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Risk Assessment in Project Management: A Practical Tool: April 2010
Risk Assessment in Project Management: A Practical Tool: April 2010
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Abstract: Project success has depended significantly on the ability to predict a particular outcome. Since risks
are the unpredictable part of the project, it is important for project team to be able to control them as much as
possible and make them as predictable as possible. In the case of projects current registered risks have
appeared, as follows: frequent deadline rescheduling and poor financial execution, meaning non-compliance in
time management and administrative / financial management, respectively. The paper has proposed a practical
tool: an application has been developed in order to monitor the project evolution and control the risks in
implementation, so as to mitigate them.
Key-Words: - risk identification, risk assessment, software application tool, project management
Risk management monitoring & implementation the project constraints of cost, schedule, scope, and
of corrective actions, if required quality. Definitions of the levels of probability and
Drafting a risk related documentation to assure impact, and expert interviewing, can help to correct
the traceability biases that are often present in the data used in this
Of course, risk management should be process. The time criticality of risk-related actions
treated in a coherent manner, but taking into account may magnify the importance of a risk.
the costs related to risk treatment processes. In d) Quantitative Risk Analysis - Quantitative Risk
project management, a quite effective and efficient Analysis is performed on risks that have been
procedure to treat and control risk is linked to prioritized by the Qualitative Risk Analysis process
project meetings, dedicated or not to risks, so as to as potentially and substantially impacting the
register and report risk related discussions and project's competing demands. The Quantitative Risk
decisions. Analysis process analyzes the effect of those risk
A good practice to notify is the risk events and assigns a numerical rating to those risks.
management plan, including project risk related It also presents a quantitative approach to making
context and limitations, risk treatment methodology decisions in the presence of uncertainty.
(processes and interfaces), risk management in- e) Risk Response Planning - Risk Response
charge staff nomination, reporting responsibility and Planning includes the identification and assignment
authority, meeting schedule, relation with other of one or more persons (the 'risk response owner') to
project documentation (or registration) and plans, take responsibility for each agreed-to and funded
relevant organizational procedures, if necessary risk risk response. Risk Response Planning addresses the
management subcontracting. risks by their priority, inserting resources and
Project risk management includes ongoing activities into the budget, schedule, and project
processes that require to be updated throughout the management plan, as needed.
project. The objectives of project risk management f) Risk Monitoring and Control - Planned risk
are to increase the probability and impact of positive responses that are included in the project
events, and decrease the probability and impact of management plan are executed during the life cycle
events adverse to the project. of the project, but the project work should be
The project risk management processes continuously monitored for new and changing risks.
include the following [3…5]: Risk Monitoring and Control is the process
a) Risk Management Planning - this process should of identifying, analyzing, and planning for newly
be completed early during project planning, since it arising risks, keeping track of the identified risks
is crucial to successfully performing the other and those on the watch list, reanalyzing existing
processes. risks, monitoring trigger conditions for contingency
b) Risk Identification - Participants in risk plans, monitoring residual risks, and reviewing the
identification activities can include the following: execution of risk responses while evaluating their
project manager, project team members, risk effectiveness. Risk Monitoring and Control can
management team (if assigned), subject matter involve choosing alternative strategies, executing a
experts from outside the project team, customers, contingency or fallback plan, taking corrective
end users, other project managers, stakeholders, and action, and modifying the project management plan.
risk management experts. Risk Identification is an The risk response owner must report periodically to
iterative process because new risks may become the project manager on the effectiveness of the plan,
known as the project progresses through its life any unanticipated effects, and any mid-course
cycle. The project team should be involved in the correction needed to handle the risk appropriately.
process so that they can develop and maintain a
sense of ownership of, and responsibility for, the 3. A case study: software for risk
risks and associated risk response actions. assessment
c) Qualitative Risk Analysis - Qualitative Risk
“The evaluation of a project’ evolution” was an
Analysis includes methods for prioritizing the
application developed starting from the following
identified risks for further action, such as
objective: to monitor the project evolution (through
Quantitative Risk Analysis or Risk Response
a Web application), starting from the basic phases of
Planning. Qualitative Risk Analysis assesses the
a project implementation (initialization, plan,
priority of identified risks using their probability of
execution, monitoring & control and project
occurring, the corresponding impact on project
closing). The main steps for the project completion
objectives if the risks do occur, as well as other
were [4, 5]:
factors such as the time frame and risk tolerance of
It can be seen that the values for the current step are
different that those were planned.
Hence, this aspect will affect the (global) project’ Fig. 5. Parameters values during the 2nd prj phase
risk.
The fourth step estimates the risk for each parameter
as soon as the final value was inserted:
Acknowledgement:
a) Time evolution:
References
[1] SR CEI 62198: 2002 - Project risk management –
Application guide
[2] SR ISO 10006: 2005 – Quality management systems.
Guidelines for quality management in projects, ASRO.
[3] Gerard M. Hill, The Complete Project Management
Office Handbook, Auerbach Publications © 2004,
Fig. 8. Time evolution plot ISBN:0849321735
[4] M. Caramihai – „Project” Course Notes
[5] M. & A. Schniederjans, J. Hamaker – Information
b) Budget evolution:
Technology Investment. Decision – Making Methodology