Project Risk Management Lecture Notes PDF

Course Title PROJECT MANAGEMENT Course Code 0404438 Course Leader: Prof. Alex Opoku (PhD, MSc, BSc (Hons), PGCHE, FHEA, MCIOB, FRICS) Professor of Sustainable Built Environment  Lecture overview Project Risk Mana...

Course Title PROJECT MANAGEMENT Course Code 0404438 Course Leader: Prof. Alex Opoku (PhD, MSc, BSc (Hons), PGCHE, FHEA, MCIOB, FRICS) Professor of Sustainable Built Environment  Lecture overview Project Risk Management Course Learning Outcomes covered: 1. Understand what a Project is, what Project Management is, and the role and responsibilities of the Project Manager within the construction team. 2. Understand how Project Managers manage projects by integrating scope, time, cost, quality, human resources, communications, risk and procurement of a project. 3. Learned to apply methods for estimating time and cost and managing quality in a construction context. 4. Learned theories of leadership, communication, motivation, conflict management within teams. 5. Understand Procurement and Risk management and how they are related. What is RISK? Risk is concerned with unpredictable events that might occur in the future whose exact likelihood and outcome is uncertain, but could potentially affect stakeholder’s objectives/ interests  Categories of Project Risk 1. Foreseen Risks Identified, but have uncertain influences on the project 2. Unforeseen Risks Not formally identified in the planning stage, are not anticipated and a mitigation plan has not been identified Risks across the PM Knowledge Areas Examples of Project Risk Risk Management System “The process involved with identifying, analyzing, and responding to risk It includes maximizing the results of positive risks and minimizing the consequences of negative events” A system that identifies and quantifies the risks to which a project is exposed so that a conscious decision can be taken on how to manage the risk Project Risk Management Process The PMBOK’s Project Risk Management knowledge area contains 7 processes: 1. Plan Risk Management 2. Identify Risks 3. Perform Qualitative Risk Analysis 4. Perform Quantitative Risk Analysis 5. Plan Risk Responses 6. Implement Risk Responses 7. Monitor Risks Project Risk Management Process How Do We Manage Risk? Project Risk Response Strategy Risk Response: Meaning of Terms Avoid: Change your plan to bypass the issue. In other words, remove the cause of the threat altogether Transfer: Outsource the risk (or a portion of it) to a different team or agency Mitigate: Take immediate steps to reduce the impact of the risk Accept: Assume the chance of a negative impact or eventually budget in the cost of dealing with it  Risk Register The risk register is the document used to record identified potential risks that could affect the execution of a project It should be maintained collectively by the integrated project team and regularly updated throughout the project lifecycle, as risks will be constantly changing Risk management plans may be recorded on the risk register or, if required, as separate risk management action plans with links to the risk register Risk Assessments The Risk Assessment Matrix Risk Assessments Risk Assessment Techniques used: Severity x frequency x number of people affected  Risk Management & Stakeholders Enterprise Risk Management (ERM) Financial risks Operational risks Strategic risks  Rules of Risk taking Never risk a lot for a little Don’t risk more than you can afford to lose Do not take risks on a point of principle Do not take risks to save face Always analyse the source and the consequences of risk Have an alternative option (plan B) Summary Project risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives