

▪ Risk averter (or avoider)
▪ Risk neutral
▪ Risk seeker

▪ What other factors might affect your risk tolerance?

16
RISK PROFILES
Value/Utility
Averter
▪ Averter
▪ Risk neutral
Neutral
▪ Risk accommodator
Seeker
▪ Risk seeker / lover
▪ Risk averse
▪ Risk intolerant
Profit/Stakes

17
RISK & REWARD (BENEFIT)
High

Poor Quadrant I Quadrant II Risky

Investment Investment

High Risk High Risk

Low Benefit High Benefit
Risk

Quadrant III Quadrant IV Good

Status Investment
Quo
Low Risk Low Risk
Low Benefit High Benefit

Low High
Reward
18
 PRACTICAL APPROACH

“ALARP”
Cost Risk
As low as responsibly
possible

19
SUMMARY
▪ Introduced to learning outcomes
▪ Risk concepts
▪ Risk terms
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 5: QUALITATIVE ANALYSIS
PART 2
ASSESSING RISK SCORE

▪ Review Heat Maps

▪ Multiple Impact Analysis
▪ Nominal Group Technique
▪ Detection Difficulty (FMEA)
▪ Cost, Schedule, Technical Evaluation
ADDITIONAL ELEMENTS
▪ Probability of Impact

Risk
Impact Rank
Event

Probability Probability of Pe x Pi x I = Rank

of event Impact
(>0 to <100%) (0 to 100%)
Look at causes

3
ADDITIONAL ELEMENTS

▪ Risk urgency assessment

▪ is near-term response required → more urgent to address?
▪ probability of detecting the risk & warning signs
▪ time to initiate a risk response
▪ risk rating

4
MORE ANALYSIS
▪ Multiple Impact assessments
▪ Rank = Probability x (cost + time + scope + quality)

5
HEAT MAPS

https://www.qualtrax.com/risk-based-thinking-protecting-your-organization-and-ensuring-compliance-with-iso-iec-170252017/risk-heat-map/
HEAT MAP WITH RATINGS
RISK OPPORTUNITIES

Figure 11-10 Probability and Impact Matrix, PMBOK® Guide, Sixth Edition,
(Newtown Square Pennsylvania, Project Management Institute Inc.)
8
FMEA: FAILURE MODE EFFECT ANALYSIS
For risk used to determine difficulty
Primarily analysis tool
▪ "Failure modes"
▪ "Effects analysis"
Examples of Use (not a complete listing)
▪ When a process, product, or service is being designed or redesigned
▪ When improvement goals are planned for an existing process, product, or service
▪ When analyzing failures of an existing process, product, or service
▪ Periodically throughout the life of the process, product, or service
Source: www.asq.org
COST – SCHEDULE – TECHNICAL EVALUATION

This Photo by Unknown Author is licensed under CC BY-SA

ALTERNATIVES TO A MATRIX
Nominal Group Technique
1. Introduction – what is the purpose/problem
2. Individual brainstorming
3. Sharing
4. Discussion - Combine ideas/ Eliminate Duplicates/ New ideas
5. Rank (top 3 to 5)
▪ Highest get more points and lowest gets least.

11
BUILDING THE RISK REGISTER
ID Risk Category Impact Probability Priority
1 If the brick layers go on strike it is External –
likely home construction will be Subcontractor's
affected, delaying the customer move & Suppliers
in date

Please review the video included in the Week 5 Additional Information Module
SUMMARY
▪ Using heat maps
▪ Tools to analyzing impact and priority
▪ Considerations for determining impact and priority
▪ How to update your risk register
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 5: QUALITATIVE ANALYSIS
PROFESSOR LISA POLLARD
LEARNING OUTCOMES
Upon completion of this module, you will be able to:

Qualitative Risk Analysis

3.1 Discuss the importance of effective risk analysis.
3.2 Perform cost, schedule, and technical evaluations to
understand potential risks.
3.3 Use qualitative methods to effectively analyze project risks.
WHERE TO BEGIN?
Part 1: Probability & Impact Analysis
▪ Probability and impact scales
▪ Heat Maps and Probability/Impact Matrix
Part 2: Assessing Risk Scores
▪ Detection Difficulty (FMEA)
▪ Cost / Schedule / Technical Evaluation
WHERE TO BEGIN?
Probability & Impact Analysis
▪ Probability and impact scales
▪ Heat Maps and Probability/Impact Matrix

Assessing Risk Scores

▪ Detection Difficulty (FMEA)
▪ Probability of impact
▪ Multiple Impact Analysis – different objectives
▪ Problems with Multi dimensions
▪ NGT
▪ Timeframe analysis
▪ Duration analysis

▪ Cost / Schedule / Technical Evaluation

QUALITATIVE RISK
ANALYSIS

“…the process of prioritizing

individual project risks for
further analysis or action by
assessing their probability
of occurrence and impact as
well as other
characteristics.”

PMBOK® Guide 6th edition page 419

PROJECT RISK MANAGEMENT PROCESS
Plan Risk Management

Risk Analysis

Perform Qualitative
Risk Analysis
Identify Risks Plan Risk Response
Perform Quantitative
Risk Analysis

Monitor and Control

Implement Risk
Response

Monitor Risks

Risk processes according the PMBOK® Guide 6th Edition

6
PROJECT RISK

High Probability High Probability

Low Impact High Impact
Project Risk is an uncertain event
or condition that, if it occurs, has
a positive or negative effect on
one or more project objectives
Low Probability Low Probability
such as scope, schedule, cost, and Low Impact High Impact
quality.”
PERFORMING QUALITATIVE RISK ANALYSIS
▪ Risk Analysis?
▪ Developing a clear understanding of the risk
▪ Probability (likelihood)
▪ Impact (consequence)
▪ Risk attributes

8
PERFORM QUALITATIVE RISK ANALYSIS

Defined Probability and Impact

Relative Cost
Rapid Foundational
Comparison Effective

9
IMPACT SCALE

10
 PROBABILITY

Must be great than 0

Must be less than 100
100% = Issue/Problem

This Photo by Unknown Author is licensed under CC BY-SA

 PROBABILITY

Complex
• Mathematical equations
• Tools such as Monte Carlo analysis

This Photo by Unknown Author is licensed under CC BY-NC

Simplified
• Expert judgement
• Intuition “gut-feeling”

This Photo by Unknown Author is licensed under CC BY-SA

This Photo by Unknown Author is licensed under CC BY-SA

PROBABILITY

▪ Be thorough
▪ Be retrospective
▪ Understand and recognize bias
▪ Err on the side of caution

▪ Confuse plausibility with

probability
▪ Consider this the last pass
This Photo by Unknown Author is licensed under CC BY-ND
IMPACT WITH PROBABILITY

15
 PRIORITY

Impact
X
Probability

This Photo by Unknown Author is licensed under CC BY-NC-ND

HEAT MAPS

https://www.qualtrax.com/risk-based-thinking-protecting-your-organization-and-ensuring-compliance-with-iso-iec-170252017/risk-heat-map/
SUMMARY
▪ Analyzing impact
▪ Analyzing probability
▪ Introduction to priority and severity
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 5: QUALITATIVE ANALYSIS
PROFESSOR LISA POLLARD
LEARNING OUTCOMES
Upon completion of this module, you will be able to:
Quantitative Risk Analysis
3.4 Use Quantitative methods to effectively analyze project
risks:
3.4.1 Decision Trees (Covered Late in the Course)
3.4.2 Expected Value
3.5 Discuss the use of probability distribution and the Monte Carlo
process.
WHERE TO BEGIN?
Part 1: Expected Monetary Value (EMV)
▪ PMBOK® Guide ITTO’s
▪ EMV Cost
▪ EMV Duration
▪ Part 2: Statistical Analysis
▪ PERT
▪ Probability Distribution
▪ Monte Carlo Analysis
▪ Sensitivity Analysis
QUANTITATIVE
RISK ANALYSIS

“…the process of numerically

analyzing the combined effect of
identified project risks and other
sources of uncertainty on overall
project objectives. The key
benefit is that it quantifies overall
project risk exposure, and it can
also provide additional
quantitative risk information to
support risk response planning”

PMBOK® Guide 6th edition page 428

PROJECT RISK MANAGEMENT PROCESS
Plan Risk Management

Risk Analysis

Perform Qualitative
Risk Analysis
Identify Risks Plan Risk Response
Perform Quantitative
Risk Analysis

Monitor and Control

Implement Risk
Response

Monitor Risks

Risk processes according the PMBOK® Guide 6th Edition

5
PERFORM QUANTITATIVE RISK ANALYSIS

▪ Numerical Analysis
▪ How much?
▪ How long?
▪ Which risk?

▪ After Qualitative Analysis

▪ Monetary and time evaluation
▪ Individual Risk Treatment

6
PMBOK® GUIDE ITTO’S

Tools &
• Project Techniques • Risk Register
Management Plan Updates
• Data Gathering
• Baselines • Document
• Data Modelling
• EEF & OPA’s Updates

Inputs Outputs
Statistical Calculation of
Evaluation Risk Exposure EXPECTED
MONETARY VALUE
Individual risk (EMV)
Average “Value”
treatment
Also referred to as “Expected
Value”
Not to be confused by Earned
Value!!
Cost (-)
Profit + EMV = (P1xV1)
Duration P = Probability & V = Value

8
EXPECTED MONETARY VALUE VS RISK SCORE
RISK SCORE = QUALIFICATION
▪ Qualitative
▪ Impact Relative Number
▪ (1 to 3) or (H, M, L)
▪ Individual Risk Treatment
▪ Individual Ranking
▪ Risk Score = Probability x Impact
RISK EXPOSURE = QUANTIFICATION
▪ Quantitative
▪ Impact Related to Dollars and Time
▪ $(1,000) negative or potential loss
▪ $1,000 positive or potential
investment/profit
▪ Months, Days, Hours (M, D, H)
▪ Individual Risk Treatment
▪ EMV = Probability x Value
9
EXPECTED MONETARY VALUE VS RISK SCORE

RISK SCORE = QUALIFICATION RISK EXPOSURE = QUANTIFICATION

▪ Project Context ▪ Project Context

▪ Relative ranking between all ▪ Project Risk Exposure
risks ▪ Cumulative “value”
▪ Project Priorities ▪ Contingencies and Reserves
▪ Project Risk Profile

10
UNDERSTANDING POSITIVE AND NEGATIVE VALUES

RISK THREATS RISK OPPORTUNITIES

EMV Duration EMV COST EMV COST EMV DURATION

• Positive Value • Negative Value • Negative Value • Negative Value
• Increases the • Decreases Profit • Increases Profit • Reduces Schedule
Schedule
CALCULATING EMV COSTS
RISK THREAT RISK OPPORTUNITY

P=70% P=70%
Or Or
0.70 0.70

$(7,000)
Or $7,000
-$7,000
V=$10,000 V=$10,000
CALCULATING EMV DURATION
RISK THREAT RISK OPPORTUNITY

P=70% P=70%
Or Or
0.70 0.70

1W = 5D -1W = -5D
70% x 1W x 5D 70% x 1W x 5D
V=3.5D V=-3.5D

V=1W V=1W
PERSPECTIVE: EMV COST

Budget at Completion (BAC) 100K Project Project Costs (Baseline) 45K

Opportunity = $100,000 + $7,000 ($107K) Opportunity = $45,000 – $7,000 ($38K)

Threat = $100,000 – $7,000 ($93K) Threat = $45,000 + $7,000 ($52K)
*Values for Risk Register Common Initial Perspective

EMV Profit View EMV Budget View

Opportunity BAC Threat Opportunity Baseline Threat
110000 60000
105000 50000
40000
100000
30000
95000
20000
90000 7K -7K 7K
-7K 10000
85000 0
Values Values
PERSPECTIVE: EMV DURATION
Expected Time to Complete (ETC) is October 31st
The total number of days is 100

Opportunity: 100 Days – 5 Days = 95 Days or October 26

Threat: 100 Day + 5 Days = 105 Days or November 5
*Values for Risk Register

Oct
31

-5 Days to +5 Days
BUILDING THE RISK REGISTER
ID Risk Category Impa Probability Priority EMV Cost EMV Duration
ct

1 Project threat. External Med 70% 2 EMVC = V1*P1 EMVD = V1*P1

Decrease profits by -$10,000 x 70% 5 Days x 70%
$10,000
Increase schedule by 5 -$7,000 3.5 Days
days
2 Project opportunity. External Med 70% 2 EMV = V1*P1 EMVD = V1*P1
Increase profit by $10,000 x 70% -5 Days x 70%
$10,000
Decrease schedule by 5 $7,000 -3.5 Days
days

Please review the video included in the Week 6 Additional Information Module
SUMMARY
▪ PMBOK® Review
▪ Concepts of Qualitative Analysis
▪ Future Application of Data
▪ Sample Calculations
MGMT8370 RISK & ISSUE MANAGEMENT
WEEK 10: CONTINGENCY PLANNING
PROFESSOR LISA POLLARD
LEARNING OUTCOMES
Upon completion of this module, you will be able to:
Contingency Planning
5.1 Describe the importance of effective contingency
planning.
5.2 Explain the concept of contingency reserves.
5.3 Develop appropriate contingency plans for:
5.3.1 Technical risks
5.3.2 Schedule risks
5.3.3 Cost risks
A BRIEF REVIEW

▪ What are the four strategies for responding to Negative Risks?

▪ What are the four strategies for responding to opportunities?

▪ What is Residual Risk?

This weeks discussion

▪ What is Secondary Risk?

3
ESCALATE AS A RISK RESPONSE

Escalate is a 5th risk response to remember

Applies to both threats and opportunities

4
 CONTINGENCY
PLANNING

“A document describing
actions that the project
team can take if
predetermined trigger
conditions occur”

PMI Lexicon

This Photo by Unknown Author is licensed under CC BY-SA-NC

STUDY QUESTIONS:

What is the purpose of contingency reserves?

What is the purpose of Management reserves?

What is a contingency plan, a fallback plan, and a workaround?

6
PRACTICE QUIZ
Go To eConestoga → Quizzes

Complete the matching question to assess your understanding of important Risk

Response terms

8370 Contingency and Reserve Practice

7
PROJECT RISK MANAGEMENT PROCESS
Plan Risk Management

Risk Analysis

Perform Qualitative
Risk Analysis
Identify Risks Plan Risk Response
Perform Quantitative
Risk Analysis

Monitor and Control

Implement Risk
Response

Monitor Risks

Risk processes according the PMBOK® Guide 6th Edition

8
WHAT IS A CONTINGENCY PLAN?

It is an agreement
• Trigger - Condition
• Cost
• Source of funds
• Resources
• Schedules
• Impacts
• Owner if different than risk owner

9
WHY HAVE A CONTINGENCY PLAN?

Alternatives Confusion
• Smooth • Poor decisions
transition • Resistance
• Acceptance • Delays
• Planning
10
 FALLBACK PLAN
A fallback plan is developed in
advance of a risk event occurring
and is designed to be used when
the primary risk response proves
not to be effective.

This Photo by Unknown Author is licensed under CC BY-SA-NC

MANAGING COMMON RISKS

Most Common Risks

Technical Schedule Costs

12
TECHNICAL RISK RESPONSE

Technical risk refers the failure of

deliverables to meet requirements.
• Potential Responses
• Develop alternative solutions
• Rapid prototype

13
SCHEDULE RISK RESPONSE
Why do we have schedule risk?
• Critical path
• Numerous dependent activities
• Little buffer or schedule contingency
Responses
• Schedule buffers
• Behind schedule - the options?
• Crash = $$$ and increased Risk
• Fast tracking
• Scope reduction

14
COST RISKS

Many factors can lead to increased cost

• Schedule
• Technical
• Long projects & inflation

Triggers
• EVM
• Monitoring CPI and SPI

15
CONTINGENCY
FUNDS/RESERVE
Time or money allocated in the
schedule or cost baseline for
known risks with active response
strategies.
CONTINGENCY FUNDS

Not • Typically 10-20% of budget

Arbitrary • Sum of individual risk evaluation

Not a • Attributed to work packages

Lump Sum • Removed when risk retired

17
PROJECT FUNDING RESERVES

Project budget Management

reserves

Cost Baseline Control Contingency

Accounts Reserves

Work Package Activity

Cost Estimates Contingency
Reserves This is the span
of the budget
under the
Activity Cost control of the
Estimates project team.

PMBOK ® Guide figure 7-8 page 255

18
PROJECT BUDGETS

Source PMBOK® guide figure 7-9 page 255 19

SUMMARY
▪ Contingency Plans
▪ Contingency Reserves
▪ Common Risks