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Collaborative Tools and Techniques to Build the Project Risk Plan - Risk Assessment Process (4 of 6)

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The next activity conducted, during the Risk Plan Facilitated Meeting, is the Risk Assessment. The participants are lead through a process of prioritizing the project risks, by understanding which risks are most important to manage, based on their probability and impact to the project. A complete Risk Register may contain hundreds of risk statements. It is not likely that all the risks can and should be addressed at the same time. By utilizing the Probability – Impact Matrix and the related definitions created during the Risk Planning Process, we lead the meeting participants through a qualitative assessment activity.

A qualitative, versus quantitative, assessment, is the initial assessment performed and many times the only type of assessment used. A qualitative assessment is a simpler approach that can be easily facilitated, using words and phrases, to represent the dimensions of probability and impact. The qualitative assessment generally provides enough understanding of the risk, and allows for easy prioritization of the risks, to develop appropriate responses.  A quantitative assessment, on the other hand, is a more complex approach that cannot be accomplished during a facilitated meeting. It generally requires sophisticated software, to perform statistical numerical analysis.

Meeting participants review each risk statement answering these questions:

•    How likely is it that this risk will occur (Probability)
•    If the risk does occur, what is the impact to the project Cost, Schedule, Quality or Scope (Impact)

A risk score can be calculated by multiplying the risk probability value by each risk impact value. If the risk impacts more than one type of objective, we sum the individual risk score values into one overall risk score. For instance a risk could have a high likelihood of occurring, giving it a value of 3 for probability. The risk could impact both cost and quality objectives differently (high impact to cost for an impact value of 3 and low impact to quality for an impact value of 1). The resulting risk score would be (3 x 3) + (3 x 1) =12.


exhibit_4_risk_assessment_example.png

Exhibit 4: Risk Assessment Example


Collaborative Tools and Techniques to Build the Project Risk Plan – Overview (1 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan – The Risk Mgt Process (2 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan – Risk Ident. Process (3 of 6)

Collaborative Tools and Techniques to Build the Project Risk Plan - Risk Assessment Process (4 of 6)

Collaborative T&T to Build the Project Risk Plan – Risk Response Identification Process (5 of 6)

Collaborative T&T to Build the Project Risk Plan – Risk Monitoring and Review Process (6 of 6)



References

Project Management Institute. (2004) A guide to the project management body of knowledge (PMBOK) (2004 ed.).  Newtown Square, PA: Project Management Institute.

Hillson, David. (2004) Effective Opportunity Management for Projects – Exploiting Positive Risk, New York, NY: Marcel Dekker Inc.

For more information on methods to close the gap on your projects between project management theory and practical tools and techniques to apply this theory, contact Solutions Cube Group at www.SolutionsCubeGroup.com

Read 5969 times Last modified on Monday, 07 December 2009 05:21
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