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Session 18 -2 PMP 4th edition
Heba is following a risk mitigation strategy to respond to the identified risk of resource attrition on a software migration project at a bank. Mitigation strategies aim to reduce the probability and/or impact of adverse risks. Specifically, Heba is providing good increments to team members, which helps retain resources and mitigate the risk of attrition. Quantitative risk analysis uses modeling techniques like decision trees and Monte Carlo simulation to numerically analyze the effects of risks on project objectives. If the team cannot identify a suitable risk response strategy, the default is typically risk acceptance, where the project management plan is not changed to account for that risk.
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Session 18 -2 PMP 4th edition
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- 2. Project Risk Management Knowledge Area Process InitiatingPlanning Executing Monitoring & Contol Closing Risk Plan Risk Management Identify Risk Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan Risk Response Monitor and Control Risks Enter phase/ Start project Exit phase/ End project Initiating Processes Closing Processes Planning Processes Executing Processes Monitoring & Controlling Processes
- 3. Perform Quantitative RiskAnalysis • The process of numerically analyzing the effect of identified risks on overall project objectives. Inputs 1. Risk register 2. Risk management plan 3. Cost management plan 4. Project scope statement 5. Organizational process assets Tools & Techniques 1. Data gathering and representation techniques 2. Quantitative risk analysis and modeling techniques 3. Expert judgment Outputs 1. Risk register updates If not necessary, this process may be skipped.
- 4. Quantitative Risk Analysis •Is a numerical evaluation (more objective) • This process may be skipped. • Purpose of this process – Determine which risk events warrant a response. – Determine overall project risk (risk exposure). – Determine the quantified probability of meeting project objectives. – Determine cost and schedule reserves. – Identify risks requiring the most attention. – Create realistic and achievable cost, schedule, or scope targets.
- 5. • Data Gatheringand Representation Techniques • • Interviewing. quantify the probability and impact of risks on project objectives. For instance, information would be gathered on the optimistic (low), pessimistic (high), and most likely scenarios for some commonly used distributions.
- 6. Probability distributions. Continuous probabilitydistributions, used in modeling and simulation represent the uncertainty in values such as durations of schedule activities and costs of project components.
- 7. Quantitative Risk Analysisand Modeling Techniques Commonly used techniques include both event-oriented and project-oriented analysis Sensitivity Analysis • To determine which risks have the most potential impact to the project • Changing one or more elements/variables and set other elements to its baseline then see the impact. • One typical display of sensitivity analysis is the tornado diagram
- 8. Decision Tree andEMV • EMV used with Decision Tree to choose between many alternative which take into account the future events • Example: (Impact)ty)(ProbabiliEVM Expected monetary value P=0.2 P=0.8 P=0.2 P=0.1 P=0.7 outcome 300.000$ - 40.000$ - 50.000$ - 20.000$ 60.000$ EMV 300.000x0.2 =60.000 -40.000x0.8 =-32.000 -50.000x0.2 =-10.000 -20.000x0.1=-2.000 60.000x0.7 =42.000 =28.000$ =30.000$
- 9. • Modeling andsimulation.(Monte Carlo technique) • A project simulation uses a model that translates the specified detailed uncertainties of the project into their potential impact on project objectives. • Iterative simulations are typically performed using the Monte Carlo technique.
- 10. Risk Register Updates •Update/add additional information to previous output i.e. Risk Register, which include: – Prioritize list of quantified risks – Amount of contingency time and cost reserve needed – Possible realistic and achievable completion dates, project cost, with confidence level – The quantified probability of meeting project objectives – Trends
- 11. Plan Risk Response •The process of developing option and action to enhance opportunities and to reduce threats to project objectives. Inputs 1. Risk register 2. Risk management plan 3. Cost management plan 4. Project scope statement 5. Organizational process assets Tools & Techniques 1. Strategies for negative risks or threats 2. Strategies for positive risks or opportunities 3. Contingent response strategies 4. Expert judgment Outputs 1. Risk register updates 2. Risk-related contract decisions 3. Project management plan updates 4. Project document updates
- 12. Plan Risk Responses •Do something to eliminate threats before they happens • Do something to make sure the opportunities happens • Decrease the probability and/or impact of threats • Increase the probability and/or impact of opportunities • For the remaining (residual) threats that cannot be eliminated: – Do something if the risk happens (contingency plan). – Do something if contingency plan not effective (fallback plan) – The risks result in applying risk response strategy is called (secondary risk) – The risk trigger is events that trigger the contingency response – Workaround is unplanned risks
- 13. Strategies for Threats 1-Avoid – Eliminate the threat entirely – Example: remove dangerous test or person or material from project
- 14. Strategies for Threats •2-Transfer (Deflect, Allocate) – Shift some or all the negative impact of a threat to a third party Example : insurance or outsource the work
- 15. Strategies for Threats •3-Mitigate – Implies a reduction in the probability and/or impact of an adverse risk event to be within acceptable threshold limits • Example : provide training for team members, Wear a helmet head
- 16. Strategies for Threats •4- Accept – Deal with the risks – Project management plan is not changed • Example : Increasing material prices (contingency)
- 17. Strategies for Opportunities •Exploit – Seek to ensure the opportunities definitely happen – Example: allocate experience manpower in critical path to complete project early
- 18. Strategies for Opportunities •Share – Allocate some or all of the ownership of the opportunity to a third party who is best able to capture the opportunity for the project benefit. – Example: buy machine
- 19. Strategies for Opportunities •Enhance – Increase the probability and/or the positive impacts of an opportunity. – Example: negotiation for the equipment earlier to secure lower price
- 20. Strategies for Opportunities •Accept – Not actively pursuing an opportunity – Example: decrease material price
- 21. Monitor & ControlRisk • The process of .. – implementing risk response plans, – tracking identified risks, – monitoring residual risks, – identifying new risks, and – evaluating risk process effectiveness throughout the project. Inputs 1. Risk register 2. Project management plan 3. Work performance information 4. Performance report Tools & Techniques 1. Risk reassessment 2. Risk audits 3. Variance and trend analysis 4. Technical performance measurement 5. Reserve analysis 6. Status meetings Outputs 1. Risk register updates 2. Organizational process assets updates 3. Change requests 4. Project management plan updates 5. Project document updates
- 22. • Risk Reassessment •Monitor and Control Risks often results in identification of new risks, reassessment of current risks , and the closing of risks that are outdated. • Project risk reassessments should be regularly scheduled. .
- 23. • Risk Audits •Risk audits examine and document the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process
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- 25. 1- Heba isa Project Manager for software migration at a bank. A major risk that has been identified is attrition of resources. As a strategy to respond to this risk, Heba, with support from Senior Management, provides good increments to his team members. What type of risk response is heba following? A-Accept B-Avoid C-Transfer D-Mitigate
- 26. 2-Which of theseis not a valid response to positive risks? A-Exploit B-Mitigate C-Enhance D-Share
- 27. 3-After conducting aSWOT Analysis, you have determined that a business deal is worth pursuing. You are required to use Agile development practices. In your company, there is no expertise in Agile development. Hence, you partner with another organization that specializes in Agile development. This is an example of: a) Sharing a Positive Risk b) Mitigating a Negative Risk c) Exploiting a Positive Risk d) Accepting a Negative risk
- 28. 4-During which stageof Risk planning are modeling techniques used to determine overall effects of risks on project objectives for high probability, high impact risks? A-Risk identification B-Risk response planning C-Qualitative risk analysis D-Quantitative risk analysis
- 29. • 5-if theteam cannot identify a suitable response to an identified risk . Which risk response would they apply? A- avoidance B-acceptance 3- mitigation 4-transference
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