Pmi RMP

1
Introduction
Risk Management Professional

(PMI RMP ) Exam Preparation
(PMI-RMP
Introduction for Risk Management

g
PMI-RMP is a certification and trademark mark of the Project Management Institute, Inc.
May 2011
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RMP-PMI
Introduction
Welcome to PMI-RMP
PMI RMP Exam Preparation
Our Ground rules
Start on time to Finish on time
Mobile Phone Silent Please
Questions after Permition
RATHOLE TO CONCENTRATE
Presents 100 % to get your certificate
May 2011
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RMP-PMI
Introduction
Course Scope
This course does
This
s cou
course
se does not
ot
Identify and define risk

management characteristics
Best practices in risk
management
Identify areas of information
that will be Presented on the
exam
Explain risk management
concepts as identified in The
Standard for risk Management
and PMBOK guide
Organize
g
risk management
g
information as it is identified
by the Project Management
Institute (PMI)
Teach general
or basic project
management
concepts or
tools
Enable you to
pass the (PMIRMP ) exam
without study
and preparation
PMI is a service and trademark of the Project Management Institute, Inc..

May 2011
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RMP-PMI
Introduction
PMI-RMP
PMI
RMP Eligibility Requirements
Source - PMI-RMP Credential Handbook August 2009

May 2011
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RMP-PMI
Introduction
PMI-RMP
PMI
RMP Eligibility Requirements
You can satisfy the project risk management educational requirements by
demonstrating the successful completion of courses, workshops and training
sessions offered by one or more of the following types of education providers:
A.
B.
C.
D
D.
E.
F.
PMI Registered
i
d Education
d
i Providers
id (R.E.P.s)
(
)
PMI Component organizations
Employer/company-sponsored programs
Training companies or consultants
Distance-learning companies, including an end-of-course assessment
University/college academic and continuing education programs
Source - PMI-RMP Credential Handbook August 2009

May 2011
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RMP-PMI
Introduction
Exam Steps , Exam Covers , and Scoring

Step 1: Take Preparation exam
Step 2: Submit your application
Step 3: Take and pass the PMI-RMP exam after your
application has been approved
The exam consists of 170 questions in 3.5 hours based on
the following domains:
Risk Communication
27%
Risk Analysis
30%
Risk Response Planning
26%
Risk Governance
17%
Exam fees $520 for PMI member and $670 for non member
May 2011
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RMP-PMI
Introduction
Please Introduce your self
What is your name

What is your Role in the organization
Why do you attend this course?
What is your expectations ?
May 2011
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RMP-PMI
Introduction
Who am I?
My name is Akram Alnajjar
Certified PMI-RMP Risk Management Professional by PMI / USA
Certified PgMP Program Management Professional by PMI / USA
Certified PMP Project Management Professional by PMI / USA
Certified PSP Planning and Schedule Professional by AACEI (The Association for
The Advance Cost Engineer international) /USA
Postgraduate Diploma for Construction Management from Ain Shams university
BSC , Civil Engineering 1984 Ain Shams University Cairo - Egypt
PM consultant and Shareholder for ITI and owner of PM-Information House
Currently working as lecturer for Arab Academy , ITI, PMI Gulf Chapters and ESI
international
Previously worked as :
Projects Control Manager for Eni Group /AGIP (Italian Oil and Gas
company) Port-Harcourt / Nigeria to July 2005
Senior Project Control Planner for Eni Group/AGIP Assaluyeh / Iran
Planning and Training Manager for Promastar Co. (Primavera Authorized
representative / Egypt and Saudi Arabia ) Responsible for Primavera
professional training
p
g courses and Primavera consultation services.
Planning and Cost Control Manager for Bin-Jarallah Group / Riyadh
Planning and Cost Control Manager for Saudi Lada Group Riyadh
May 2011
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RMP-PMI
Introduction
Course Overview
Risk communication 27%
Risk Response Planning 26%
Develop a risk response strategy

Develop a contingency approach
Present recommendations to key
stakeholders
t k h ld
Apply interpersonal skills

Assess stakeholder risk tolerance
Document risk-related information
Create regular status reports
Risk Analysis 30%
Risk Governance 17%

Document and record lessons learned
Refine risk policies and practices
Create the risk management plan
Establish metrics for risk management
processes
Examine process performance
Monitor risk performance
identify relevant policies and standards
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RMP-PMI
Identify Risk
Evaluate risk attributes using
qualitative and q
q
quantitative risk
analysis
Prioritize risk
Establish control limits
May 2011
10
Introduction
Assessment of Risk
May 2011
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RMP-PMI
11
Introduction
Project
j
Risk
Risk
An uncertain event or condition that,
if it occurs, has a positive or a
negative effect on a projects
objective
Source: PMBOK Guide, p. 438

May 2011
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RMP-PMI
12
Introduction
Elements of Risk
Every risk consists of three elements
A definable
event
Probability of
occurrence
May 2011
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Impact
p
(consequence) of
occurrence
RMP-PMI
13
Introduction
Risk Exposure Is a Function of Its Components

Risk exposure = (probability of occurrence) (impact of occurrence)
PROBA
ABILITYOFO
OCCURREN
NCE
high
Highthreat
or
or
opportunity
Moderate
threat or
threator
opportunity
Lowthreat
or
or
opportunity
low
high
low
IMPACTOFOCCURRENCE
May 2011
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RMP-PMI
14
Introduction
Characteristics of Risk Events

Risk events are
Situational
They have no textbook answer
Team must rely
y on sound use of tools and
methods/techniques
Time-based
Risk is a future phenomenon only
Time affects risk perceptions
Interdependent
One
O risk
i k eventt can affect
ff t others
th
One risk can cause others
Quantity of risks may affect perceptions
May 2011
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RMP-PMI
15
Introduction
Characteristics of Risk Events (continued)

Risk events are
Magnitude dependent
The greater the payoff, the more acceptable the risk
The higher the impact, the more significant the risk
Value based
Personal and cultural values affect company risk
taking
Company
C
values
l
affect
ff t iindividual
di id l choices
h i
Everyone sees risk differently
May 2011
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RMP-PMI
16
Introduction
Project Risk Management

Project Risk management
includes the processes concerned with conducting
risk management planning, identification, analysis,
responses, and monitoring and control on a project
Threat
Opportunity

May 2011
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RMP-PMI
17
Introduction
Responsibilities
in Risk Management
p
g
Project Team
Project Manager
Initiate and lead

e risk
management
process
Provide
direction to the
project team on
the risk
management
process and
tools
May 2011
Project
Manager
Understand and
follow the risk
management
process
E
Execute
t risk
ik
management
strategies
Report status on
the risk
management
process
Project
Team
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RMP-PMI
18
Introduction
Benefits of Risk Management

Risk management benefits Please record on the flip chart
Minimize management by crisis
Encourage proactive management
Minimize surprises
p
and p
problems
Gain competitive advantage
Decrease overall probability of project variances
Increase probability of project success
Increase profitability
Focus on building the right product the first time
Prevent problems from occurring, or if they occur, from
escalating
May 2011
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RMP-PMI
19
Introduction
Types of Risks
Risks can come from internal or external sources and will be either
Business risks
Normal risks of
doing business
that carry the
potential of both
gains and losses
g
May 2011
Pure, or insurable
Pure
Risks that present
potential for loss
p
only
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RMP-PMI
20
Introduction
Uncertainty
Known risks: Risks that were identified by the project team
Unknown risks: Risks that were not identified
Your objective
To increase the
Known/ Known
and decrease the
Unknown/Unknowns
using Risk Management
May 2011
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RMP-PMI
21
Introduction
Critical Success Factors

Critical success factors
A process rooted in group
techniques
A set of analytical tools that
supports these factors
Continuous and ongoing
planning and preparation for
risk management
Communications with team
members and key stakeholders
May 2011
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RMP-PMI
22
Introduction
Risk Management Processes in PMBOK Guide

Plan Risk Management (What, when, how)
Identify Risks
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis
Plan Risk Responses
Monitor and Control Risks
May 2011
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RMP-PMI
23
Introduction
Risk Management Process

Inputs
Requirements
Process
Management
Schedule
Budget
Quality
Assumptions
Constraints
Testing
Expectations
Deployment
Security
Training
Risk Attitudes and
Tolerances
May 2011
Tools & Techniques

Risk Management T&T
www.pmhouse.org
Outputs
Risk management plan

Risk register
Prioritized risks
Risk response plans
Project plan updates
RMP-PMI
24
Introduction
Risk Management and Project Management

Project management focuses on
Planning, organizing, directing, and controlling an organizations
resources to provide a product or service on schedule, within
budget and to the customers
budget,
customer s stated requirements
Risk management focuses on

Identifying, quantifying, responding to, and
controlling the risks in a project
How do they interact?

May 2011
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RMP-PMI
25
Introduction
Exercises 1
Match the list of terms to the correct definitions.
A A description of the scenario that may occur if the risk were to materialize
A.
materialize.
B. Describes how the risk management processes will be carried out.
C. Signs or indications that a risk event is about to occur or has occurred.
D. An uncertain event or condition that, if it occurs, has a positive or negative
effect on a projects objectives.
E. The result and consequences of the probability of the risk occurring.
F. Contains all the identified risks, the results of risk analysis, the proposed
risk responses, and the current status of the risk , among a few other
things.
G. The likelihood that a risk will occur.
H. A hierarchical breakdown of risks organized by risk categories and sub
categories.
I. Something that is occurring now in the present.
May 2011
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D
I
A
C
B
F
H
G
E
RMP-PMI
Risk
Issue
Risk Event
Risk Trigger
Risk Mgt Plan
Risk Register
RBS
Probability
b bili
Impact
26
Introduction
QUESTIONS?
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
27

(PMI-RMP ) Exam Preparation
Plan , Identify & Communicate Risk
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
28
Course Overview
Risk communication

Risk Governance
Risk Analysis

g
processes
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RMP-PMI
Identify Risk
qualitative and quantitative risk
analysis
Prioritize risk
May 2011

stakeholders
Plan , Identify &

Communicate Risk
29
Pl Ri
Plan
Risk
k Management
M
t
Defines the scope and objectives of the Project Risk
Management process, and ensures that the risk process is
fully integrated into wider project management.
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
30
Pl Ri
Plan
Risk
k Management
M
t iinputs
t
Inputs
Project scope statement

Cost Management plan.
Schedule Management plan.
Communication Management plan.
Enterprise Environmental Factor
Organization Process Assets
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RMP-PMI
Plan , Identify &

Communicate Risk
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Planning Meeting & Analysis

Tool & Technique
Purpose
Who attends
To develop the risk management plan

Project manager , selected project team members and
stakeholders , anyone else involved in the risk
management planning activities
Early on within the project
When
All inputs into the plan risk management process
Information
Estimate costs of conducting risk management
Sample agenda
Develop risk schedule activities
The result
Plan risk contingency reserve approach
Identify risk categories to be used
Risk Management Define levels of risk , probability , and impact
Create/modify
C t / dif probability
b bilit and
d iimpactt matrix
ti
Plan
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RMP-PMI
Plan , Identify &

Communicate Risk
32
Ri k M
Risk
Managementt Pl
Planning
i
Outputs
O t t
Risk categories
Probability and Impact
Matrix
Methodology
Definitions of risk
probability and impact
Roles and responsibilities

Risk
Management
Planning outputs
B d ti
Budgeting
Timing
Revised stakeholders
tolerances
Reporting formats
T ki
Tracking
Source: PMBOK Guide, pp. 279-282
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
33
S
Sample
l Risk
Ri k M
Managementt Pl
Plan output
t t
Required Work
Roles
R
l and
d
Responsibilities
Time
Methodology
Budget
Identify Risks
Abdo
3 weeks
Brainstorming
$2000
Perform Qualitative
Risk Analysis
Omar
2 weeks
P & I assessment
$4000
1 week
Monte Carlo
$2500
2 week
Response
strategies
$6000
Perform Quantitative
Risk Analysis
Salma
Plan Response to
Risks
Ali
Monitoring & Control

Risks
Ahmed
May 2011
All Project period
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Audit
RMP-PMI
$18,000
Plan , Identify &

Communicate Risk
34
Risk Management Plan output

Defined Conditions for impact
p
Scales of a Risk on Major
j project
p j
objective
j
Relative or numerical Scales are Shown

Project
objective
Very Low
V
L
/ .05
Low
L
/ .10
Moderate
M
d t
/ .20
Cost
IInsignificant
i ifi
t
Cost increase
<10% costt
increase
10-20%
10
20% costt 20-40%
20 40% costt > 40% costt
increase
increase
increase
Time
Insignificant
Time increase
<5% Time
increase
5-10% Time
increase
May 2011
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High
Hi
h
/ .40
10-20%
Time
increase
RMP-PMI
Very High
V
Hi h
/ .80
20>% Time
increase
Plan , Identify &

Communicate Risk
35
Risk Management
g
Plan output
p
Impact
Probability
Very Low
Low
Moderate
High
Very High
Hi h
High
Moderate
Low
Very Low
May 2011
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RMP-PMI
Very High
Plan , Identify &

Communicate Risk
36
Risk Management
g
Plan output
p
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
37
Communication in the Risk Management

Process
Process
S k h ld must understand:
Stakeholders
d
d
Implications of risks and responses
Status and potential risks
Team members must understand:

Effectiveness of risk responses carried out
Workarounds chosen
Stakeholder perceptions and directions
May 2011
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Should be timely
and regular
Should
communicate
i
tto kkey
issues
stakeholders and
team members
RMP-PMI
Plan , Identify &

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38
E
Exercises
i
2
Match the risk management plan content item with the
d
descriptions
i i
provided:
id d
A. Defines how the risk activities will be recorded for reference during the
project and within lessons learned.
B Amount of funds that are set aside for risks and the contingency
B.
reserve.
C. Uses a scale or rating system.
D. Describes the approach
pp
used to carry
y out risk management.
g
E. Systematically classifies risks.
F. Describes the risk threshold attitudes.
G. Identifies who is responsible for the risk activities.
H. Describes how the results of the risk management processes will be
documented, analyzed, and then shared.
I. Used as a look-up table.
J. When and how often the risk management processes are carried out.
resent.
D
G
B
J
E
C
I
F
H
A
May 2011
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Methodology
Roles &
Responsibilities
Budgeting
Timing
Risk Categories
Definition
Probability &Impact
Probabilityy &
Impact Matrix
Stakeholder Risk
Tolerance
Reporting
Formats
Tracking
RMP-PMI
Plan , Identify &

Communicate Risk
39
GROUP EXERCISE
Prepare Risk
Management Plan for
your p
y
project!
j
Deliverables:
1- Who will do What ,
When , How much it will
cost y
you and How y
you
are going to do it ?
2-Risk categories
3- Prob./Impact Matrix
20 Min
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
40
Id tif Risks
Identify
Ri k
Identifies as many knowable risks as practicable
practicable.
You need to Identify and

document the
CHARACTERISTICS
of project risks.
Practice Standard for Project Risk Management, p. 16

May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
41
Id tif Risks
Identify
Ri k iinputs
t
Inputs
Risk Management Plan

Stakeholder register
Activity cost/duration estimates
Cost/Schedule/Quality mgmt plans
Scope baseline
Project documents
*Source: PMBOK Guide, pp. 284285

May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
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Identify Risks inputs & Tool and

Techniques
Inputs

Cost/Schedule/Quality mgmt
plans
Scope baseline
Project documents
Tool &Techniques
i
Documentation
reviews
Risk identification
techniques
Checklist,
questionnaires,
ti
i
and
d
templates
Assumption analysis
Diagramming
techniques
Affinity diagramming
*Source: PMBOK Guide, pp. 284285

May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
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T l and
Tools
d Techniques
T h i
to
t Identify
Id tif Ri
Risks:
k
Analogy
gy
Checklists, questionnaires,
templates
Affinity Diagram
Prototyping
yp g
Tools
and
Techniques
Expert interviews
Delphi technique
SWOT Analysis
B i t
Brainstorming
i
Documentation Review

May 2011
Nominal g
groupp technique
q
(NGT)
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RMP-PMI
Plan , Identify &

Communicate Risk
44
Analogy Process
Based on the idea that no new project represents a totally new
system
Identify
information
needs
Identify
similar
projects
Collect useful
data
May 2011
Finalize list of risks

and place on Risk
Li i
Listing
Analyze data
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RMP-PMI
Plan , Identify &

Communicate Risk
45
Ch kli t Questionnaires,
Checklists,
Q
ti
i
and
d Templates
T
l t
Again, based on the idea that no new project represents a
Again
completely new set of risks
A list of threats that have occurred on certain types of projects
in the past
Some publicly available risk checklists, questionnaires, and
templates
Software Engineering Institute (SEI) Risk Taxonomy (an
organized list)
Software Program Managers Network (SPMN)
Examine checklists or questionnaires to generate additional
risks for the project
May 2011
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RMP-PMI
Plan , Identify &

Communicate Risk
46
E
Expert
t IInterviews
t
i
Identify
experts and
interviewers
Prepare for the

interview
and target Interested
area
Document and verify

interview
Document on the Risk

Listing
and
follow through
May 2011
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Solicit
jjudgment
g
and
general
information
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D l hi T
Delphi
Technique
h i
Steps
p of the Delphi
p Technique
q
1. Coordinator formulates the problem and
distributes it to experts in the field.
2. Experts send written position papers to

coordinator.
3. Coordinator sends out position papers.
4. Experts reconsider their positions and

submit changes as appropriate.
5 R
5.
Resubmissions
b i i
are reviewed;
i
d repeat steps
4 through 6 as needed.
6. Finalize list of risks and pplace on risk listingg
form or other documentation tool.
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RMP-PMI
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B i t
Brainstorming
i P
Process
Number your ideas
Start with a clear statement of
the problem
Structure Sessions
Use
U ffacilitator
ilit t
One speaker at a time
Volume, not depth
No critiquing or arguing
Post all rules and ideas on
the wall
Helps competitive instincts

for sessions
Helps as a reference for
discussion
Use spatial and physical
memory
Use Post-It Notes, rolls of
paper on walls, other
materials
t i l as needed
d d
Expect momentum to build

Momentum builds slowly at
first, then intensely before
reaching
hi a plateau.
l
At plateau, jump to another
topic to keep creativity high
Anyone can draw as they

please
H
Helps
l fi
fix mindset
i d t tto a
location, improves recall
May 2011
Make it fun!
www.pmhouse.org
Pl
Place
results
lt on the
th risk
i k li
listing
ti
RMP-PMI
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49
N
Nominal
i l Group
G
Technique
T h i
(NGT)
STAGE
2
STAGE
1
Each member of a small group (6 to 12)

writes down what he or she sees as the
major issues to the propositionno
talking!
st person
pe so reads
eads ooff oonee item
te from
o hiss
First
or her list
Item is recorded on a large pad of paper
in front of the group
N t person does
Next
d
the
th same
Continue in order until all lists are
exhausted
Againno talking
Facilitator finalizes and adds to Risk
Register
May 2011
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RMP-PMI
Plan , Identify &

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50
Exercise A-1
A1
Identification Techniques
Techniques
Project XYZ
May 2011
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SWOT Analysis
May 2011
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P t t i
Prototyping
Develop initial
requirements
Design and
build prototype
Test with users
Modify initial
requirements
Finalize
requirements
May 2011
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Analyze
results
RMP-PMI
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53
Affi it Di
Affinity
Diagramming
i
Builds on brainstorming,
brainstorming OR NGT by providing a method of
sorting or classifying data
Is done in silence
Is creative rather than analytical
Sorts a large volume of data quickly
Produces order from chaos
Can lead to breakthrough thinking
Tends to reduce tension
THE AFFINITY DIAGRAMMING PROCESS
All risk events are placed on
small pieces of paper
Team members examine

risk events
Process continues with all

team members operating in
silence
il
Process ends when no further

movements are made by team
members
b
May 2011
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Team members individually and

simultaneously place risk events
into groups on wall
Team decides names for each

grouping
RMP-PMI
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54
S
Sample
l Affinity
Affi it Diagram
Di
What are the issues involved in influencing total quality
training in our community?
DEVELOP AN
EFFECTIVE
MARKETING ARM
Establish a Web site and
bulletin board for
capturing
p
g ideas and
broadcasting successes
Design new marketing
brochures
Redesign organization
logo
Develop and send out a
monthly newsletter
Update mailing
list/expand mailing list
Sponsor quality awards
and award events for
local community
organizations
May 2011
INVOLVE
COMMUNITY
CEOs IN OUR
ORGANIZATION
Develop and implement
a stakeholder
management plan to
obtain and sustain our
top management buy-in
DEVELOP A
COMPLETE QUALITY
CURRICULUM
Establish a complete
program of training for
org members
Develop new training
programs
Recruit active
membership of
established leaders
Send selected members

for certification so theyy
can train; mentor the
rest
Develop a plan and

process for involving
top mgmt from
f
our andd
other organizations
Work with local

communityy college
g to
promote an associate
degree in quality
Encourage our top

management to seek
specific
ifi help
h l from
f
other
th
CEOs
Provide quality resource

materials in the
organization's library
www.pmhouse.org
RECOGNIZE AND
IMPROVE
CURRENT TRAINING
EFFORTS
Reward organizations
that are putting
members through
quality training now (a
dinner?)
Look for corporate
scholarships or other
funding opportunities
Standardize and
improve our training
process
Establish a process to
capture lessons learned
from organizations that
have sent people
th
through
h quality
lit ttraining
i i
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55
Ishikawa Diagram
AKA
AKA, FISHBONE
Cause and Effect
Mind Mapping Technique
May 2011
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RMP-PMI
Plan , Identify &

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56
Risk
Ri k R
Register
i t (S
(Sample)
l )
WBS
Number
Category
1.5
Contract
Labor rates may be substantially lower, resulting

in a cost savings
1.1.3
Technical
Use of an automated test tool could result in a

schedule duration savings or reduction
1.1.41
Technical
Customer fails to identify all site conditions

properly, causing installation problems on-site
Opportunity Event
1.3.2
Subcontractor employees not properly trained

to conduct systems integration
integration, resulting in
possible quality problems and schedule delays
of Event
1 month
Threat
Probability
WBS
Number
Category
1.2.1
Reqs1.5.6
damagesofclause
in contract result in
Poor Liquidated
customer definition
requirements
negative
financial
impactimplementation
of $100,000 if we
causes
major delay
in project
deliver late
1.1
Schedule
Personnel unavailability due to staffing

delays causes delay in prototype validation
2133
2.1.3.3
Regulatory
Building excavation necessitates additional

drainage runoff construction
2.4.5
Physical
Two extra conference rooms required within

production area
May 2011
Probability
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Impact
Overall
Rating
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Priority
Ranking
Priority
Ranking
Plan , Identify &

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57
E
Exercises
i
3
B
C
B
E
A
D
A
B
E
C
A
D
C
Match each of the characteristics listed to the corresponding tool

and
d technique
h i
off the
h Identify
Id
if Risks
Ri k process
1.Attempts to create a comprehensive list of risks.
A. Documentation Reviews
2. Participants respond anonymously.
B Brainstorming
B.
3.Includes a multidisciplinary set of experts.
C. Delphi Technique
4.Identifies the source of the risk.
D. Interviewing
5.Performs a structured review.
E Root Cause Analysais /
E.
6.May be conducted one-on-one.
Identification
7.Determines risk by comparing project planning to project
requirements and assumptions.
8.Sometimes utilizes the RBS as a framework.
9.Groups risks by causes.
10.Attempts to reduce bias in the data.
11.Concerned with the quality of the project plans.
12.A primary source of risk identification data gathering.
13.Attempts to reach a consensus regarding project risks.
May 2011
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58
E
Exercises
i
4
B
C
E
A
D
F
A
E
C
E
B
F
D
Match the following tools and techniques with their corresponding

characteristics:
h
i i
1.Obtains information from the Project Scope Statement.
A. Checklist Analysis
2.Also known as Ishikawa diagrams.
B. Assumptions Analysis
3.Elements within the diagram influence one another.
C. Cause and Effect
4.Utilize historical information from previous projects.
Diagrams
5.Shows a process from beginning to end.
D. Process Flow Charts
6.Identifies the organizations strengths and weaknesses. E. Influence Diagrams
F. SWOT Analysis
7.Utilize the lowest level of the RBS as a checklist.
8.Reflect uncertainty within potential paths.
9.Also known as fishbone diagrams.
10.Are used to make decisions.
11.Examines validity, inaccuracy, inconsistency, or incompleteness.
12.Increases the breadth of identified risks.
13.Show how various elements of a system interrelate.
May 2011
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59
C
Case
St
Study
d A-1
A1
CCC Bank
Bank
Risk Identification
May 2011
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60
Day-2
ay
May 2011
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Communication Overview
Risk Communication : 27 % of In this section :
PMI-RMP Exam
Basic model of communication
Communication management Plan
contents
Communication methods and
techniques
How to communicate effectively with
stakeholders
How to tailor presentations to your
audience
o to
o ga
gather
e information
o a o
How
Assessing stakeholder risk tolerance
Developing reports
And More
May 2011
Communication types
Communication Mediums and
method
Calculating communication
channels
Communications management
plan
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B i Model
Basic
M d l off Communication
C
i ti
Most communication skills are common for g
general management
g
and
project management, such as, but not limited to:
Listening actively and effectively,
Questioning,
Questioning probing ideas and situations to ensure better understanding
understanding,
Educating to increase teams knowledge so that they can be more
effective,
Fact-finding to identify or confirm information, Setting and managing
expectations,
Persuading a person or organization to perform an action
action,
Negotiating to achieve mutually acceptable agreements between
parties,
Resolving conflict to prevent disruptive impacts, and Summarizing,
recapping, and identifying the next steps.
Source : A Guide to the Project Management Body of Knowledge (PMBOK Guide) Fourth Edition
May 2011
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B i model
Basic
d l off communication
i ti
Decode
Message
Feedback
Decode
Encode
Encode
Medium
R
Receiver
i
May 2011
Were talking about

EFFECTIVE communication of
ideas, thoughts and info.
Only SUCCESSFUL when Tx
and Rx understand same
information.
Otherwise, misunderstanding
g
will create roadblock to goals
GOAL is to break barriers
Message: lengthy,
disorgani ed erroneo
disorganized,
erroneous,
s
Poor language: verbal or
body
Context/Situation: too
much too fast?
Mind other peoples time.
S d
Sender
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Communication Types and

Situation
Preferred Method
memo
Informal Written
Project Plan , report
Formal Written
L
Long
Distance
Di t
F
Formal
lW
Written
itt
Meetings
Informal Verbal
P
Presentations
t ti
F
Formal
lV
Verbal
b l
Conversations
Informal Verbal
Complex Problems
Formal Written
Email
Informal Written
Notes
Informal Written
Speeches
Formal Verbal
Project Charter
Formal Written
May 2011
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55% is are non-verbal

(physical mannerism)
Para-lingual
Active
Active Listening
Formal Written:
charter, plans, long
distance Best method
to use for complex
issues
Formal verbal
Informal Written:
emails, memos
Informal
I f
l verbal:
b l
meetings,
conversations
RMP-PMI
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Communication Mediums & Methods

Communication Methods : Collecting
g , Sharing
g , and
distributing communication
Distributing
g Methods
Meeting
Hard-copy Documents
Manual Filing Systems
Electronic Databases
E-mail
Fax , Voicemail
Telephone
Video / web conferencing
Web Publishing
Project Management tool
May 2011
Communication Methods
Face to Face Meeting
Best Method
Phone conferencing
Web
W b conferencing
f
i
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Calculating Communication Channels
If
Total Project stakeholders = 4
Comm Channels = n(n
Comm.
n(n-1)/2
1)/2
Comm. Channels = 4(4-1)/2
Comm Channels = 6
Comm.
May 2011
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C
Communication
i ti M
Managementt Plan
Pl Provide
P
id
Stakeholder communication requirements;
Information to be communicated, including language, format, content,
and level of detail;
Reason for the distribution of that information;
Time frame and frequency for the distribution of required information;
Person responsible
p
for communicating
g the information;;
Person responsible for authorizing release of confidential information;
Person or groups who will receive the information;
Methods or technologies used to convey the information
information, such as
memos, e-mail, press releases;
Resources allocated for communication activities, including time and
b d t
budget;
Escalation process identifying time frames and the management chain
(names) for escalation of issues that cannot be resolved at a lower staff
l
level;
l
May 2011
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C
Communication
i ti M
Managementt Plan
Pl Provide
P
id
Method
M h d ffor updating
d i and
d refining
fi i the
h communications
i i
management plan as the project progresses and develops;
gy;
Glossaryy of common terminology;
Flow charts of the information flow in the project, workflows with
possible sequence of authorization, list of reports, and meeting
plans etc
plans,
etc.;; and
Communication constraints, usually derived from specific
legislation or regulation, technology,
and organizational policies, etc.
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Communication Management Plan

Inputs
Tool & Techniques
Stakeholders Register
Communications
g
Stakeholder Mg. Strategy Requirement Analysis
Enterprise Environmental Communication Technology,
Enterprise
Methods & Models.
Factors
g
Process
Organization
Assets
May 2011
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70
E
Exercises
i
5
Which of the following communication methods is
considered to be the best ?
A. Face-to-Face Meeting
B Phone Conferencing
B.
C. Web-Conferencing
D Email
D.
May 2011
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C
Communication
i ti P
Project
j t Risk
Ri k
Overview
Factors that impact the communication of risk :
Ri k attitudes
Risk
ttit d
Psychological factors
Utility theory
Organizational theory
Stakeholder Risk tolerance
Communicating risks to stakeholders
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Ri k attitudes
Risk
ttit d
Risk Averter
Risk Neutral
Risk Seeker
Risk Tolerant : He isnt concerned about risk or allows it to influence

their decisions , but becomes surprised
p
by
y risk if it converts into an issue
May 2011
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NEW Slide
Ri k attitudes
Risk
ttit d
Risk Averter
Risk Neutral
Risk Seeker
U: Represents utility; the amount of satisfaction or pleasure that the individual

receives from a payoff
The X axis in this case is the amount of money at stake (but can also potentially
represent technical performance or schedule).
Source: Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Tenth Edition by Harold Kerzner
May 2011
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Psychological factors , Utility theory and

Psychological factors may be the underlying reason for risk attitudes
People resist change
personal control
Influenced byy individual has level of p
Influenced on an emotional level
Utility theory :
Attempts to formalize how much you are welling to accept risk
g into the ways
y that people
p p , teams , and organizational
g
units
Provides insight
behave based on the organization types and structure
Identify , Plan , Communicate Risk
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Stakeholder Risk tolerance

Risk tolerance
The degree , amount , or volume of risk that an organization or individual
will withstand PMBOK Guide Definition
How to assess risk tolerance ?
EEF , OPA , stakeholder register and management strategy
To communicate risk to stakeholders you need to obtain info.
f from
f
Communication management plan
Stakeholder management strategy
Risk management plan
May 2011
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E
Exercises
i
6
________________________ attempts to formalize the
subjective views of stakeholders.
A. Risk attitudes
B Psychological
B.
P h l i l ffactors
t
C. Utility theory
D. Organizational
O
theory
May 2011
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E
Exercises
i
7
________________________ Provides insight into the
ways that people , teams , and organizational units
behave based on the organization types and
structure
A. Risk attitudes
B Psychological factors
B.
C. Utility theory
D Organizational theory
D.
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Assessment Communication
May 2011
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General Management Skills

Interpersonal & General management Skills
Communication skills
g
Skills
Management
Leadership Styles
Conflict Management
Motivating skills
May 2011
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Diff
Different
t St
Styles
l off L
Leadership
d
hi
Directing: telling people what to do
Coaching: giving needed instructions
Facilitating: coordinating input of others
Supporting: giving assistance along the
way
Autocratic: Making decisions without
i
input
t
Consultative: Inviting ideas from others
Consensus: decision made based on
agreement
NOTE: leadership MIX changes along

different phases of project life.
NOTE: autocratic is not always bad. PM
does not have to consult others for input
p
all the time.
May 2011
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Forming a Group
NEW
N
WS
Slide
de
Forming
The group first gets together with its

common aim.
Storming
After a while, aims & objectives are

questioned. Group experiences conflict
from within.
Norming
Because of conflict, policy & procedures

are drawn up and agreed.
Performing
May 2011
Group follows the policy & procedures

and works effectively towards its aim.
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Forming a Group
NEW
N
WS
Slide
de
FORMING
STORMING
DIRECTING
COACHING
May 2011
NORMING
PERFORMING
SUPPORTING SUPPORTING
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Conflict Management
Causes of Conflicts
Schedules
Project Priorities
Resources
Technical Opinions
Admin Procedures
Cost
Personality
May 2011
Handling Conflicts
Withdrawal
Smoothing
Compromising
F i
Forcing
Problem Solving (Confrontation)
Collaboration
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Conflict Management (cont)

When two people in Business always agree, one of
them is unnecessary.
All conflicts arent Bad. Conflict has a positive side
as well as a negative side.
Causes:
Poor
P
communication
i ti
Lack of openness
Failure to respond to
employee needs
May 2011
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Motivational Theories
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McGregor
McGregorss Theory
Theory X
Theory Y
Employees inherently dislike work

and will attempt to avoid it.
Employees can view work as being as

natural as rest or play.
Employees must be coerced

coerced,
controlled, or threatened with
Punishment.
People will exercise self-direction and

self-control if committed to the object.
Employees
l
will
ill avoid
id responsibilities
ibili i
and seek formal direction.
The average person can learn to

accept, even seek, responsibility.
Most
os wo
workers
e s pplace
ace security
secu y above
all other factors associated with
work.
The ability to make innovative

decisions is dispersed throughout the
population.
E l
Employees
di
display
l little
littl ambition.
biti
May 2011
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Expectancy Theory
The strength to act in a certain way depends on the
strength of an expectation that the act will be followed by a
given outcome,
outcome and on the attractiveness of that outcome to
the individual
Individual
effort
Individual
Performance
Organizational
Reward
Personal
Goals
The 3 Questions:
1 - If I give a maximum effort, will it be recognized in my performance appraisal?
2- If I get a good performance appraisal, will it lead to organizational reward?
3 - If I am rewarded,
d d are the
th rewards
d ones that
th t I fi
find
d personally
ll attractive?
tt ti ?
May 2011
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Acquired Needs Theory

Need
N
d ffor
Achieveme
nt
Should be given
projects that are
challenging but are
reachable
They like recognition
Need for
Affiliation
Work best when

cooperating with others
They seek approval
rather than recognition
Need
N
d ffor
Power
Need for power is

socially
i ll oriented,
i t d rather
th
than personally oriented
They like to organize
and influence others
May 2011
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It call also David

McClellands Theory who
was an American
psychologist. Noted for his
work on achievement
motivation
RMP-PMI
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E
Exercises
i
8
Match the leadership style with the description.
G
C
F
B
D
E
A
1.When decisions are reached as a group.

2.Places emphasis on instructing others.
3.When ideas of others are encouraged.
4.Involves coordinating the ideas and inputs of others.
5.Involves providing team members with assistance.
6.When decisions are made based only on the individual that has made the decision.
7When a manager tells others what to do..
A. Directing
B. Facilitating
C. Coaching
D S
D.
Supporting
i
E. Autocratic
F. Consultative
G Consensus
G.
C
May 2011
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E
Exercises
i
9
Match the resolution technique to its corresponding description
D
E
A
B
C
1.Where agreement is emphasized.

2.When someone pushes a decision, even if at the expense of another.
3.Where the conflict is dealt with head on and resolved.
4.Finding a solution that brings some level of satisfaction to the people involved.
5.Avoiding the issue.
A. Confronting
A
C f ti / Problem
P bl
Solving
S l i
B. Compromising
C. Withdrawal
D Smoothing
D.
E. Forcing
May 2011
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E
Exercises
i
10
Match the type of power to its corresponding description
C
E
B
D
A
1.Punishment for not doing something.

2.Based on the authority of someone else.
3.Based on rewarding someone for doing something.
4.An individual is an expert on a subject, and their knowledge gives them a
heightened status and authority.
5.Based on a persons position.
A. F
A
Formall
B. Reward
C. Penalty
D Expert
D.
E. Referent
May 2011
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E
Exercises
i
11
Match the motivational theory to its corresponding description, and write in the
theorist connected to the theory after the description.
C 1. States that people must first meet a basic set of needs before reaching for
higher achievement.
B 2. States that there are two different types of attitudes toward work; one
believes that employees are inherently lazy, while the other believes
employees may be ambitious and self-motivated.
D 3. States that there are multiple job motivating factors and hygiene factors that
affect peoples attitude at work.
A 4. States that employees
p y
who believe that p
putting
g in more effort will lead to
better performance.
A. Expectancy Theory
A
B. McGregors Theory of X and Y
C. Maslows Hierarchy of Needs
D Herzbergs
D.
Herzberg s Theory of Motivation
May 2011
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Assessment H
H.R.
R
May 2011
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QUESTIONS?
May 2011
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Ri k M
Risk
Managementt T
Testt
Test #1#
May 2011
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Risk Analysis
May 2011
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Course Overview
Ri k communication
Risk
i ti 27%
9
9
9
9

Risk Analysis 30%

stakeholders
Risk Governance 17%

g
processes
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RMP-PMI
9 Identifyy Risk
analysis
y
Prioritize risk
May 2011
Risk Analysis
98
H
How
we d
do risk
i k analysis
l i
Qualitative
Quantitative
Risk analysis is
typically expressed
in one of three
forms:
& Descriptive &
Categorizes the risk using

a rating system of
description or colors to
rank probability and/or
impact
impact.
May 2011
Quantifies risk using a

numbers to indicate
probability of occurrence
and a dollar value to
indicate impact.
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99
Q lit ti Risk
Qualitative
Ri k Rating
R ti
Example
E
l
QUALITATIVE RISK RATING GUIDELINES
Rank
Probability
Risk event has high probability of
occurrence
If risk event occurs, a significant impact to

one of project objective like cost, schedule,
quality, or customer satisfaction will occur
Risk event has medium probability of

occurrence
If risk event occurs, a moderate impact to

one of project objective like cost, schedule,
quality, or customer satisfaction will occur
Risk event has low probability of

occurrence
If risk event occurs, a small impact to one of

project objective like cost, schedule, quality,
or customer satisfaction will occur
High
Medium
Low
Impact
Defining high, medium, and low risks is subjective but Important

May 2011
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Q lit ti iimpactt S
Qualitative
Scales
l Example
E
l
Defined Conditions for impact
p
Scales of a Risk on Major
j project
p j
objective
j
Relative or numerical Scales are Shown

Project
objective
Very Low
/ .05
Low
/ .10
Moderate
/ .20
High
/ .40
Very High
/ .80
Cost
Insignificant
Cost increase
<10% cost
increase
10-20%
cost
increase
20-40%
cost
increase
> 40% cost

increase
Time
Insignificant
Time increase
<5% Time
increase
5-10%
Time
increase
10-20%
Time
increase
20>% Time
increase
May 2011
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Q lit ti P
Qualitative
Probability
b bilit and
d IImpactt M
Matrix
ti
High
Risk 2
M/H
Mediu
um
L/M
M/H
L/M
Risk 1
Low
PR
ROBABILIT
TY
Risk 3
L
Low
Medium
High
IMPACT
May 2011
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102
Quantitative Probability and Impact Matrix
100%
1
Risk 2
50
75
100
50%
25
50
75
25
50
0%
50%
100%
Risk 1
0%
PR
ROBABILIT
TY
Risk 3
IMPACT
May 2011
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103
P b bilit Analysis
Probability
A l i
Purpose
To understand the likelihood of the occurrence of a
risk event
Sources of probability data
Subjective
judgment
May 2011
Theoretical
distributions
Simulations
www.pmhouse.org
Historical
data
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104
P b bilit Rules
Probability
R l
Mutually
y exclusive events
Two or more events that can never happen at the same time
If you roll snake eyes (2), you have not rolled a 3
If the project is late, it is not on time
If the risk event occurs, it excludes the possibility of the risk not
occurring
Non-mutually
Non
mutually exclusive events
Two or more events that may or may not happen at the same
time
Pulling a king or a spade from a deck of cards
If you pull a king, it may or may not be a spade
If you pull a spade, it may or may not be a king
A project
j t can b
be either
ith llate
t or over b
budget
d t or b
both
th
If one event occurs the other either may or may not occur
Probabilities are expressed as decimals between 0 (definitely will
nott happen)
h
) and
d 1 (definitely
(d fi it l will
ill h
happen)) or as percentages
t
(0%
(0%
100%)
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105
Mutually Exclusive Probability Rules

Addition Rule
If you want to know the probability of one thing or another thing
happening, ADD
P(A
( or B)) = P(A)
( ) + P(B)
( )
10% chance that a project will be completed on time OR a
45% chance that the project will be completed early
10% + 45% = 55% ((Project
j
will be completed
p
on time or be
early)
Multiplication Rule
If yyou want to know the probability
p
y of one thing
g and another
thing happening, MULTIPLY
P(A and B) = P(A) x P(B)
project
j
will be over budget
g if it is late
70% chance that a p
AND a 45% chance the project will be late
70% x 45% = 31.5% (Project will be late and over budget)
May 2011
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Mutually Exclusive Probability Rules

(continued)
Summation Rule
All of the possibilities that could happen, when added, must total 1
(100%)
P(A) + P(B) + P(C) . = 1.0
10
20% probability that the project will be more than 3 weeks late;
25% that the project will be 1 to 3 weeks late; 10% that the
project
j t will
ill b
be on titime; 45% that
th t the
th project
j t will
ill b
be early
l
20% + 25% + 10% + 45% = 100% (100% chance that one of
p
will be met))
these schedule options
1 Minus Rule
The probability that Event A will occur is 1 minus the probability
th t E
that
Eventt A will
ill nott occur
70% probability it will not rain
1 0 0.70
0 70 = 0.30
0 30 (30% probability it will rain)
Event A = 1.0
May 2011
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107
36 Ways
W
for
f Di
Dice tto F
Fall
ll
May 2011
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Risk Analysis
108
E
Exercise
i B-1
B1
You roll a single die. What is the
probability of :
1 Getting
1.
G tti a six?
i ?
2. Getting a five?
3 Not getting a six?
3.
4. On the second roll, getting a six?
5. On the second roll, getting a five?
6. On the second roll, not getting a six?
May 2011
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RMP-PMI
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109
A
Answer
E
Exercise
i B
B-1
1
1.
2.
3
3.
4.
5
5.
6.
May 2011
Getting a six? 1/6

Getting a five? 1/6
N t getting
Not
tti a six?
i ? 5/6
On the second roll, getting a six? 1/6
On the second roll
roll, getting a five? 1/6
On the second roll, not getting a six? 5/6
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RMP-PMI
Risk Analysis
110
E
Exercise
i B-2
B2
For two consecutive rolls of the single die, what is the
probability ofGetting a six?
1.
2
2.
3.
4.
5.
Getting two sixes in a row?

Getting two fives in a row?
Getting a five and then a six?
Getting no sixes on either roll?
Getting at least one six?
May 2011
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Risk Analysis
111
A
Answer
E
Exercise
i B
B-2
2
1.
2.
3
3.
4.
5
5.
Getting two sixes in a row? 1/6 x 1/6 =1/36

Getting two fives in a row? 1/6 x 1/6=1/36
G tti a five
Getting
fi andd then
th a six?
i ? 1/6 x 1/6 =1/36
1/36
Getting no sixes on either roll? 5/6 x 5/6 =25/36
Getting at least one six? 11/36
May 2011
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RMP-PMI
Risk Analysis
112
The
Th Purpose
P
off Risk
Ri k Analysis?
A l i ?
We analysis risk to
Determine probability of the risk happening
Determine impact of the risk if it happens
Estimate overall rating of the risk
risk, either
qualitatively or quantitatively
May 2011
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113
Ri k A
Risk
Analysis
l i
Inputs
Categorized list of risks
WBS
Contractual requirements
(statement of work)
Cost and schedule estimates
Lessons learned files
Staffing plan
Other project-related plans
Rating system guidelines

Risk
i k Register
i
Risk, Cost, Schedule
mgmt. plans
OPA
Scope Statement
Outputs
Tools and Techniques

Data Gathering and
Representation Techniques
Interviewing
Probability distributions
Expert judgment
Qualitative Risk Analysis
Probability and Impact matrix
Quality of risk data
Urgency of risk response
Risk categories
g
Quantitative Risk Analysis and
Modeling Techniques
Sensitivity analysis
Expected monetary value
analysis
Decision tree analysis
Modeling and simulation
PERT
Risk Register
Update

May 2011
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Risk Analysis
114
S
Sources
off IImpactt D
Data
t
May 2011
Historical data
Estimates
Expert judgment
Simulations
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Risk Analysis
115
I
Impact
t Analysis
A l i
Project cost
May 2011
Each risk event must be

analyzed to assess potential
impacts to project costs
resulting
lti ffrom such
h ffactors
t
as
Labor rates
Task duration
Direct materials
Equipment and tools
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Risk Analysis
116
I
Impact
t Analysis
A l i
Project schedule
May 2011
Each risk event must be

analyzed to assess potential
impacts to the project
schedule resulting from such
factors as
Resource shortages
Duration expansions
Other delays
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Risk Analysis
117
I
Impact
t Analysis
A l i
Project scope
Each risk event must be analyzed to

assess potential impacts to the project
scope resulting from factors such as
as
Increased requirements
Reduced work effort
Product reliability
Qua
Quality
ty level
eve of
o de
deliverable
ve ab e
Product safety
May 2011
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Risk Analysis
118
T l and
Tools
d Techniques
T h i
for
f Risk
Ri k Analysis
A l i
Expert judgment
p
value
Expected
Decision trees
Program Evaluation and Review Techniques (PERT)
Computer simulations
Monte Carlo
May 2011
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RMP-PMI
Risk Analysis
119
Expert
E
tJ
Judgment
d
t
SMEs
SME s (subject matter
experts)
PMO
Other units within the
organization.
Consultants
Stakeholders, including
customer
t
and
d sponsors.
Professional and
technical associations.
associations
Industry groups.
May 2011
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120
Expected Monetary Value (EMV)

Expected
p
value ((EV)) is a
statistical assessment of risk
value,
For threats,
threats expected
value is called exposure
For opportunities,
expected value is called
leverage
Each risk event identified has
a probability of occurrence
that can be weighted against
the impact
Expected value = probability impact

May 2011
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Risk Analysis
121
Ri k E
Risk
Events
t and
dE
Expected
t dV
Value
l
WBS
Number
Category
Opportunity Event
Probability
Impact
1.6
Reqs
Prototype function
correctly the first time
20%
-$200,000
WBS
N
Number
b
C t
Category
Th t Event
Threat
E
t
P b bilit
Probability
I
Impact
t
1.4.1
Contract
Suppliers strike during

project
50%
+$500,000
2.1.9
Natural
Hazards
Snowstorm in March
90%
+$5,000
May 2011
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Overall
Rating
Priority
Ranking
Overall
R ti
Rating
Priority
R ki
Ranking
RMP-PMI
Risk Analysis
122
Expected Value Example

Project BUDGET baseline = $5,000,000
$5 000 000
Risk Event
Probability Impact
pp
strike
1. Suppliers
during project (T)
0 50 x $500
0.50
$500,000
000
2. Prototype
functions correctly
the first time (O)
0 20 x $200
0.20
$200,000
000
3. Snowstorm in
March (T)
0.90 x $5,000
Total value of risk
events
T = Threat
Th t
O = Opportunity
May 2011
Expected Value
$250,000
$40,000
$4,500
$214,500
Project
P
j t budget/
b d t/ costt
baseline
$5,000,000
Adjusted total project

baseline
$5,214,500
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Risk Analysis
123
E
Expected
t d ValueExpanding
V l
E
di
th
the Range
R
Expected value for a project should be evaluated against
the best-case and the worst-case scenarios
BEST CASE
WORST CASE
Everything
hi hhappens perfectly
f l
Everything
hi goes wrong
Probability for threats = 0%
Probability for threats = 100%
Probability
P b bilit for
f opportunities
t iti = 100%
Probability
P b bilit for
f opportunities
t iti = 0%
May 2011
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Risk Analysis
124
Expected ValueExpanding the Range

(
(continued)
ti
d)
Risk Event
Probability Impact
Expected Value
Best Case
Worst Case
1. Suppliers strike
during
gp
project
j
((T))
0.50 x $500,000
$250,000
2. Prototype
functions correctly
th first
the
fi t time
ti
(O)
0.20 x $200,000
$40,000
$200,000
0.90 x $5,000
$4,500
$5,000
3. Snowstorm in
March (T)
Total value of risk

events
T = Threat
Th t
O = Opportunity
May 2011
$500,000
$214,500
$200,000
$505,000
Project
P
j
budget/
b d / cost
baseline
$5,000,000
$5,000,000
$5,000,000
Adjusted total project

cost
$5,214,500
$4,800,000
$5,505,000
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Risk Analysis
125
Exercise Expected Value

You are the proposed project manager for the construction of a new electric power plant using solar
thermal technology.
technology This power plant is designed to last 10 years.
years Expenses to construct the plant are
estimated to be $100 million, but you have identified a 10 percent chance of litigation by
environmental groups during this 10-year period over land use that could add $20 million to the cost
of construction. Over the p
plants useful life,, the electricityy ggenerated is expected
p
to p
produce $40
million each year in revenue. However, you have several industry and Department of Energy reports
indicating that increased demand for power and dwindling baseload supply have a 25 percent chance
of causing electricity prices to rise, so you could realize additional revenues of $10 million per year
off operation.
i
P i ll offsetting
Partially
ff i that
h goodd news is
i a 40 percent chance
h
that
h the
h county will
ill raise
i reall
estate taxes for industrial land use that significantly affects natural habitats of certain wildlife
species. This raise in taxes could potentially reduce your revenues by $2 million per year. In
addition there is a 25 percent chance,
addition,
chance per year of operation,
operation of a fire caused by reflection from
heliostats, which would reduce your revenue by $1 million in any year in which such a fire occurs.
Insurance could be purchased to fully protect you from such losses for $250,000 per year. Other
mishaps already are covered by a blanket insurance policy included in the base operating costs.
Operational and maintenance costs to run the plant are expected to be $10 million a year.
Decommissioning costs at the end of the 10-year life would be $35 million (real current dollars).
Your government affairs division estimates that there is a 35 percent chance that increased
environmental requirements will be passed by the end of 10 years,
years so the decommissioning costs
actually could be $5 million higher.
May 2011
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RMP-PMI
Risk Analysis
126
Exercise Expected Value

What is the value of the project if none of the identified risk events occur?
What is the overall expected value of the project, considering the baseline and all risks?
What is the worst-case value for this project?
What is the best-case value for this project?
Would it be more prudent to purchase insurance against heliostat fires or risk the chance of a
fire?
May 2011
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127
D i i T
Decision
Tree A
Analysis
l i
An effective mind tool
Help you CHOOSE between
different courses of action.
Explore options &
investigate possible
outcomes associated with
each.
Help you to FORM A
BALANCED PICTURE of the
risks and rewards
associated with each
possible course of action.
action
Decision Nodes: squares
Chance Nodes: circle
End Nodes: triangles
May 2011
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Risk Analysis
128
D i i T
Decision
TreeExample
E
l
Should we build a prototype of the new flight simulator
product? Project requirements were poorly defined. As a
result, there is the risk that the final product will not pass the
customer
t
acceptance
t
test.
t t A prototype
t t
also
l would
ld
substantially reduce the cost of rework for failures at
customer acceptance test.
Cost to build prototype
$98,000
Probability of passing customer acceptance test

With prototype
90%
Without prototype
20%
Cost of rework after customer acceptance test

With prototype
$20,000
Without prototype
$250,000
May 2011
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RMP-PMI
Risk Analysis
129
D i i T
Decision
Tree with
ith P
ProbabilityExample
b bilit
E
l
Pass customer acceptance test

Build
prototype
Fail customer acceptance
p
test
Do not build
prototype
p
yp
Fail customer acceptance test
May 2011
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RMP-PMI
Risk Analysis
130
D i i T
Decision
Tree with
ith P
ProbabilityExample
b bilit
E
l

Build
prototype
p
test
Do not build
prototype
p
yp
May 2011
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RMP-PMI
Risk Analysis
131
Decision Tree Scenario with Expected

V l
ValueExample
E
l

Build
prototype
p
test
Do not build
prototype
p
yp
Expected Value with prototype: $98,000+$0+$2,000 = $100,000

Expected Value without prototype: $0+$0+$200,000 = $200,000
May 2011
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RMP-PMI
Risk Analysis
132
Exercise Decision Tree

You travel regularly from Cairo to London on business.
business Historically,
Historically
the accounting department always told you to fly Egypt Airlines to
save money.
y The Cairo-London run is $750. You would much
rather fly bmi Air, which has a wonderful frequent-flyer program
and much better food. The Cairo-London run is $1,000 on bmi. If
you arrive
i in
i London
L d on time,
i
no extra costs are incurred.
i
d When
Wh you
arrive late, the company normally must put you up in a local hotel
(rather than making a same-day return) at a cost (including per
diem) of $250. The company also loses an extra full day of your
y Egypt
gyp Airlines has an
time, and yyour fullyy loaded rate is $800/day.
on-time arrival record of 60 percent on the Cairo-London trip. bmi
Air has an on-time arrival record of 90 percent on the same run.
B ild a decision
Build
d i i tree
t to
t presentt this
thi case.
May 2011
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RMP-PMI
Risk Analysis
133
PERTOne of the More Significant

Statistical Sums Used in Risk Analysis
An event
event-oriented,
oriented network analysis technique used when
there is a high degree of uncertainty with task duration
estimates
Helps
H l d
determine
t
i th
the probability
b bilit di
distribution
t ib ti off various
i
outcomes
Applies the critical path method (CPM) to a weighted
average estimate for task durations
Start
Task 1
Task 2
Task 3
16 Days
11.3 Days
14.7 Days
Task 4
Task 5
Task 6
14 Days
8 Days
5 Days
End
E
Expected
d project
j duration
d
i = 42 days
d
= Mean
M
=E
Expectedd critical
i i l path
h
May 2011
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134
Determine Critical Path Estimate

Pert weighted average (Mean) = Optimistic + 4(Most Likely) + Pessimistic
6
Standard deviation () = Pessimistic Optimistic
6
Task
Pessimistic
Most
Optimistic
(P)
Likely
Lik
l (ML)
(O)
Te
25
16
16.0
3.00
15
11
11 3
11.3
1 00
1.00
28
13
14.7
3.33
Total
68
40
24
42.0
NA
Expected Project Duration

Expected Critical Path
Mean
May 2011
42 days
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RMP-PMI
Risk Analysis
135
Standard Deviation for the Critical Path Using

PERT
2
Task 1
2
Task 2
2
Task 3
Task
(P)
(ML)
(O)
Te
25
16
16.0
3.00
15
11
11.3
1.00
28
13
14.7
3.33
T t l
Total
68
40
24
42 0
42.0
= (3.00)2 + (1.00)2 + (3.33)2

= 9.00 + 1.00
.00 + 11.08
.08
= 4.59 (+/-)
Figure e(t)
path
( ) and SD for each task and for the path.
May 2011
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RMP-PMI
Risk Analysis
136
Standard Deviation for a the Critical Path Using

PERT (continued)
S d d ddeviation
Standard
i i ffor the
h path
h = 44.59
59
-1 = 37.41
-2 = 32.82
+1 = 46.59
42.00
-3 = 28.23
+2 = 51.18
+3 = 55.77
PR
ROBABILIITY
68.26%
95.46%
99.73%
There is a 68.26% chance that the

actual project duration will be
between 37.41
37 41 and 46.59
46 59 days
1 = 4.59
+1 = 42.00 + 4.59 = 46.59
-1 = 42.00 4.59 = 37.41
There is a 95.46% chance that the

actual project duration will be
between 32.82 and 51.18 days
2 = 9.18 (4.59 x2)
POSSIBLE PROJECT DURATIONS OR COST
May 2011
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+2 = 42.00 + 9.18 = 51.18

-2 = 42.00 9.18 = 32.82
RMP-PMI
Risk Analysis
137
M t Carlo
Monte
C l Process
P
P j t manager
Project
Establishes probability distribution for duration and cost
for each task or activityy
Tool
Conducts multiple,
multiple randomly chosen simulations based
on the information and the probabilities
Collects outcomes
Plots o
outcomes
tcomes as a range
May 2011
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RMP-PMI
Risk Analysis
May 2011
138
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RMP-PMI
Risk Analysis
May 2011
139
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RMP-PMI
Risk Analysis
May 2011
140
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Risk Analysis
141
Documenting the Analysis: Risk Register

T l with
Tool
ith Complete
C
l t Analysis
A l i (Sample)
(S
l )
WBS
Number
Category
Opportunity Event
Probability
Impact
Overall
Rating
1.5
Contract
Labor rates may be substantially lower,

resulting in a cost savings
Medium
($30,000)
1.1.3
Technical
Use of an automated test tool could

result in a schedule savings or reduction
Medium
(4 weeks)
1.4.1
WBS
Number
Category
121
1.2.1
Req
Reqs
1 3 2s
1.3.2
1.1
Schedule
1.5
2.1.3.3
Regulatory
Customer fails to identify all site

conditions properly, causing installation
Threat
Event
Probability
problems
on-site
Poor
of nott properly
Medium
S b customer
Subcontractor
t t definition
employees
l
l
requirements
causes
major
trained to conduct systems integration,
delay
in project
implementation
resulting
in possible
quality problems
and schedule
delays of due
1 month
Personnel
unavailability
to
Low
staffing
delays
causes
delay in
Liquidated
q
damages
g clause
in contract
prototype
validation
result in negative financial impact of
$100,000
if we deliver late
Building
excavation
Medium
necessitates additional
2.4.5
Physical
May 2011
Two extra conference rooms

required within production area
High
www.pmhouse.org
Overall
Rating
Impact
High
HM
4-week delay in prototype

validation
$150,000 in construction
costs and 2-week
construction delay
costs,3-week
construction delay
MH
RMP-PMI
Priority
Ranking
Priority
Ranking
Risk Analysis
142
C
Case
Study
St d B-1
B1
CCC Bank
Bank
Risk Analysis
May 2011
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RMP-PMI
Risk Analysis
143
Day-4
ay
May 2011
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RMP-PMI
Risk Analysis
144
Ri k P
Risk
Prioritization
i iti ti
Inputs
List of analyzed
y
risks
Risk tolerance
Risk attitudes
May 2011
Tools & Techniques
Outputs
Qualitative
Q
assessment
Quantitative
assessment
Comparative risk
ranking
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RMP-PMI
Risk Analysis
145
Ri k P
Risk
Prioritization
i iti ti
Tools
T l and
d Techniques
T h i
Tools
Qualitative risk ranking
Quantitative risk ranking
Comparative risk ranking (CRR)
Techniques
Filtering
Filt i
May 2011
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RMP-PMI
Risk Analysis
146
Expected Value Ranking

Perform expected value calculation for each risk event
Rank 1 through n, based on magnitude of expected values
Cost and schedule impacts should be ranked separately
Qualitative
Risk
Probability
Impact
Overall Rating
Rank
L/M
M/H
H/H
Risk
Probability
Impact
Overall Rating
Rank
0.10
$50,000
$5,000
0.50
$70,000
$35,000
0 70
0.70
$10 000
$10,000
$7 000
$7,000
Quantitative
May 2011
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RMP-PMI
Risk Analysis
147
Filt i
Filtering
and
d Comparative
C
ti Risk
Ri k Ranking
R ki
Filtering
A question-and-answer technique that filters out risks
that
h are currently
l lless iimportant
Questions need to be organization- and project-specific
Questions should map to key metrics previously defined
Comparative risk ranking (CRR)

A comparison
p
tool that p
produces a reliable,, p
prioritized list
of important risks
Uses filtering to remove less important risks
May 2011
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RMP-PMI
Risk Analysis
148
Filt i
Filtering
Will we see a significant
1 impact if this risk occurs?
NO
YES
Is this risk more likely to

2 occur?
NO
YES
Will the project be affected by

3 the risk soon?
NO
Remove from
the priority
listing .
YES
Can management control this

4 risk?
NO
YES
This risk becomes part of the active priority risk
listing.
May 2011
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RMP-PMI
Risk Analysis
149
C
Comparative
ti Ri
Risk
kR
Ranking
ki
Comparison question: Which risk has more significant impact?
(Assume that 4 persons are voting)
May 2011
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RMP-PMI
Risk Analysis
150
O t t off Risk
Output
Ri k Prioritization
P i iti ti
Inputs
Li
List off analyzed
l d
risks
Prioritization
structure
May 2011
Tools &Tech.
Qualitative
assessment
Quantitative
assessment
Comparative
risk ranking
www.pmhouse.org
Outputs
Updated risk
register
List of
List
analyzed
risks
Overall
risk rating
RMP-PMI
Risk Analysis
151
Output: Prioritized Risk Register with

C
Complete
l t A
Analysis
l i (S
(Sample)
l )
WBS
Number
Category
Opportunity Event
Probability
Impact
1.5
Contract
Labor rates may be substantially lower,

resulting in a cost savings
Medium
1.1.3
Technical
Use of an automated test tool could

result in a schedule savings
g or reduction
Medium
1.4.1
Customer fails to identify all site

conditions properly, causing installation
Threat
Event
Probability
problems
on-site
Overall
Rating
Priority
Ranking
($30,000)
(4 weeks)
WBS
Number
Category
1.2.1
Reqs
q
1.3.2
Poor
customer definition
of not properly
Medium
Subcontractor
employees
requirements
causes
major
trained to conduct systems integration,
delay
in project
resulting
in possible quality problems
implementation
and schedule delays of 1 month
High
g
1.1
Schedule
15
1.5
Personnel unavailability due

Low
toLiquidated
staffing delays
causes
damages
clause in contract
delay
resultininprototype
negativevalidation
financial impact of
$100,000 if we deliver late
Building excavation
Medium
necessitates additional
4-week delay in
prototype validation
costs and 2-week
construction delay
Two extra conference rooms

required within production
area
costs, and 3-week
construction delay
MH
2.1.3.3
Regulatory
2.4.5
Physical
May 2011
High
Overall
Rating
6
Priority
Ranking
Impact
www.pmhouse.org
HM
RMP-PMI
1 12
4
3
Risk Analysis
152
C
Case
Study
St d B-2
B2
CCC Bank
Risk Prioritization
May 2011
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RMP-PMI
Risk Analysis
153
QUESTIONS?
May 2011
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RMP-PMI
Risk Analysis
154
Ri k M
Risk
Managementt T
Testt
Test #2#
May 2011
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RMP-PMI
Plan Risk
Responses
155

Plan Risk Responses
May 2011
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RMP-PMI
Plan Risk
Responses
156
Course Overview
Ri k communication
Risk
i ti 27%
9
9
9
9

stakeholders

Risk Analysis 30%
Risk Governance 17%

g
processes
www.pmhouse.org
RMP-PMI
9 Identifyy Risk
9 Evaluate risk attributes using
analysis
y
9 Prioritize risk
9 Establish control limits
May 2011
Plan Risk
Responses
157
Plan Risk Response

Risk response planning involves
Creating risk response strategies separately for both
threats and opportunities
Evaluating and selecting a primary response
Incorporating
I
ti responses iinto
t th
the risk
i k and
d project
j t plans
l
May 2011
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RMP-PMI
Plan Risk
Responses
158
P
Process
t Pl
to
Plan Ri
Risk
k Responses
R
Input
Prioritized risk
register
Opportunities to
pursue, threats to
respond to
Opportunities
pp
to
accept, threats to
accept
Risk management
plan
Project management
plan
Project documents
May 2011
Tools & Tech.

Strategies to minimize
threats (negative
risks)
Strategies to enhance
opportunities (positive
risks)
s s)
Contingent responses
Expert judgment
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RMP-PMI
Plan Risk
Responses
159
R
Response
St
Strategies
t i for
f Th
Threats
t
Accept (accepting the consequences)
Mitigate (reducing the expected value of a threat)
Minimizing the probability of the threat event
Minimizing the impact of the threat event
Transfer (shifting some or all of the threat to another)
Avoid (eliminating a specific threat, usually by

eliminating the cause)
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RMP-PMI
Plan Risk
Responses
160
Accept
A
t
If risk exposure is acceptable to the project and the
company
Review organizational tolerances
Assess
A
organizational
i ti
l capacity
it (t
(tolerance)
l
) ffor additional
dditi
l
risk exposure
Document and communicate strategy
Continue to reassess the risk throughout the project for
changes in risk exposure (Watch List)
Acceptance can be
be
Active: Develop a contingency plan
Passive: Fully accept the consequences; do nothing
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RMP-PMI
Plan Risk
Responses
161
Miti t
Mitigate
If risk exposure is not acceptable to the project and
company
Take specific actions to
Lower
L
th
the probability
b bilit off occurrence
Lower the impact of occurrence
g
Evaluate and estimate effectiveness of risk mitigation
strategy
Continue to reassess the risk throughout the project for
changes to risk exposure
May 2011
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RMP-PMI
Plan Risk
Responses
162
Transfer
T
f
Transfer all or part of the risk to a third party
Subcontract
Warranties
Insurance
Customer contract
Transference does not eliminate the risk
Transference may involve payment of a risk premium

May 2011
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RMP-PMI
Plan Risk
Responses
163
A
Avoid
id
If risk exposure is not acceptable and/or risk mitigation or transference
i not sufficiently
is
ffi i l effective
ff i
Cause of risk must be avoided and threat eliminated; take an alternative
approach
Review organizational tolerances
Assess task vs. project avoidance
Continue to reassess the risk throughout the project
Th product
The
d t description
d
i ti
f
for
an elementary
l
t
social
i l sciences
i
education
d
ti
multimedia
lti
di program
references stock video clips of children riding bikes and roller skating without helmets or knee
pads. During risk identification , the project team reviewed the product description and identified
a potential risk of school administration not buying the program because it appears to advocate
unsafe activities. Team avoided this risk by changing the project scope so that it did not include
the videos.
May 2011
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RMP-PMI
Plan Risk
Responses
164
R
Response
St
Strategies
t i for
f O
Opportunities
t iti
Accept: Active or passive
Enhance
Maximize the probability of the opportunity event
Maximize the impact of the opportunity event
Exploit (ensure opportunity is realized)
Share (allocate all or part of the ownership to third party)

May 2011
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RMP-PMI
Plan Risk
Responses
165
E h
Enhance
Facilitate or strengthen the cause of the opportunity
Target or reinforce the trigger
Take specific actions to
Maximize the probability of the opportunity event
Maximize the impact of the opportunity event
Examples of enhancing opportunities include adding more
resources to an activity to finish early
May 2011
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RMP-PMI
Plan Risk
Responses
166
Exploit
E l it
Take specific actions to ensure the opportunity realized
Eliminate the uncertainty associated with a particular risk
Possibly shorten the duration of a project by:
Assign more talented resources
Provide better quality that originally planned
Examples of directly exploiting responses include
assigning an organizations most talented resources to the
project to reduce the time to completion or to provide lower
cost than originally planned
May 2011
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RMP-PMI
Plan Risk
Responses
167
Sh
Share
Sharing the opportunity with a third party who can benefit
from the opportunity
Create risk sharing partnerships or joint ventures with
the express purpose of managing opportunities
May 2011
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RMP-PMI
Plan Risk
Responses
168
D fi iti
Definition
off Reserves
R
R
Reserves: Money
M
or ti
time provided
id d ffor iin th
the project
j t
management plan to mitigate cost, schedule, or
performance risk
Management
M
t reserves: A separately
t l planned
l
d quantity
tit
of money or time intended to reduce the impact of
missed cost, schedule, or performance objectives that
are impossible
i
ibl tto plan
l ffor; unknown
k
unknowns
k
Contingency reserves: Quantity of money or time that

is intended to reduce the impact of missed cost,
schedule,
h d l or performance
f
objectives,
bj ti
which
hi h can only
l b
be
partly planned; known unknowns
Reserves are intended only for in scope risks
Reserves are not part of EVM calculations
Reserves may be included in the total project budget
May 2011
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RMP-PMI
Plan Risk
Responses
169
Definition
D fi iti
off Reserves
R
(continued)
(
ti
d)
Project cost performance baseline: Items that are known about
the project and known by the team
g y reserve: Allowances for unplanned
p
but ppotentiallyy
Contingency
required changes that can result from realized risks identified in
the risk register
Management reserve: Budgets reserved for unplanned changes
to project scope and cost
May 2011
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RMP-PMI
Plan Risk
Responses
170
F t
Factors
in
i Determining
D t
i i
Reserves
R
Life-cycle position *
Opportunity leverage
Risk tolerance levels *
Estimating approach
Factors
Type of contract *
Risks accepted
Threat exposure *
Consequences of overruns *
Lessons learned
May 2011
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RMP-PMI
Plan Risk
Responses
171
Putting Reserves in Perspective Helps

with
ith Fi
Finall B
Budgeting
d ti
D
Decision
i i
+$
Total value of
threat
event impact
Total
value of
opportunity
events
-$
Total expected
value of threat
events
*Reserves
requested
Project Budget
Baseline
Total expected
value of
opportunity
events
*Reserves = net expected values of threats and opportunities
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RMP-PMI
Plan Risk
Responses
172
U d t Project
Update
P j t Management
M
t Plan
Pl
Represents the final output of all the risk response work
Contains results of the preceding steps of risk
identification, analysis, and prioritization
Includes how contingency plans will be implemented and
executed
Includes how reserves will be allocated
Provides structure for future risk management updates
p
ag
good basis for lessons learned
Represents
May 2011
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RMP-PMI
Plan Risk
Responses
173
P
Process
t Pl
to
Plan Ri
Risk
k Responses
R
Input
Prioritized risk
register
Opportunities to
pursue, threats to
respond to
Opportunities to
accept, threats to
accept
Risk management
pplan
Project management
plan
Project documents
Tools & Tech.

Strategies to minimize
threats (negative
risks)
Strategies to enhance
opportunities (positive
risks)
Contingent
i
responses
Expert judgment
O
Output
Risk register
Risk
response
strategies
Updated
project
documents
May 2011
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RMP-PMI
Plan Risk
Responses
174
C
Case
Study
St d C-1
C1
May 2011
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RMP-PMI
Plan Risk
Responses
175
QUESTIONS?
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
176

Monitoring & Controlling Risk
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
177
Course Overview
Ri k communication
Risk
i ti 27%
9
9
9
9
9 Develop a risk response strategy

9 Develop a contingency approach
9 Present recommendations to key
stakeholders

Risk Analysis 30%
Risk Governance 17%
May 2011

g
processes
www.pmhouse.org
RMP-PMI
9 Identifyy Risk
9 Evaluate risk attributes using
analysis
y
9 Prioritize risk
9 Establish control limits
Monitoring &
Controlling Risk
178
Risk
Ri k Monitoring
M it i
and
dC
Control
t l
[T]he process of implementing risk response plans,
tracking identified risks, monitoring residual risks
identifying new risks and evaluating risk process
throughout the project.*
Integrated
g
with p
project
j
management
g
p
plan
Related to the accomplishment of project objectives
Performed continuously during the project
Determines if project assumptions are still valid
Determines if contingency reserves are still accurate if they
need to be changed
Determines if risk management policies and procedures are
being followed and if they could be improved
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
179
Overview
O
i
off Monitor
M it and
d Control
C t l Risk
Ri k
Risk
management
plan
Risk monitoring and

control
Execute
Risk
response
plans
Planned
responses,
evaluations,
additional
responses
Evaluate
Project execution
and
control processes
Document
Updated risk
management
plan
Updated
risk
response
development
May 2011
Progress,
deviations,
variances
Updated
prioritized
risk list
www.pmhouse.org
Risk
Ri
k
reassessment
RMP-PMI
Monitoring &
Controlling Risk
180
Execute Risk Response Strategy

Risk executing involves
involves
Implementing risk response strategies in the project plan
Monitoring and reacting to risk triggers, symptoms,
i di t
indicators
and
d residual
id l risks
i k
Communicating plan status to project stakeholders
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
181
E
Execute
t Ri
Risk
kR
Response St
Strategies
t i
Inputs
Project plan
Risk management
plan
Risk list
Approved change
requests
t
Work performance
information
Performance
requests
May 2011
Tools & Tech.
Outputs
Technical
performance
measurement
Status reports
and meetings
Early
E l warning
i
system
(triggers)
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
182
Ri k E
Risk
Execution
ti
Terms
T
Problem: A negative risk event, either known or
unknown, that occurs
Windfall: A positive risk event, either known or

unknown,, that occurs
Workaround: A response
response, not defined in advance,
advance to a
negative risk event that has occurred
Corrective action: Performing the response to a

negative risk event, planned , when the threat occurs
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
183
E
Execute
t Ri
Risk
k St
Strategies
t i O
Outputs
t t
Inputs
Project plan
Risk management
plan
Risk list
Approved change
requests
Work
k performance
f
information
Performance
requests
May 2011
Tools & Tech.
Technical
performance
measurement
Status reports and
meetings
Early
E l warning
i
system
(triggers)
www.pmhouse.org
Outputs
Results of
implemented risk
response strategies
t t i
Change requests
Cost and schedule
performance
RMP-PMI
Monitoring &
Controlling Risk
184
M it Project
Monitor
P j t Status
St t
Include risk review in agenda for regularly held project
status meetings. Monitor
Risk areas and descriptions
Significant risks
Progress made in risk management plan
New
N
problems
bl
or windfalls
i df ll observed
b
d or anticipated
ti i t d
Change management action required
Management action required
Risk owners reports on status of risks
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
185
Maintain Project Management Plan and Other

Project Documentation
Continually maintain project plan

Record trends
Notify key stakeholders of results
A
Acquire
i necessary d
documentation
t ti
Documentation may be required for change
negotiations
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
186
Evaluate Results
Evaluating risk response results involves
involves
Monitoring the effectiveness of risk response strategies
Evaluating corrective actions taken
Reanalyzing existing risks
Reassessing the risk environment
Evaluating project assumption validity
Identifying new risks
Adjusting the plan accordingly
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
187
Risk Evaluation
Inputs
Risk management
plan and project
plan
Cost and schedule
performance
All relevant
l
t eventt
information
Change requests
May 2011
Tools & Tech.
Outputs
Risk reassessment
Risk
Ri k audits
di
Variance and trend
analysis
Assumptions
A
ti
analysis
Technical
performance
measurement
Reserve and
contingency
analysis
Status meetings
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RMP-PMI
Monitoring &
Controlling Risk
188
Evaluate Results of Corrective Actions
Have mitigated risks been sufficiently contained?

Can materialized, accepted risks be tolerated?
Have contingency plan results been satisfactory?
H
Have
workaround
k
d results
lt b
been effective?
ff ti ?
Has the risk life cycle ended?
Is any further action required?
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
189
Ri k Reassessment:
Risk
R
t Id
Identify
tif Ri
Risks
k
What new risks are due to cost or schedule variances?
What new risks are due to customer changes in requirements?
What new risks are a result of personnel or stakeholder
changes?
h
?
What new risks are a result of organizational or environmental
changes?
What new risks are possible because of resource changes or
utilization changes?
Which of the originally identified risks have changed?
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
190
Risk Reassessment: Analyze and

P i iti Risks
Prioritize
Ri k
May 2011
Is the probability of each risk occurring the same?

Is the impact of each risk the same?
priorities the same?
Are the risk p
Are organizational tolerances the same?
Have stakeholders or sponsorship changed?
Are there any new risks?
Are there any response strategies that no longer work?
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
191
Risk Evaluation Output

Inputs
Project Plan
Risk management
plan
Cost,
Cost schedule
and scope
performance
All relevant event
i f
information
i
Corrective
actions
Change
g requests
q
May 2011
Tools & Tech.

Risk
reassessment
Risk audits
Variance
V i
and
d
trend analysis
Assumptions
analysis
y
Reserve and
contingency
analysis
www.pmhouse.org
Output
Updated risk register
9Newly identified
and analyzed risks
9Updated risk
assessments/ratings
9New risk response
strategies
RMP-PMI
Monitoring &
Controlling Risk
192
Document Risk Management Outcomes

Risk updating involves
Recording outcomes of risk reassessments and
evaluations
Closing
Cl i outt risks
i k no llonger applicable
li bl
Documenting changes to probability and impact
matrices and the Risk Breakdown Structure
Creating lessons learned
Revising risk management plan and the project
management plan
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
193
Update Risk Documentation

Inputs
Risk identification
and analysis data
Risk management
results
lt
Project results
Assumptions and
impressions
p
Interpretations and
analysis
Risk register
Risk
Ri k managementt
plan
May 2011
Tools
T
l and
d
Techniques
Outputs
Documentation
tools
Simple
reporting
format
Routine
project
j t
reports
ESI risk
tools
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
194
Update
U d t Risk
Ri k R
Register
i t
Record what worked and did not work
The original event is still identified, as well as the
status of the deliverables involved, but the success,
failure, or nonimplementation of the strategy is now
documented
data, so it becomes
Retain with the rest of the project data
part of the project history
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
195
Benefits of Updating the Risk

M
Management
t Pl
Plan
Should be done by the project team members
Provides a valuable historical reference for future
projects
p
j
((lessons learned))
Provides a project chronology of events for audit and
other reasons
Provides a communications mechanism
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
196
U d t Ri
Update
Risk
k Documentation
D
t ti
Output
O t t
Inputs
Risk
identification
and analysis
data
Risk
management
results
Project results
Assumptions
and more
impressions
Interpretations
and analysis
May 2011
Tools
T
l and
d
Techniques
Simple
reporting
formats
Routine
project
reports
ESI risk tools
www.pmhouse.org
Outputs
Updated risk
register
Updated risk
management
plan
Updated
project
management
plan
l andd other
th
documents
RMP-PMI
Monitoring &
Controlling Risk
197
1 Plan Risk Management

1.
Inputs
Project scope statement
Cost mgmt plan.
g
plan.
p
Schedule mgmt
Comm. mgmt plan.
EEF & OPA
Techniques
Pl
i
ti
l i
Planning
meetings
& analysis
Outputs
May 2011
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
198
Risk Identification
Inputs
Cost/Schedule/Quality
/
/Q
y mgmt
g
p
plans
Scope baseline
Project documents + EEF & OPA.
Techniques
Documentation Reviews
Assumptions analysis
Diagramming techniques
SWOT analysis
Checklists analysis
Info gathering techniques
Expert Judgment
Outputs
Risk Register
(Risk Potential Response,
(Risk,
Response Root Cause
Cause, Updated
Risk Categories)
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
199

Inputs
Risk Register
OPA (LL)
SCOPE STATEMENT
Techniques
Prob./Impact
Prob./Impact ASSESSMENT
Prob./Impact MATRIX
Data Quality Assessment
Risk Categorization
Risk Urgency Assessment
Expert Judgment
Outputs
Risk Register (Updates)
May 2011
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RMP-PMI
Monitoring &
Controlling Risk
200
Perform Risk Quantitative Analysis

Inputs
p
Risk Register
Risk, Cost, Schedule mgmt plans
OPA
Techniques
Quantitative Risk analysis and Modeling
techniques
Data Gathering and Representation techniques
Expert Judgment
Outputs
May 2011
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
201
Plan Risk Responses

I
Inputs
t
Risk Register
Techniques
Strategies for +ve risks
Strategies for ve risks
Contingent response strategies
Expert Judgment
Outputs
Project Management plan & docs
(Updates)
Risk-related
Ri k l t d contract
t
t decisions
d ii
May 2011
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
202
Risk Register
Work
Performance
information
Performance
Reports
Risk audits
Risk
Reassessment
Variance &
Trend Analysis
Technical
Performance
Measurement
Reserve Analysis
Outputs
O
s
Project
j
Management
Plan
Tools & Tech

T
hniques
s
Inputs
s
Monitor & Control Risks

Risk Register
g
Updates
Change requests
Project
management
plan updates
OPA updates
Project docs
updates
Status Meetings
May 2011
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
203
QUESTIONS?
May 2011
www.pmhouse.org
RMP-PMI
Monitoring &
Controlling Risk
204
Ri k M
Risk
Managementt T
Testt
Test #3#
May 2011
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RMP-PMI
Practice Standard for

205

Practice Standard for Project Risk

Management
g
May 2011
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RMP-PMI(Unit5)

206
Over view for Practice Standard for Project

Ri k Management
Risk
M
t
Introduction
Plan Risk Management
Identify Risks
Perform Quantitative Risk Analysis
p
Plan Risk Responses
Monitor & Control Risks
9 Purpose and Objectives for every Process
9 Critical Success Factors for every Process
9 Tools and Techniques for every Process
9 Documenting the Results of the every Process
May 2011
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RMP-PMI(Unit5)

207
I t d ti
Introduction
1.1 Purpose of the Practice Standard for Project Risk Management
9 provide a standard for project management practitioners
9 provide a standard that is globally applicable and consistently applied
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RMP-PMI(Unit5)

208
PLAN RISK MANAGEMENT

4.1 Purpose
p
and Objectives
j
of the Plan Risk Management
g
Defines the scope and objectives of the Project Risk Management process,
and ensures that the risk process is fully integrated into wider project
management.
management
4.2 Critical Success Factors for the Plan Risk Management Process
1) Identify and address barriers to successful project risk management
2) Involve project stakeholders in project risk management
3) Comply with the organizations objectives, policies, and practices
4.3 Tools and Techniques for
f the Plan Risk Management Process
9 Planning Sessions
9 Templates
4.4 Documenting the Results of the Plan Risk Management Process
9 The results of risk management planning are documented in the risk
management plan.
May 2011
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RMP-PMI(Unit5)

209
IDENTIFY RISKS
5.1 Purpose
p
and Objectives
j
of the Identify
y Risks Process
To identify all the knowable risks to project objectives.
5.2 Critical Success Factors for the Identify Risks Process
Early Identification , Iterative Identification , Emergent Identification
Comprehensive Identification , Explicit Identification of Opportunities
Multiple Perspectives , Risks Linked to Project Objectives ,
Complete Risk Statement , Ownership and Level of Detail , Objectivity
5.3 Tools and Techniques for the Identify Risks Process
9 Historical Review , Current Assessments , Creativity Techniques
5.4 Documenting the Results of the Identify Risks Process
Th results
The
l from
f
the
h Identify
Id if Risks
Ri k process should
h ld be
b recorded
d d in
i order
d to
capture all relevant information currently available for each identified
risk in risk register.
May 2011
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RMP-PMI(Unit5)

210
PERFORM QUALITATIVE RISK ANALYSIS

6.1 Purpose
p
and Objectives
j
of the Perform Qualitative Risk Analysis
y
To evaluates key characteristics of individual risks enabling them to be
prioritized for further action.
6 2 Critical Success Factors for the Perform Qualitative Risk Analysis
6.2
Use Agreed-Upon Approach , Use Agreed-Upon Definitions of Risk Terms ,
Collect High-Quality Information about Risks , Perform Iterative
Qualitative Risk Analysis
6.3 Tools and Techniques for the Perform Qualitative Risk Analysis
Select Risk Characteristics that Define Risks
Risks Importance
Collect and Analyze Data
o
e Risks
s s by Probability
obab y a
and
d Impact
pac o
on Spec
Specific
c Objec
Objectives
es
Prioritize
Prioritize Risks by Probability and Impact on Overall Project
Categorize Risk Causes
Document the Results of the Perform Qualitative Risk Analysis
May 2011
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RMP-PMI(Unit5)

211
PERFORM QUANTITATIVE RISK ANALYSIS

7.1 Purpose and Objectives of the Perform Quantitative Risk Analysis
provides a numerical estimate of the overall effect of risk on
the objectives of the project, based on current plans and information
7 2 Critical Success Factors for the Perform Quantitative Risk Analysis
7.2
Prior Risk Identification and Qualitative Risk Analysis , Appropriate Project
g High
g Q
Quality
y Risk Data , Unbiased Data ,
Model Commitment to Collecting
Overall Project Risk Derived from , Individual Risks , Interrelationships
Between Risks in Quantitative Risk Analysis
7.3 Tools and Techniques for the Perform Quantitative Risk Analysis
Comprehensive Risk Representation , Risk Impact Calculation , Quantitative
Method Appropriate to Analyzing Uncertainty , Data Gathering Tools ,
Effective Presentation of Quantitative Analysis Results , Iterative Quantitative
y
, Information for Response
p
Planning
g
Risk Analysis
7.4 Documenting the Results of the Perform Quantitative Risk Analysis
May 2011
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RMP-PMI(Unit5)

212
PLAN RISK RESPONSES

8.1 Purpose and Objectives of the Plan Risk Responses Process
To determine the set of actions which most enhance the chances of project
success while complying with applicable organizational and project constraints
8 2 Critical Success Factors for the Plan Risk Responses Process
8.2
Communicate , Clearly Define Risk-Related Roles and Responsibilities ,
p
y Timing
g of Risk Responses
p
, Provide Resources,, Budget,
g , and Schedule
Specify
for Responses , Address the Interaction of Risks and Responses , Ensure
Appropriate, Timely, Effective, and Agreed-Upon Responses , Address Both
Threats and Opportunities , Develop Strategies before Tactical Responses
8.3 Risk Response Strategies
8 4Tools and Techniques for the Plan Risk Responses Process
8.4Tools
Response Identification , Response Selection , Action Planning ,
p and Responsibility
p
y Assignment
g
Ownership
8.5 Documenting the Results of the Plan Risk Responses Process
May 2011
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RMP-PMI(Unit5)

213
MONITOR AND CONTROL RISKS

9.1 Purpose and Objectives of the Monitor and Control Risks Process
To track identified risks, monitor residual risks, identify new risks, ensure that
risk response plans are executed at the appropriate time, and evaluate their
effectiveness throughout the project life cycle.
cycle
9.2 Critical Success Factors for the Monitor and Control Risks Process
g
Risk Monitoring
g and Control with Project
j
Monitoring
g and Control ,
Integrate
Continuously Monitor Risk Trigger Conditions , Maintain Risk Awareness
9.3 Tools and Techniques for the Monitor and Control Risks Process
Managing Contingency Reserves , Tracking Trigger Conditions , Tracking
Overall Risk , Tracking Compliance
9 4 Documenting the Results of the Monitor and Control Risks Process
9.4
The final control action of risk monitoring and controlling is to record actual data
for future use
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QUESTIONS?
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Examination Specification
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O
Over
view
i
ffor Examination
E
i ti S
Specification
ifi ti
Examination Blueprint
Domains, Tasks, and Knowledge and Skill Statements
Performance Domain I: Risk Communication
Performance Domain II: Risk Analysis
Performance Domain III: Risk Response Planning
Performance Domain IV: Risk Governance
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E
Examination
i ti
Blueprint
Bl
i t
The exam consists of 170 questions in 3.5 hours based on the
following domains:
Risk Communication
27%
Risk Analysis
30%
26%
Risk Governance
17%
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Domains, Tasks, and Knowledge and Skill

St t
Statements
t
This section of the report contains the domains, tasks, and
knowledge and skill statements as defined by the role delineation panels.
Domains:
I. Risk Communication
II. Risk Analysis
III. Risk Response Planning
IV. Risk Governance
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Domain I:
Ri k C
Risk
Communication
i ti
Task 1 Lead the risk management function by applying interpersonal
Task 2 Gather relevant information using human and automated sources
in order to assess and communicate the sensitivity of the stakeholder to risk.
Task 3 Document risk-related information using standard tools and techniques
in order to establish and maintain a common understanding of the risks.
Task 4 Create regular status reports using performance metrics as specified in
the
h risk
i k management plan
l iin order
d to update
d
the
h stakeholders.
k h ld
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Domain II:
Ri k A
Risk
Analysis
l i
Task 1 Identify all relevant risks (positive and negative) using human and
automated sources in order to scope the potential impact(s) of these risks
Task 2 Evaluate the attributes of the identified risks using qualitative and
quantitative tools and techniques in order to establish a uniform context
f the
for
th risk
i k response process.
Task 3 Prioritize the evaluated risks based on collected stakeholder
sensitivity in order to facilitate decision and action.
Task 4 Establish control limits by completing a risk tolerance assessment
in order to influence risk response and monitor trends.
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Domain III:
Ri k Response
Risk
R
Planning
Pl
i
Task 1 Develop a risk (positive and negative) response strategy from
the policy, and information gathered during risk analysis in order to
ensure timely and defined action when required.
Task 2 Develop a contingency approach using the response strategy and
prepare
p
for the occurrence of
relevant scenarios in order to p
anticipated risks and unanticipated events.
T k 3 Present
Task
P
t recommendations
d ti
t key
to
k
stakeholders
t k h ld
b
based
d on risk
i k
response, values and other influences in order to obtain
authorization for response plan execution.
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Domain IV:
Ri k G
Risk
Governance
Task 1 Capture lessons learned by formal and informal means in order to
i
incorporate
t th
them iinto
t ffuture
t
risk
i k planning.
l
i
Task 2 Refine risk policies and practices using lessons learned in order to
p
risk management
g
effectiveness.
improve
Task 3 Create the risk management plan using relevant policies and
standards in order to direct risk management activities.
T k 4 Establish
Task
E t bli h metrics
t i ffor risk
i k managementt processes b
by d
defining
fi i
baselines in order to evaluate performance.
process p
performance using
g established metrics and
Task 5 Examine p
standard tools in order to drive risk process improvements.
Task 6 Monitor risk performance using the risk response plan in order to
initiate corrective actions
actions.
Task 7 Identify relevant policies and standards using internal and external
sources in order to integrate the applicable elements into the risk
managt. plan.
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Ri k M
Risk
Managementt T
Testt
Test #4#
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1

Risk Management Professional

Introduction for Risk Management

Identify and define risk

PMI is a service and trademark of the Project Management Institute, Inc..

Source - PMI-RMP Credential Handbook August 2009

Source - PMI-RMP Credential Handbook August 2009

Exam Steps , Exam Covers , and Scoring

Please Introduce your self

What is your name

Risk Response Planning 26%

Develop a risk response strategy

Apply interpersonal skills

Risk Analysis 30%

Risk Governance 17%

Source: PMBOK Guide, p. 438

Risk Exposure Is a Function of Its Components

Characteristics of Risk Events

Characteristics of Risk Events (continued)

Project Risk Management

Source: PMBOK Guide, p. 436

Initiate and lead

Benefits of Risk Management

Critical Success Factors

Risk Management Processes in PMBOK Guide

Risk Management Process

Tools & Techniques

Risk management plan

Risk Management and Project Management

Risk management focuses on

How do they interact?

Plan , Identify &

Risk Management Professional

Plan , Identify & Communicate Risk

Plan , Identify &

Risk Response Planning

Apply interpersonal skills

Document and record lessons learned

Develop a risk response strategy

Plan , Identify &

Plan , Identify &

Project scope statement

Plan , Identify &

Planning Meeting & Analysis

To develop the risk management plan

Plan , Identify &

Roles and responsibilities

Plan , Identify &

Monitoring & Control

All Project period

Plan , Identify &

Risk Management Plan output

Relative or numerical Scales are Shown

Plan , Identify &

Plan , Identify &

Plan , Identify &

Communication in the Risk Management

Team members must understand:

Plan , Identify &

Plan , Identify &

Plan , Identify &

You need to Identify and

Practice Standard for Project Risk Management, p. 16