11. Risk and Issue Management

Question 1

Risk Sources

Answer 1

• The Project World
• The Organisational World
• The Marketplace
• The Technical World
• The External World

Question 2

Risk Process

Answer 2

1. Initiate Risk Management
2. Identify Risks
3. Assess Risks
4. Plan Risks Response
5. Implement Response

Question 3

Risk Identification Techniques

Answer 3

• Assumptions & Constraints Analysis
• Checklists
• Prompt Lists
• Brainstorming
• Nominal Group Technique
• Interviews
• Delphi Technique
• SWOT Analysis
• Technological Readiness Levels

Question 4

Risk Assessment Techniques

Answer 4

• Decision Trees
• Monte Carlo Analysis
• Risk Impact windows
• Sensitivity Analysis

Question 5

Responding to Negative Risks

Answer 5

• Avoid the risk
• Reduce the threat
• Transfer
• Accept or Fall back

Question 6

Responding to Positive Risks

Answer 6

• Pooling risk (Exploit)
• Contractual Arrangements (Sharing)
• Enhance probability
• Accept/Ignore

Question 7

Contingency excludes:

Answer 7

• Major scope changes, for example, alterations to the end product specification, amendments to capacities, building sizes and location of the asset or project
• Extraordinary events such as major strikes and natural disasters
• Management reserves
• Escalation and currency effects

Question 8

Contingency includes:

Answer 8

• Planning and estimating errors or omissions
• Minor price fluctuations (other than general escalation)
• Design developments and changes within the scope
• Variations in market and environmental conditions

Question 9

Measurable Benefits of Risk Management

Answer 9

• Enables better informed and more believable plans, schedules and budgets
• Discourages the acceptance of financial unsound projects
• Identifies and allocates responsibility to best risk owner
• Leads to the most suitable type of contract.

Question 10

Soft Benefits of Risk Management

Answer 10

• Leads to a common understanding and improved team spirit

- Helps distinguish between good luck and good management and vice-versa

Question 11

Risks Characteristics

Answer 11

• Pre-recognised potential problems to project
• Mitigation prepared
• Should not impact on TCQ Constraints
• Usually owned by a Risk Owner
• As prepared for, should not affect project baseline or objectives

Question 12

Issues Characteristics

Answer 12

• Unrecognised acutal problems to the project
• PM and team unprepared
• Will impact on TCQ constraints
• Needs sponsor and project board to enable its resolution
• May necessitate a change to project scope

Question 13

Advantages of Escalating Risks

Answer 13

• Represents and reports accurate status of the project
• Address the risk or issue earlier
• Ability for management to resolve and contain the situation
• Avoid compounding the impact
• Adjust baseline if required as a result of issue/risk resolution
• Having an escalation process improves reporting time
• Timely and proactive escalation avoids unpleasant surprises and costly fixes.

Question 14

Disadvantages of Escalating Risks

Answer 14

• Escalation may be taken personally rather than professionally
• Issues or risks may not be escalated in fear of backlash or anger towards the person
• Less experienced members or PM’s will not dare escalate against higher level or more experienced people
• There is no specific escalation plan for the project
• Escalation builds the perception that the project is out of control and the project manager is not able to manage
• Members don’t know how to use the escalation process hence abuse it or not use it at all
• Senior management don’t want to hear bad news