4. Risk Analysis and Management PDF

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Summary

Project Management Risk Analysis and Management What is Risk?  “the perceived risk of an activity is a linear function of five dimensions: its probability of harm, benefit, status quo and its expected harm and benefit”  “expected harm and benefit measure the perceived magnitudes of negative and po...

Description

Project Management Risk Analysis and Management What is Risk?  “the perceived risk of an activity is a linear function of five dimensions: its probability of harm, benefit, status quo and its expected harm and benefit”  “expected harm and benefit measure the perceived magnitudes of negative and positive outcomes, whereas the probability of harm and benefit measure the perceived probability of negative and positive outcomes occurring”  “the probability of status quo measures the probability of breaking even as a result of engaging in an activity” What is Risk Analysis?

Why Analyse Risk?  “the objective of the risk analysis is to enable the project manager to include contingencies, that is, having identified the most risky elements of the project, to put some actions in place to make sure that the risk is minimized” (Maylor 2010:230) How can Risk be Managed? (Maylor 2010)  Identify, quantify and solve or prepare for the problem before it happens

Project Management  

Outsource so the contractor deals with the risk Try it out first in a trial or pilot

What Qualitative Approaches can we Use?  Probability Impact Chart

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Failure Mode Effect Analysis (FMEA) o (likelihood) x (severity) x (hideability) o In other words: (probability) x (impact) x (how easy for someone to hide problem from rest of project team until its too late?) Expected Value o Expected Value = possible outcome c probability of its occurrence Programme Evaluation & Review Technique (PERT) o Optimistic time = o o Most likely time = m o Pessimistic time = p

o Expected time = [o + 4m +p]/6 o Variance of activity time = [[p-o]/6]2

Project Management 

Sensitivity Analysis

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Monte Carlo Simulation o Uses ranges of values for time, cost and other estimates  finances and other critical project factors...