Project Risk Assessment Method PRAM

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Project Risk Assessment Method -PRAM
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PROJECT SUCCESS
Behold the lowly Turtle - he only makes progress
when he sticks his neck out - James Conan Bryan,
1954
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ESTIMATING?
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Productivity Management Principle3. Estimate
the Time and Costs

• OBJECTIVE A time and cost estimate with risks
  known and agreed to by all parties that will be
  the project teams most useful vehicle for
  achievement of project goals.
• Key ideas
• Fixed cost fixed parameters
• Change happens, budget for it
• Avoid leaving out tasks

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PRAM PROJECT RISK ASSESSMENT METHOD

• OBJECTIVE To improve estimating by identifying
  project risks and mitigating their impact.
• Key ideas
• Risk is inherent in all projects and it must be
  anticipated and planned for.
• Risk and its consequences must be easily
  displayed.
• Active management of shared risks by customers
  and IS will result in better on-time within
  budget performance, with less surprises.

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THE ESTIMATE ON A SUNNY DAY IN MAY
Customer Says The system must be installed by
January 1st! Why not? I dont have anymore
info! But it must be done by Jan 1st - Just give
a Ball Park estimate. Atta Boy - Go get em
Tiger!
IS Says Cant do it! Need more info! Then
I cant estimate time money! OK - You got it!
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THE RESULT ON A RAINY DAY IN NOVEMBER
Customer Says What - you need more time and
!! - Why? Why not? I have a lot of
Commitments dependent on this project...Why
didnt you tell me? I didnt understand I was at
risk!
IS Says The assumptions I made when I gave you
the estimates didnt hold! Im not sure - I
think it was________! Why didnt you
ask? Oh.... Im sorry.
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QUIZ - RISK MANAGEMENT
Define these terms 1. Bayesian Probability 2.
Continuum of Uncertainty 3. Coefficient of
Variation 4. Risk Referent Level 5. Deceptive
Inequitable Risk 6. Monte Carlo Simulation 7.
Decision Tree Analysis 8. Sycophantic
Relationship 9. Expected Value 10. Risk
Sensitivity Analysis
Answer Probability of one event multiplied by
the probability of other events. A range of
conditions going from total certainty to complete
uncertainty based on available information.
(b-a)/6 EV The reference level of acceptable
risk. Risk imposed on someone without benefit
and Without their knowledge. Statistical method
for developing probability profiles. Shows
alternative actions related to a previous
decision. ? Pw x reward minus Pl x remedy
EV Sensitive of an estimate to a particular risk
variable.
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DEFINITIONS

• Risk - Potential realization of an unwanted
  negative consequence
• Reward - Potential realization of a wanted
  positive consequence

Most Risks are Reacted tovsPlanned for
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PRAM

• The Estimate
• Should be considered the beginning or starting
  point for the risk assessment
• Many Estimating Methods
• Dictate
• Formulas
• Matrices
• Guidelines
• Function Point Analysis
• Automated Tools - Estimacs/Bridge/etc.....
• Task by Task

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PRAM THE FOUR STEPS
STEP ONE - Identify the Risks
STEP TWO - Assess the Risks
STEP THREE - Plan Risk Mitigation
STEP FOUR - The Project Risk Profile
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PRAM - STEP ONE IDENTIFY THE RISKS
Sensitive to what needs?
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PRAM - STEP ONE IDENTIFY THE RISKS

• OBJECTIVE Explicitly identify issues and
  obstacles that may produce undesired outcomes.
• Key ideas
• Utilize the Project Risk Template to assist in
  risk identification.
• Identify additional risks unique to the project.
• Eliminate assumptions and replace with specific,
  stated, shared risks.

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PROJECT RISK TEMPLATE
Risk Variables by PM Principles
4. Break the Job Down Large/Small
Project Size of Team Geographic
Dispersion Reliability of Personnel Availabili
ty of Support Organization Availability of
Champion Project Manager Availability 5. Set
Up Change Procedure Vulnerability to
Change Stability of Business Area Organization
al Impact Tight Time Frame Turnover of Key
People Change Budget Accepted Change Process
Accepted Charge Back System Accountability
for Change 6. Agree on Acceptance
Criteria Level of Client Commitment Client
Attitude toward IS Readiness for
Takeover Client Design Participation Client
Participation in Acceptance Test Client
Proximity to IS Acceptance Process
1. Define the Job in Detail New
Technology Functional Complexity New vs.
Replacement Leverage on Company Intensity of
Business Need Interface Existing
Applications Number of User Departments 2.
Involve the Right People Staff
Availability Commitment of Team Team Morale
Applications Knowledge Client IS
Knowledge Technical Skills Availability Staff
Conflicts Senior Management Commitment Project
Manager Experience 3. Estimate Time
Costs Quality of Information Available Dependa
bility on other projects Conversion
Difficulty End-date Dictate Conflict
Resolution Mechanism Continued Budget
Availability Project Standards Used
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PRAM - STEP TWO ASSESS THE RISK
Dont blame me. Youre the one who called the
wizard a fake.
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THE PROJECT TRIANGLE
Scope/ Functionality
Costs/Effort
Quality
Time

• Definition of Project
• A well-defined activity that produces
  predetermined results at a point in time.

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PRAM - STEP TWO ASSESS THE RISK

• OBJECTIVE Assess risk impacts on project
  estimates and on project objectives.
• Key ideas
• Probable risks should be assessed risks that
  are reasonably likely to occur.
• Both positive and negative consequences for each
  risk should be identified.
• The impact on project estimates, for each risk,
  both positive and negative, should be
  specifically stated.

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RISK ASSESSMENT MATRIX

• PROBABILITY
• High 51 - 100
• Medium 16 - 50
• Low 0 - 15
• CONSEQUENCE (Budget Impact)
• High 21 - 100
• Medium 11 - 20
• Low 0 - 10
• Budget impact can be assessed in terms of
  dollars, effort hours, elapsed time, or resources.

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RISK ASSESSMENT MATRIX
PROBABILITY
High Medium Low gt50
lt15
C O N S E Q U E N C E
Specs Sub Project Vendor
too Vague Interference
Delivery Size of
Team Proj. Mgrs
Resources Skills
Inexperienced Estimates Team Not Valid
Commitment New Technology Client
Availability
High gt20 Medium Low lt10
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PRAM - STEP THREE PLAN RISK MITIGATION
Were not ready... Come back tomorrow.
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PRAM - STEP THREEPLAN RISK MITIGATION

• OBJECTIVE To state the actions needed now to
  mitigate negative consequences or to maximize
  positive benefits.
• Key ideas
• Decide in advance how to manage each probable
  risk.
• Explore ways of eliminating risks by uncovering
  acceptable alternatives.
• Establish criteria for change.

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PRAM - STEP FOURTHE PROJECT RISK PROFILE

• OBJECTIVE Provide clear, graphic presentation so
  that parties understand and agree to risk impacts
  and mitigation action plans.
• Key ideas
• Simple statement of risks, estimating
  assumptions, impacts (both positive and
  negative), and mitigation actions.
• Graphic display of impact on estimates for time
  and costs.
• Develop consensus on change budget consistent
  with risk profile graphic.

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COMMUNICATING SHARED RISK
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PRAM PROJECT RISK ASSESSMENT METHOD

• When to do a PRAM
• Pre-project planning process
• During project
• Each phase SOW with estimate
• Pre-customer discussion
• With any estimate of time or dollars
• Periodically during a phase

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PRAM SUMMARY

• PRAM provides a simple way to identify and
  articulate project risks.
• The Project Risk Template assists with risk
  identification.
• The Project Risk Profile provides a graphic
  display of risk impacts and consequences.

The Result Active management of shared risks by
all parties.
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Surprises are welcome for birthdays, not for
projects.
Advice on risk management from a famous Project
Manager Yogi Berra
When you come to the fork in the road, take it.
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