Managing Project

Uncertainty: Risk
and Procurement
Management
Review of Project Risk Management
Project Risk and Procurement Management

Module 1 Agenda
• Introduction
• Overview of Project Risk Management
• Processes:
– Inputs
– Tools and techniques
– Outputs

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Definitions
Uncertainty: The possibility of unexpected events which will impact the
project
 Risk: An uncertain event or condition that, if it occurs, has a positive or
negative effect on a project’s objectives
Risk Event: A discrete occurrence that may affect the project for
better or worse
 Threat: A negative risk event

 Opportunity: A positive risk event

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Project Risk Management Processes

Plan Risk Management

Identify Risks

Perform Qualitative Analysis

Perform Quantitative Analysis

Plan Risk Responses

Implement Risk Response Plans

Monitor Risks

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Project Risk Management Processes

Plan Risk
• The process of defining how to conduct risk management activities.
Management

• The process of determining which risks may affect the project and documenting their
Identify Risks characteristics.

• The process of prioritizing risks for further action by assessing and combining their
Perform
Qualitative Risks probability of occurrence and impact

• The process of numerically analyzing the effect of identified risks on overall project
Perform
Quantitative Risks objectives

• The process of developing options and actions to enhance opportunities and reduce
Plan Risk
Responses threats to project objectives.

Implement Risk
• The process of planning and implementing actions and plans in response to project risks.
Response plans

• The process of tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk
Control Risks process effectiveness.

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Tools and Techniques

Brainstorming

 The Delphi Technique

 Interviewing

Root cause analysis

 SWOT analysis

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Brainstorming

Led by Project Manager and attended by team and

external experts
RBS and other tools used as organizing tool

 Risks can be categorized by type and more clearly defined

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Delphi Technique

 Anonymous method for reaching consensus of experts by eliminating bias and
balancing
their influence on outcome
 Method involves using questionnaire that solicits ideas about important
project risks
 Responses are summarized and re-circulated to the participants for further
comment until consensus is reached
 Uses repeated rounds of questioning and written responses and avoids the
biasing effects possible in oral methods, such as brainstorming

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Interviewing

Interviewing people with similar project experience is an important
tool for identifying potential risks
 Experienced project participants,

 Stakeholders,

 SMEs

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Root Cause Analysis

Examines the root causes of risks and clarifies their definition

 Groups risks by their causes and develops potential responses

based on identified causes

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – SWOT Analysis

Adaptation of the familiar strategic management tool for project
risk management
 Helps identify the broad negative and positive risks that apply to a
project

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks
Examples of project Risks?

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Risk Breakdown Structure

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Dimensions of Risks

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Project Risk and Procurement Management

Identify Risks – Outputs

Risk Register
• List of identified risks
• Root causes of risks
• Potential responses to risks
• New or enhanced risk categories identified during risk
identification process
Risk Triggers
• Risk symptoms that are indirectly related to risk events
• Indications that a risk has occurred or is about to occur
• May be specified as continuous or discrete

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Outputs

Risk Register Contents:
o An identification number for each risk event

o A rank for each risk event

o The name of each risk event

o A description of each risk event

o The category under which each risk event falls

o The root cause of each risk

o Triggers for each risk; triggers are indicators or symptoms of actual risk events

o Potential responses to each risk

o The risk owner or person who will own or take responsibility for each risk

o The probability and impact of each risk occurring

o The status of each risk

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Identify Risks – Outputs

Risk Register Contents:

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Project Risk and Procurement Management

Perform Qualitative Risk Analysis

Used to prioritize risks according to their probability of occurrence
and impact on project objectives (scope, time, cost, quality)
 Assess the likelihood and impact of identified risks to determine
their magnitude and priority
 Prioritized risks lay the foundation for quantitative analysis and
risk response planning
Allows organizations to categorize and create a risk
hierarchy and therefore focus on high-priority risks

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Perform Qualitative Risk Analysis – Risk Value

Probability Impact

Risk
Value
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Project Risk and Procurement Management

Perform Qualitative Risk Analysis

Probability: The likelihood of occurrence
– The ratio of the number of chances that an event may happen, to
the sum of the chances of it both happening and not happening
 Impact: The magnitude of consequences
– The amount at stake; the extent of adverse, or positive
consequences which might affect the project

Risk Score = Probability X Impact

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Perform Qualitative Risk Analysis

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Perform Qualitative Risk Analysis

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Perform Qualitative Risk Analysis

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Plan Risk Responses

After identifying and quantifying risks, you must
decide how to respond to them
• Four main response strategies for negative risks:
 Avoid

 Transfer

 Mitigate

 Accept

Escalate

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Plan Risk Responses

MODULE 0 – Overview of Project Risk Management

Project Risk and Procurement Management

Plan Risk Responses

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Project Risk and Procurement Management

Plan Risk Responses – Positive Risks

Share: Team up with a third party in a joint venture to realize an
opportunity and reap the benefit.
 Enhance: Increase the probability and/or impact by identifying and
maximizing key drivers of the risk to ensure it occurs.
 Exploit: Eliminate uncertainty that may hinder an opportunity to
be realized. Allocate expert project team member to finish early
and collect on an incentive
Accept

Escalate

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Project Risk and Procurement Management

Thank you for your Attention

MODULE 0 – Overview of Project Risk Management