CPETECET 470 Project Management

1
CPET/ECET 470Project Management

• Class 7 Risk Management

2
What is Risk?

• Risk is
• The possibility of an event/non-event that could
  adversely impact the desired outcome
• Risk Areas
• Cost
• Schedule
• Technical
• Risk Items (examples)

3
Low Risk Project
RD
Manufacturing
Marketing
Time
4
Medium Risk Project
RD
Information Exchange
Manufacturing
Marketing
Time
5
High Risk Project
RD
Manufacturing
Marketing
Time
6
Types of People

• Risk Avoiders
• Risk Neutrals
• Risk Lovers
• What are the stereotypes?
• Which type are you?

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What is Risk Management?

• Remember Earned Value Management?
• A process for measuring and controlling project
  cost schedule
• Risk Management
• A process for measuring and controlling project
  risks
• What gets measured for each risk item identified?
• Likelihood of the item going wrong
• Impact to the project if the items goes wrong

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Risk Management Process

• Looks a lot like the EVM process

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How Do You Measure Risk?

• Somewhat subjective at face value this is why
  it is important to have a process the human
  factor is reduced/eliminated from the evaluation
• Using a standard approach that combines the
  likelihood of occurrence and the impact of the
  risk neutralizes most subjectivity
• An industry standard approach combines the
  likelihood and impact and creates a risk rating
  (low, medium, high)

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Risk Rating Matrix
ASSESSMENT
LIKELIHOOD
IMPACT

Technical
and /
Impact on
and /
and /
Level
Performance
or
Schedule
Cost
Other Teams
or
or
1
Minimal or no Impact
Minimal or no Impact
Minimal or no Impact
None
2

Acceptable with some
Additional resources
lt5
Some Impact
reduction in need dates
required able to meet
Minor slip in key milestones
Moderate
Acceptable with significant
5 - 7
3
reduction in margin
not able to meet need dates
Impact
4
7 - 10
Major
Acceptable no remaining margin
Major slip (gt2 weeks) in key milestones
Impact
5
Unacceptable
Can't achieve key team or
gt10
Unacceptable
or major program milestone
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Sample Risk Register