11.1 Plan Risk Management

The Plan Risk Management process explains the methodology for managing risks in the project.  It assigns the degree, type and visibility of risk management appropriate for the project stakeholders as it pertains to the projects priorities.  Coordination with stakeholder is essential to meet stakeholder needs and keep them engagement in the risk management process through out the project.  Included in this knowledge area and listed further down the page are:

• 11.2 Identify Risk
• 11.3 Perform Qualitative Risk Analysis
• 11.4 Perform Quantitative Risk Analysis
• 11.5 Plan Risk Responses

The Plan Risk management Inputs, Tools & Techniques and Outputs listed in Figure 21 illustrate this process.

Figure 21. Plan Risk Management: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.313. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.

Process Definition

The risk management plan defines how risk will be identified, analyzed, documented and managed during the project.  I also spells out who is involved it those processes based on type, severity and impact of the risk.  There are four other knowledge area to explore when planning risk management.  All of these processes culminate in the Risk Management Plan.

Process Assessment

The key benefit for planning risk management is being proactive in identifying threats and opportunities currently in the project or forecast for those that may come up.  It gives occasion to plan and coordinate a response to either; and perhaps expand the scope to take advantage of opportunities.  

Artifacts

Input

One of the inputs for the Plan Risk Management process is organizational process assets.  These at plans, tables, charts definitions, authority levels and lessons learned from previous projects that may help to identify and plan a mitigation strategy for the current project; as well as format the current risk management plan. Below is an essay that explains the importance of this input and how I used it in my past career. See 11.1.1

Tools & Techniques

Analytical techniques are used to determine the probability, impact and severity for risks that are identified.  Below is an excerpt from one of the risk management plans create in the course which describes the analysis process and how the risks were categorized.  See 11.1.2

Output 

The final output of this process in conjunction with the 4 other process is the risk management plan.  I've included the risk management plan the analytical tool were taken from so you can see the completed process and how it all integrates.  See 11.1.3

11.2 Identify Risks

The Identify Risk process is where we identify current risks and forecast potential risks and their characteristics and likelihood in a document.  This allows us to preemptively develop a mitigations strategy for risks and capitalize early on opportunities.    Listed below in figure 22 are the Inputs, Tools & Techniques, and Outputs for this process.

Figure 22. Identify Risks: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.319. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.

Process Definition

The first knowledge area under the process of planning risk management is the Identify Risk process.  Before you can manage risks you must know what they are.  The process of risk identification is iterative and continues throughout the project but initially it is important to clearly identify qualify and quantify as many risks as you can right up front.  With this process the more the merrier.  The more people from the project team, stakeholders, customers, and other risk and project management offices who provide input will increase the accuracy of the identification process. 

Process Assessment

Gathering the information from this process will help the project manager to develop meaningfully, concise and accurate risk statements to disseminate to all the project stakeholders what the risks and mitigations processes are.  It also provides for a more precise risk management plan.

Artifacts

Input

The quality management plan helps to identify a baseline for measurements used to establish what may be a risk to the minimum quality standard.  Part of higher numeric sequence in the knowledge area may give the indication that this must be done later but most of the time it is accomplished in conjunction with many of the other process and also has an iterative affect on identifying risks.  Below is the Quality Management Plan from PMGT613 as an input to this process.  see 11.2.1

Tools & Techniques

Gathering information to identify risk is a time consuming processes.  That due impart to the fact that it is an important process and thorough or as complete as possible information prior to the execution of the project plan is critical.  Below is an essay on some ways to conduct information gathering.  See 11.2.2

Output

Once information is gather tracking it becomes the next step.  Not just what the risks are but there status as mitigation processes continue through the project.  Risk information is placed in a Risk Register.  This register may identify the risk, what to do, who is responsible, what is being done, and its current status.  See 11.2.3

11.3 Perform Qualitative Risk Analysis

The Qualitative Risk Analysis categorizes and sequences identified risks based on priority, probability and project impact.  This focus reduces the level of ambiguity in the project and risk management process while focusing resources at high-priority risks.  See the Inputs, Tools & Techniques and Outputs for this process in figure 23.

Figure 23. Perform Qualitative Risk Analysis: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.328. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.

Process Definition

The Perform Risk Qualitative Analysis process is one of the risk analyses conducted on identified risks.  It prioritizes the risk based on its probability and impact on the project if it occurs.  It also takes into consideration the time it will take for risk response. The risk tolerances of those parts of the project impacted by the risk and the project stakeholders are included in these calculations.  It is critical not to include bias in this analysis which can skew results and give false data creating inappropriate risk priorities.  

Process Assessment

The risk qualitative analysis process provides quick, and therefore cost effective resource for prioritizing risks and preparing them for further analysis and quantification.  These two analysis processes continue through the project as priorities, risk potential and response change based on the environment the project is being conducted.  For example the impact of poor weather on a construction site lessens as the outside structure is completed...

Artifacts

Input

 Using the risk register from the previous knowledge area to continue the conversation you can see where the information come from to be analyzed in the qualification process.  See 11.3.1

Tools & Techniques

Below is a qualitative analysis that was performed during one of our projects in PMGT613  The third artifact below is a risk categorization chart we used in this same class to identify where the risks were to be placed in the risk register.  See 11.3.2 & 11.3.3

Output  

The output for this process is to update the risk register.  Since I've already included the register the risk identification was taken from, it wouldn't benefit me to include another here.  you may refer back to the included risk register if you have any questions.

11.4 Perform Quantitative Risk Analysis

The Quantitative Risk Analysis quantifies known risks based on analytical degrees of probability against the degree they will impact project objectives. It also considers stakeholders risk tolerance. Combination these two set of data help to evaluate the appropriate risk response and supports risk decision making.  The Inputs, Tools & Techniques for perform quantitative risk analysis are listed in figure 24

Figure 24. Perform Quantitative Risk Analysis: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.334. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.

Process Definition

The Quantitative Risk Analysis process is performed on those risks identified in the qualitative process as having a significant potential to impact the overall project objectives.  It evaluates the combined risks affecting the project during different periods of the schedule.  Numerical priority are assigned based on the significance of the risk impact.  Expert judgement is used due to the nature of the Quantitative analysis.  Time, budget, quality and quantitative impacts are assessed to develop a mitigation strategy.  Because of that often the project manager must estimate for information that isn't readily available due to the project planning progression.  Since this process is also iterative it continues to be updated as information is provided.    

Process Assessment

Evaluating over all risks, their mitigation potential and their impact on the project, aids in decision making when it comes to project execution strategies and reduces project result ambiguity. 

Artifacts

Input

Cost can play a major role in any project.  When dealing with risk the cost estimate for a project that is close to the overall budget with a high risk potential may have to be review to reduce the scope and cost the risk to ensure the project meets the proposed budget.  This is why the Project Cost management plan is critical to this step.  See 11.4.1

Tools & Techniques

During PMGT 501 we were given an exercise where we were asked to reduce the time schedule of a project from 26 to 14 days based on the needs of the instructor.  Using the probability distribution in the crashing mode we were able to determine the cost and schedule or crashing this project.  Depending on the overall goals, threats and opportunities, the estimated $25000 price tag for taking these steps provides information  on whether to proceed or not.  See 11.4.2 

Output

Updating and tracking risk responses and analysis are also critical to the project.  Below is a process we included in our PMGT501 project plan to update the risk management process for a sustainable home build.  The process was ours but we found a suitable form on line (as cited) and included with our process. See 11.4.3

11.5 Plan Risk Responses

The Plan Risk Response process takes input for the previous risk knowledge areas and applies a strategy for how to respond to those risks.  The potential to capitalize on opportunities are explored and means of reducing or mitigating threats are investigated.  This step considers project resources, schedules, budges and priorities.  Figure 25 lists the Inputs, Tools & Techniques and Outputs for plan risk response.

Figure 25. Plan Risk Responses: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.342. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission.

Process Definition

The Plan Risk Response process is where all the risk identification, analysis and documentation have led us to.  Now we decide how to respond to the risks that have been identified. This is where we establish the options to reduce threats and or take advantage of opportunities.   

Process Assessment

The advantage to this process is that the risks are a categorized and prioritized there for you can work on responses base on their priority, budget and schedule.  

Artifacts

Input

The artifact included for this process is the Risk Management Plan from PMGT501 group project.  The risk management provides guidance on agreed upon risk responses. See 11.5.1

Tools & Techniques

Risk management strategies are critical to the decision making of how to handle risk. in PMGT613 we were given an assignment to document how we used a given risk strategy in our work.  As an Air traffic Controller I chose to discuss risk mitigation.  See 11.5.2

Output

One of the exercises we accomplished in PMGT501 was a risk status report. This was to be used as a way of communicating updates to risks as they were being managed.  Below is the Risk status report we developed to up channel communications it would be one of the document that would be updated as part of the iterative processes of the Plan Risk Response outputs. See 11.5.3