W.H.Bender Quote 62 - Always strive to be a Hospitality Service professional
Risk management profesional presentation
1. I N T R O D U C E D B Y
PROF. KARIM EL-DASH
P H D ; P M P ; R M P ; C C E ; A V S
RISK MANAGEMENT PROFESSIONAL
PMI-RMP®
06/10 - 10/10 /2012
1
Prof. Karim El-Dash www.projacs.com
2. PMP Eligibility /Requirements
Educational
Background
Project Risk Management
Experience
Project Risk
Management
Education
High school
diploma, associate’s
degree or global
equivalent
4,500 hours experience within
the last five years
40 contact hours of formal
education
Bachelor’s degree
or global equivalent
3,000 hours experience within
the last five years
30 contact hours of formal
education
06/10 -
10/10
/2012
2
Prof. Karim El-Dash www.projacs.com
5. Definition of a Project
5
Any work that:
1. Has a temporary endeavor with a beginning and an
end.
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
Start Process Finish
6. Definition of a Project
6
2. Creates a unique product ,
service or result.
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
7. What Is Project Management?
7
Project Management
is the application of
knowledge, skills,
tools, and techniques
to project activities to
meet project
requirements.
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
13. Cost & staffing levels across PLC
06/10 - 10/10 /2012
13
Prof. Karim El-Dash www.projacs.com
Time
Start the
project
Organizing &
preparing
Carrying out work Closing the
project
Project
Charter
Project Management
Plan
Accepted
deliverables
Archived
project
documents
14. Impact of variables based on project time
14
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
cost
Influence / risk
Time
15. Project Governance Across the Life Cycle
15
Project governance
provides a
comprehensive,
consistent method of
controlling the project
It should be described in
the project plan
It must fit within the
context of the program or
performing organization
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
16. Stakeholders
16
A stakeholders are persons and
organizations that are actively
involved in the project, or whose
interests may be affected as a result
of project performance or project
completion.
+ve & -ve stakeholders
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
21. Process Groups Interact in a Phase or Project
21
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
Time
Initiating Planning Executing Monitoring &
Controlling
Closing
22. Project Management Process Group Triangle
22
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
Executi
ngproce
sses
Closing
process
es
Plannin
g
process
es
Initiatin
g
process
es
Monitoring & controlling processes
Executi
ngproce
sses
Closing
process
es
Plannin
g
process
es
Initiatin
g
process
es
Monitoring & controlling processes
Executi
ngproce
sses
Closing
process
es
Plannin
g
process
es
Initiatin
g
process
es
Monitoring & controlling processes
Executi
ngproce
sses
Closing
process
es
Plannin
g
process
es
Initiatin
g
process
es
Monitoring & controlling processes
Phase 1 Phase 2 Phase 3 Phase 4
Project Life Cycle
Executi
ngproce
sses
Closing
process
es
Plannin
g
process
es
Initiatin
g
process
es
Monitoring & controlling processes
29. Is a form of progressive
elaboration planning.
Work to be accomplished in the
near term is planned in detail at a
low level of the WBS
Work far in the future is planned
for WBS components that are at a
relatively high level of the WBS.
Rolling Wave Planning
29
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
30. Dependencies
Mandatory dependency
inherent in the nature of
the work being done /
contractually required
(hard logic)
Discretionary
dependency determined by
project team (soft logic)
External
30
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
31. Cost Management Plan
Level of accuracy
Units of measure
Organizational
procedures links (ex.
control account, CA)
Control thresholds
Rules of performance
measurement (EVM)
Reporting formats
Process descriptions
31
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
34. Estimate Activity Duration
Tools
Expert judgment
Analogous estimating: also
called top-down estimating, means
using the actual duration of a
previous, similar activity as the
basis for estimating the duration of
a future activity based on specific
parameters like duration, budget,
size, weight
Parametric estimating
3-point estimate
Reserve analysis
34
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
35. Estimate Activity Duration
Tools
Expert judgment
Analogous estimating
Parametric estimating
uses statistical relationship between
historical data and other variables
to estimate for activities, such as
multiplying quantity of work by
productivity rate
3-point estimate
Reserve analysis
35
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
36. Estimate Activity Duration
Tools
Expert judgment
Analogous estimating
Parametric estimating
3-point estimate
Optimistic, most likely, pessimistic
and
6
4 pMo
E
ttt
t
6
op tt
t
36
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
42. Variable & Fixed Costs
Variable Costs that change
with the amount of
production.
Fixed Costs that do not
change as production
changes.
42
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
43. Direct and Indirect Cost
Indirect costs are the necessary costs of doing business that
cannot be related to a particular activity and in some cases
cannot be related to a specific project.
general overhead
project overhead.
43
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
45. Project Quality Management
Precision is
consistency that the
value of repeated
measurements are
clustered and have
little scatter
Accuracy is
correctness that the
measured value is
very close to the true
value
45
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
50. Communication Management Plan
Stakeholder requirements
Information, format, content, and level of
detail
Reasons
Time frame
Responsible person
Who will receive the information
Technologies used
Escalation process
Updating communications management
plan
Constraints
50
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
51. Project Communication Plan (sample)
51
06/10 - 10/10 /2012
What Who/Target Purpose When/Frequency Type/Method(s)
Initiation
Meeting
All
stakeholders*
Gather information
for Initiation Plan
FIRST
Before Project
Start Date
Meeting
Distribute
Project
Initiation Plan
All
stakeholders*
Distribute Plan to
alert stakeholders
of project scope
and to gain buy in.
Before Kick Off
Meeting
Before Project
Start Date
Document distributed via
hardcopy or electronically.
May be posted on project
website or OIT
Blackboard site.
Project Kick
Off
All
stakeholders*
Communicate
plans and
stakeholder
roles/responsibilitie
s.
At or near
Project Start
Date
Meeting
Status
Reports
All
stakeholders
and Project
Office
Update
stakeholders on
progress of the
project.
Regularly
Scheduled.
Distribute electronically
and post via web/OIT
Blackboard site.
Prof. Karim El-Dash www.projacs.com
53. Power / Interest Grid for Stakeholder Prioritization
06/10 - 10/10 /2012
53
Key Players
(Manage Closely)
Important Players
(Keep Satisfied)
Affected Players
(Keep Informed)
Other Players
(Monitor)
HighLow
High
Low
Interest
Power
Prof. Karim El-Dash www.projacs.com
54. Communication Technology
Urgency of the need for
information
Availability of technology
Expected project staffing
Duration of the project
Project environment
54
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
58. Distribute Information
Sender-receiver model
Choice of media
Writing styles
Meeting management
techniques
Presentation techniques
Facilitation techniques
58
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
59. Performance Report
Analysis of past performance
Current status of risks and issues
Work completed
Work to be completed
Summary of changes
Results of variance analysis
Forecast project completion
59
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
61. Cost Performance Baseline
It is an authorized time-
phased budget at completion
(BAC) that is used as a basis
against which to measure,
monitor, and control overall
cost performance on the
project.
61
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
69. Perform Quality Assurance
Is the process of auditing
the quality requirements
and the results from quality
control measurements to
ensure appropriate quality
standards and operational
definitions are used
69
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
70. Perform Quality Assurance
Quality audit
Is a structured, independent review to determine
whether project activities comply with
organizational and project policies, processes, and
procedures
70
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
74. Team Performance Assessment
74
06/10 - 10/10 /2012
Behaviors/Process Measures Results Measures
Individual Level:
An employee’s
contribution to the
team
Whether or how well the
employee: cooperates with team
members, communicates ideas
during meetings, participates in
the team’s decision-making
processes.
The quality of the written report,
the turnaround time for the
individual’s product, the accuracy
of the advice supplied to the team,
the status of the employee’s case
backlog.
Team Level:
The team’s
performance
Whether or how well the team:
runs effective meetings,
communicates well as a group;
allows all opinions to be heard,
comes to consensus on decisions.
The customer satisfaction rate
with the team’s product, the
percent decline of the case
backlog, the cycle time for the
team’s entire work process.
Prof. Karim El-Dash www.projacs.com
75. Decision Making
Problem definition
Problem solutions
generation
Evaluation criteria
Solution action planning
Solution evaluation
planning
Evaluation of outcome
75
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
77. Project Risk Management
Planning,
identification,
analysis (qualitative + quantitative),
responses, and
monitoring and control on a project
77
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
78. Project Risk Management
Objectives are to:
increase the probability and impact of
positive events, and
decrease the probability and impact of
events adverse to the project
78
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
79. Project Risk
Project risk is an uncertain
event or condition that, if
it occurs, has an effect on a
project objective.
Objective : Scope / time /
cost / quality
A risk has a cause or more
and, if it occurs, an impact
or more.
79
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
80. Known & Unknown
Known risks are those that
have been identified and
analyzed
Unknown risks cannot be
managed, may be addressed by
contingency plan
80
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
82. Plan Risk Management
11-1
1. Project scope statement
2. Cost management plan
3. Schedule management plan
4. Communications
management plan
5. Enterprise environmental
factors
6. Organizational process
assets
Inputs
1. Planning meetings & analysis
Tools & Techniques
1. Risk management plan
Outputs
06/10 - 10/10 /201282Prof. Karim El-Dash www.projacs.com
83. Plan Risk Management (T&T)
Planning Meetings & Analysis
Project manager
Selected team members and stakeholders
Anyone with responsibility to manage the risk
planning and execution activities
83
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
84. Risk Management Plan
Methodology
Roles and responsibilities
Budgeting
Timing
Categories
Probability & Impact
A relative scale “very unlikely” to “almost certainty” could be
used.
Numerical probabilities on a general scale (e.g., 0.1, 0.3, 0.5,
0.7, 0.9)
84
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
85. 85 06/10 - 10/10 /2012
Risk Responsibility Chart
Top
management
PM
Management
Team
Risk Owner
Plan Risk Management X X X
Identify Risk X X
Perform Qualitative
Risk Management
X X X
Perform Qualitative
Risk Management
X X X
Plan Risk Responses X X X
Monitor & Control Risks X X X
Prof. Karim El-Dash www.projacs.com
87. Likelihood Expectations
87
06/10 - 10/10 /2012
Level Likelihood Expected or actual frequency experienced
1 Rare
May only occur in exceptional circumstances; simple process; no
previous incidence of non-compliance
2 Unlikely
Could occur at some time; less than 25% chance of occurring; noncomplex
process &/or existence of checks and balances
3 Possible
Might occur at some time; 25 –50% chance of occurring; previous
audits/reports indicate non-compliance; complex process with extensive
checks & balances; impacting factors outside control of organization
4 Likely
Will probably occur in most circumstances; 50-75% chance of
occurring; complex process with some checks & balances; impacting
factors outside control of organization
5 Almost certain
Can be expected to occur in most circumstances; more than 75%
chance of occurring; complex process with minimal checks & balances;
impacting factors outside control of organization
Prof. Karim El-Dash www.projacs.com
88. Impact Scale
88
06/10 - 10/10 /2012
Relative or numerical scales
Objective
Very low /
0.05
Low / 0.10
Moderate /
0.20
High / 0.40
Very
High /
0.80
Cost
Insignificant
increase
<10%
increase
10-20%
increase
20-40% increase
>40%
increase
Time
Insignificant
increase
<5% increase
5-10%
increase
10-20% increase
>20%
increase
Scope
Barely
noticed
change
Minor change
Major
change
Unacceptable by
sponsor
Product
is
useless
Quality
Barely
noticed
Applications
affected
Sponsor
approval
required
Unacceptable by
sponsor
Product
is
useless
Prof. Karim El-Dash www.projacs.com
89. 89 06/10 - 10/10 /2012
Stakeholder Tolerance Matrix
Stakeholder Requirements
Tolerances
Time Cost Quality
PM
Deliver product as
requested
More than
10% Phase
II
More than
5% Phase II
Conformance
to all specs
Technical
Manager
Passing all QC
criteria
More than
20% Phase
II
More than
10% Phase
II
Conformance
to all
limitations
Marketing
Manager
Verify profits
More than
5% Phase
II
More than
2% Phase
II
Customer
acceptance
IT Manager
Customer
satisfaction
(internal & external)
More than
20% Phase
II
More than
5% Phase II
Positive
feedback
Prof. Karim El-Dash www.projacs.com
90. Risk Matrix
90
06/10 - 10/10 /2012
Consequences
Likelihood Insignificant Minor Moderate Major Extreme
Rare Low Low Low Low Low
Unlikely Low Low Low Medium Medium
Possible Low Low Medium Medium Medium
Likely Low Medium Medium High High
Almost
certain
Low Medium Medium High Extreme
Prof. Karim El-Dash www.projacs.com
91. Risk Management Plan
Stakeholder tolerance
Reporting format
Tracking
91
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
107. Perform Qualitative Risk Management (outputs)
Risk register updates
Relative ranking
Risks categorized
Causes requiring particular attention
List of risks for additional analysis
Watch-lists of low-priority risks
Trends in qualitative risk analysis results
107
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
108. Risk Register
108
06/10 - 10/10 /2012
Task Cause Risk Effect Probability Impact
Design Conflict
Errors +
Rework
Delay High High
Procurement Single supplier
Inappropriate
delivery
Delay / cost
increase
Medium Medium
Handing out Permit not ready No access Delay Medium High
Executing
Technical
problems
Rework
Delay /
Cost
increase
Low Medium
Verification Nonconformance
Corrective
action
Quality /
Cost/ Time
Low Medium
Prof. Karim El-Dash www.projacs.com
109. Perform Quantitative Risk Management
Numerically analyzes the effect of identified risk on
overall project objectives.
109
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
111. Perform Quantitative Risk Management (T&T)
Data gathering & representation technique
Interviewing
Probability distribution
111
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
112. Three-Point Estimate
WBS
Element
Low Most Likely High
Design $2 $4 $7
Build $35 $45 $60
Verify $5 $7 $10
Total $42 $56 $77
112
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
113. Probability Distribution
Probability
Time / Cost
Beta
distribution
Optimistic Most
likely
Pessimistic
Triangular
distribution
Probability
Time / Cost
113
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
114. Probability Distribution
Probability
Likelihood of occurrence.
Statistics
Mean – Average of the values of events
Mode – Value which occurs most often
Median – Value in middle of the range of ordered values
Variance
Average of the squared deviations from the mean
Standard deviation – Square Root of the Variance
Range – Values between upper & lower limits
114
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
115. Statistical Description
Sample: 5,7,3,6,7,8,4,7,2 (2,3,4,5,6,7,7,7,8)
Mean =
Mode = 7
Median = 6
Range = 6
115
06/10 - 10/10 /2012
45.5
9
274876375
Prof. Karim El-Dash www.projacs.com
116. Normal Distribution CurveNormal Distribution Curve
2 standard deviations (+/- 1 ) = 68.26 %
4 standard deviations (+/- 2 ) = 95.46 %
6 standard deviations (+/- 3 ) = 99.73 %
0-1-2-3 +1 +2 +3
116
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
119. SENSITIVITY ANALYSIS
SPIDER DIAGRAM
Total cost of the project
Quality Skill
Logistics
Variation %
0%
(+)
(-) Time
119
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
120. Expected Monetary Value
Ei is the expected payoff for strategy i,
Pi,j is the payoff element, and
pj is the probability of each state of nature occurring.
n
j
jjii pPE
1
,
120
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
121. Expected Monetary Value
State of
nature
Boom Moderate Recess Expected
value
Strategy
0.20 0.50 0.30
S1 50 20 (40) 8
S2 40 10 (10) 10
S3 20 10 0 9
121
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
122. Large Plant
or
Small Plant
Small Plant
($200,000)
Large Plant
($500,000)
Recess
+400,000
Boom
+900,000
Recess
+160,000
Boom
+300,000
30%
70%
30%
70%
900k -500k = 400k
400k -500k = -100k
300k -200k = 100k
160k -200k = -40k
400*.3 -100*.7= 50k
100*.3 - 40*.7 = 2k
Decision Definition Decision Node Chance Node Net Path value
Decision Node
Chance Node
End of Branch
122
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
123. SIMULATION
+ + =
A B C Sum
123
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
124. SIMULATION
+ + =
A B C Sum
124
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
125. Total Cost Probability Distribution
06/10 - 10/10 /2012
125
Prof. Karim El-Dash www.projacs.com
126. Perform Quantitative Risk Management (outputs)
Risk register updates:
Probabilistic analysis
Probability of achieving objectives
Prioritized list of quantified risks
Trends in quantitative risk analysis results
126
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
127. Plan Risk Responses
11-5
1. Risk register
2. Risk management plan
Inputs
1. Strategies for negative risks
or threats
2. Strategies for positive risks or
opportunities
3. Contingent response
strategies
4. Expert judgment
Tools & Techniques
1. Risk register update
2. Risk-related contract
decisions
3. Project management plan
updates
4. Project document updates
Outputs
06/10 - 10/10 /2012127Prof. Karim El-Dash www.projacs.com
128. Plan Risk Responses (T&T)
Strategies for negative risks:
1. Avoid
2. Transfer
3. Mitigate
4. Accept
128
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
129. Risk Avoidance
Involves changing the project management plan to
eliminate the threat entirely
Some risks that arise early in the project can be
avoided by clarifying requirements, obtaining
information, improving communication, or acquiring
expertise
One form of avoidance is to shut down the project
129
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
130. Risk Transfer
Requires shifting the negative impact of a threat,
along with ownership of the response, to a third
party.
Cost-type contract transfer the cost risk to the buyer
Fixed-price contract transfer risk to the seller
130
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
131. Risk Mitigation
Implies a reduction in the probability and/or impact
of an adverse risk event to an acceptable threshold
131
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
132. Risk Acceptance
Passive acceptance requires no action
Active acceptance strategy is to
establish a contingency reserve for
known (sometimes unknown) risks
132
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
135. Risk Exploiting
Eliminate the uncertainty associated with a
particular upside risk by making the opportunity
definitely happen.
135
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
136. Risk Sharing
Involves allocating ownership to a third party who is
best able to capture the opportunity for the benefit of
the project
136
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
137. Risk Enhancement
Modifies the “size” of
an opportunity by:
1. Increasing probability
and/or positive
impacts
2. Identifying and
maximizing key
drivers of these
positive-impact risks
137
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
138. Strategies for Opportunities
138
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
ExploitEnhance
ShareAccept
Amount of
Benefit
Occurrence
Frequency
139. 139
06/10 - 10/10 /2012
Risk register
( after planning risk responses)
Task Cause Risk Effect Probability Impact Trigger Response Allocation Owner Residual risk Secondary risk
Design
Procurement
Handing out
Executing
Verification
Prof. Karim El-Dash www.projacs.com
140. Risk-Related Contract Decisions
Contractorincentive
Firm Fixed Price (FFP)
Fixed Price Plus Incentive Fee (FPIF)
Fixed Price with Economic Price Adjustments (FP-EPA)
Cost Plus Fixed Fee (CPFF)
Cost Plus Incentive Fee (CPIF)
Customer influence
Cost Plus Award Fee (CPAF)
Time & Materials
Customer risk
Contractorrisk
140
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
144. Common Construction Project Risk
1. Tight project schedule
2. Design variations
3. Excessive approval procedures in administrative government departments
4. High performance/quality expectations
5. Inadequate program scheduling
6. Unsuitable construction program planning
7. Variations of construction programs
8. Low management competency of subcontractors
9. Variations by the client
10. Incomplete approval and other documents
11. Incomplete or inaccurate cost estimate
12. Lack of coordination between project participants
13. Unavailability of sufficient professionals and managers
14. Unavailability of sufficient amount of skilled labor
15. Bureaucracy of government
16. General safety accident occurrence
17. Inadequate or insufficient site information (soil test and survey report)
18. Occurrence of dispute
19. Price inflation of construction materials
20. Serious noise pollution caused by construction
144
06/10 - 10/10 /2012Prof. Karim El-Dash www.projacs.com
145. K A R I M E L - D A S H
K _ E L D A S H @ H O T M A I L . C O M
T E L : 9 6 5 - 9 9 3 1 0 2 6 1
F A X : 9 6 5 - 2 2 3 1 4 5 3 3
06/10 - 10/10 /2012
145
THANKS
Prof. Karim El-Dash www.projacs.com