3.0 Planning and Managing Project Risk
Learning Objectives
By the end of this session, you will be able to:
- Explain the importance of navigating uncertainty to improve the ability to anticipate situations, make good decisions, plan and solve problems.
- Explain the purpose and role of project risk management in project management.
- Examine the principles and concepts including stakeholders risk attitudes, communications, responsibility for project risk management and project manager’s role for project risk management.
- Apply and evaluate all elements of the project risk management processes.
- Plan Risk Management
- Identify Risks
- Perform Qualitative Risk Analysis
- Perform Quantitative Risk Analysis
- Plan Risk Responses
- Monitor and Control Risks
- Analyze all Critical Success Factors
Introduction
Project environments are constantly changing with varying degrees of uncertainty. Uncertainty represents threats and opportunities that project teams explore, assesses and decide how to handle. According to PMBOK 7th edition, the Uncertainty Performance Domain, addresses activities and functions associated with risk and uncertainty. Uncertainty is about a state of not knowing or unpredictability and there are many degrees of uncertainty:
- Risk: Associated with not knowing future events.
- Ambiguity: Associated with not being aware of current or future conditions.
- Complexities: Associated with dynamic systems having unpredictable outcomes.
- Volatility: Associated with rapid and unpredictable change.
Successful navigating uncertainty begins with understanding the larger environment within which the project is operating. Aspects of the environment that contributes to project uncertainty include and not limited to:
- Economic factors such as volatility in prices, availability of resources, ability to borrow funds, and inflation/deflation
- Technical consideration such as new or emerging technology, complexity associated with systems, and interfaces.
- Legal or legislative constraints and requirements
- Physical environment as it pertains to safety, weather, and working conditions
- Ambiguity associated with current and future conditions
- Social and market influences shaped by opinion and media
- Political influences, either external or internal to the organization.
There are hardly any uncertainty free projects since there are multiple events that can influence the project so risk management is about identifying, analyzing, minimizing and managing risk.
PMI Practice Standard for Project Risk Management purpose is to:
- Define Project Risk
- Explain Principles and Concepts
- Identify Risk Management Processes
