Project Risk Management

Project Risk Management

Planning

Division of ProjectDivision of ProjectManagement

What is Risk Management Planning

*The process concerned with identifying, analyzing, and responding to project risk.

*Includes maximizing the results of positive *Includes maximizing the results of positive events.

*Includes minimizing the consequences of adverse events.

How Does Risk Management Differ From Change Control?

*What is Risk ManagementRisk Management is a systematic approach for making informed decisions while minimizing adverse impacts to project scope, cost, and schedule.schedule.*Risk Management Focuses on identifying risks and managing their outcomes.Risk Management Process occurs in each phase of the project lifecycle and provides numerous methods for identifying risks.

Risk Management and Change Control (continued)

*What is Change ControlChange Control provides only one type of Risk Response. That is mitigation by the advancing of certain affected work packages during the PA&ED phase.PA&ED phase.*Change Control occurs prior to the end of PA&ED phase of the project.Change Control is mandated and must be used.

Caltrans Project Risk Management Process

Risk Management Planning Risk Identification

*Quantitative Risk Analysis*Quantitative Risk AnalysisRisk Response PlanningRisk Monitoring and ControlThis process is continuously performed throughout the duration of the project life cycle.

T y p e e n v i r o n m e n t a ld o c u m e n t e x p e c t e d ?

S T E P 1 : R i s k M a n a g e m e n tP l a n n i n g

P D T i s e s t a b l i s h e d .

S T E P 2 : R i s k I d e n t i f i c a t i o nT h e P D T i d e n t i f i e s r i s k s a n d c r e a t e s a

p r o j e c t r i s k l i s t

S T E P 3 : Q u a l i t a t i v e R i s kA n a l y s i s

P D T a s s e s s e s

R i s k m a n a g e m e n t p l a n i so p t i o n a l

P r o j e c t h a so n l y a

C a t e g o r i c a lE x e m p t i o n o r

C a t e g o r i c a lE x c lu s i o n

P r o j e c t h a s e n v i r o n m e n t a l d o c u m e n t ( N D , F O N S I ,E I S , o r E I R )

S T E P 4 : Q u a n t i t a t i v e R i s kA n a l y s i s

S T E P 5 : R i s k R e s p o n s e P l a nF o r e a c h i d e n t i f i e d r i s k , t h e P D T d e c id e s

w h e t h e r t o a v o id t h e r i s k , m i t i g a t e t h e r i s k , o ra c c e p t t h e r i s k .

S T E P 6 : R i s k M o n i t o r i n g a n dC o n t r o l

O n g o i n g p r o c e s s f o r t h e l i f e o f t h e p r o j e c t .A s s ig n e d t e a m m e m b e r s m o n i t o r t h e r i s k s a s

t h e p r o j e c t m a t u r e s , n e w r i s k s d e v e l o p , o ra n t i c i p a t e d r i s k s d i s a p p e a r .

V a l u eA n a l y s i s

r e q u i r e d ?Y e s

N o

What’s in it for you?

Accurate workload Better documentationBetter programming = meeting commitmentsMore information = better decisionsMore information = better decisionsReduce crisis management “firedrill suppression”Higher confidence

Risk Management Planning

Defined: Deciding how to approach and plan the risk management activities for the projectInputs: Project charterDefined responsibilitiesDefined responsibilitiesStakeholder risk tolerancesIdentify WBS Products

Output: Risk Management Plan

Risk Identification

Involves identification of the risks that may affect the project and their documentation.Inputs: Historical Information, Risk Categories, Risk Management PlanTools: Checklists, Assumption Reviews, Tools: Checklists, Assumption Reviews, Diagramming techniquesOutputs: Risks, Triggers, Input to other processes

Qualitative Risk Analysis

Assessing the impacts of identified risksInputs: Risk Management Plan, Identified Risks, Project Status, Project Type, Data Precision, Scales of Probabilityof ProbabilityTools: Probability/Risk Rating MatrixCan be downloaded from the Intranet (Available on PM Website)Output: Risk ranking for the project, prioritized risks, list of risk for additional analysis and management.

Quantitative Risk Analysis

•Aims to analyze numerically the probability of each risk and

consequences on project objectives.•Inputs: Identified and prioritized risk, •Inputs: Identified and prioritized risk,

expert judgment, risk management plan.•Tools: Decision tree analysis, sensitivity

analysis, simulation.•Output: Risk Response Plan

Risk Response Planning

•Developing options and determining actions to enhance opportunities and reduce threats

to the project objectives.•Inputs: Prioritized list of quantified risks, list

of potential responses, risk owners and of potential responses, risk owners and thresholds.

•Tools: Avoidance, mitigation, acceptance, transference.

•Output: Risk Response Plan + Contingency Plans/reserves required for the project

Risk Monitoring and Control

•Keeping track of identified risks, monitoring residual risks, and identifying new risks.

•Inputs: Scope Changes, project communication, risk response plan, risk communication, risk response plan, risk

management plan.

•Tools: Risk response audits, earned value.

•Output: Workaround Plans, corrective action, project change requests, updates to the risk

management plan.

Tips for Success!

•Consider all team input in the development of project plans and workplan creation.

•Be realistic about scheduled resources and plan execution.•Monitor efforts – track changes, document changes, review

data, report and recommend changes to the process.data, report and recommend changes to the process.

•Important to keep workplans and project databases current for accurate project reporting

Is it working?

Proposed performance measures•% of projects with Risk Management plans during the

PID phase (is it happening)

•% of PCRs due to unidentified risks (builds into the quality of the PCRs)into the quality of the PCRs)

These measures will be tracked and reported by HQ Division of Project Management (for

the measure relating to PCRs) and Planning (for the measure regarding PIDs)

Special Thanks to the Risk Management Implementation Team

Sponsored by Carl Haack, HQ Division of Project Management and Karla Sutliff, Division of Design

•Rick Guevel HQ Project Management•Shirley Choate, District 2 Program/Project Management

•Cindy Adams, HQ Environmental Management•Allan Kosup, District 11 Program/Project Management

•Scott McGown, HQ Design •Scott McGown, HQ Design•Mary Frederick, HQ Project Management

•Bimla Rhinehart, HQ Right-of-Way•Mark Robinson, District 10 Program/Project Management

•Michael Thomas, HQ Design•Ginger Williford, HQ Project Management Process

Improvement