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5 Project Risk Management - Part I
5 Project Risk Management - Part I
5 Project Risk Management - Part I
Learning Outcomes
• LO- 3 Illustrate how the project management knowledge areas apply to the project
management process groups
Faculty of Technology
University of Sri Jayewardenepura
Content
• Project Management Framework
• What is a Risk?
• What is a Project Risk?
• Definitions for Project Risks
• Uncertainty
• Risks and Uncertainties
• Project Life Cycle
• Strategic vs. Tactical Risks
• Strategic Risks- Background (External)
• Strategic Risks- Market Conditions
Faculty of Technology
University of Sri Jayewardenepura
What is a Risk?
Political Risk
Project Risk
1. Positive or Negative Impact on project objectives
2. One or more causes
3. One or more impacts
Uncertainty
Uncertainty Explanation
a= Information required to estimate an outcome
b= Information already possessed by the decision maker
U= Uncertainty
U= a-b
If you can improve your knowledge, b then U
Project Manager 1 Project Manager 2 Project Manager 3 [a]
U1 U2 U3
U1>U2>U3
b ????
This Project Manager 3 is having very good control over the other
Faculty of Technology
University of Sri Jayewardenepura
Uncertainty
Results from LACK of information regarding:
• What to do
• How to do
• The conditions under which it will be done OR
• Combination of all three
Faculty of Technology How to invest this money ???
University of Sri Jayewardenepura
Need to carry out the proper
research on your project
Uncertainty
Contributing Factors to Uncertainty:
• Insufficient project initiation effort
• Un-reconciled objectives
• Incomplete or unclear information
• Deficiency in knowledge
• Unstable information
Franchise companies
Very innovative fashion industry all over the world
This company could not adapt to the online market …
Report bankruptcy
Forever 21 is a multinational fast fashion retailer headquartered in Los
Angeles, California, United States. Originally founded as the store
Fashion 21 in Highland Park, Los Angeles in 1984.
Faculty of Technology
University of Sri Jayewardenepura
Uncertainty
Most Effective way to deal with uncertainty is to:
Level of Information
Faculty of Technology
University of Sri Jayewardenepura
Elon Musk With an estimated net worth of around $210 billion as of October 27, 2022,
Musk is the wealthiest person in the world according to both the Bloomberg
Billionaires Index and Forbes' real-time billionaires list.
Faculty of Technology
University of Sri Jayewardenepura
Sending people to outer space ???
Strategic Risks
• Requires management attention at the executive/corporate
level
• Typically ignored or partially addressed by the project team
• Lack of a practical and disciplined approach to managing
strategic risks
• Strategic Risk Management is needed to deal with strategic
risks
Faculty of Technology
University of Sri Jayewardenepura
• Market Conditions
• Location
Sri Lanka is in a strategically attractive location (The USA, China and India are in the interest of Sri Lanka)
• Business partnerships
Faculty of Technology
University of Sri Jayewardenepura
Kodak Camera
Canon PowerShot Smartphone
Faculty of Technology
University of Sri Jayewardenepura
Strategic Risks-
Market Conditions
Faculty of Technology
University of Sri Jayewardenepura
Strategic Risks-
Market Conditions
-Michael Knight-
-Wristwatch-
-Smart Vehicle-
Faculty of Technology The autopilot is the most advanced on the market, and the best 'self-driving’ software is
University of Sri Jayewardenepura in Tesla vehicles. Tesla is so far ahead of the game with autonomous driving that some
companies don't even bother to compete. <Digital screen, pairing with smartphones and
smartwatches>
Strategic Risks-
Market Conditions
Faculty of Technology
University of Sri Jayewardenepura
Strategic Risks-
Market Conditions
SMART Products
Faculty of Technology
University of Sri Jayewardenepura
References
• Project Management Institute. (2017). A guide to the project management body of
knowledge (PMBOK guide). Project Management Institute, Inc., Newtown Square,
Pennsylvania, USA.
• Global Text Project, Andrew R. Barron, Merrie Barron, etc. (2019). Project
Management 101. OpenStax, Rice University, USA.
THANK YOU !