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Project Management > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

Risk Management

A

identifying, analysing, and responding to risk factors throughout the project and in the best interest of its objectives

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2
Q

Risk

A

an uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives

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3
Q

Project risk (impact) or Event risk

A

all risks must be evaluated in terms of two distinct elements:
- likelihood that the event occurs
- consequences of its occurrence

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4
Q

Event risk formula

A

Event risk= Probability of Event x Consequences of Event

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5
Q

Opportunity

A

Favorable uncertainties

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6
Q

Amount at stake

A

the investment made

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7
Q

Combined risk impact

A

Project risk

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8
Q

Project life span

A
  • Phase 1: Conceive (highest opportunity and risk, lowest amount at stake and combined risk impact)
  • Phase 2: Develop
  • Phase 3: Execute (highest risk impact)
  • Phase 4: Finish (highest risk impact and amount at stake, lowest risk)
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9
Q

Project life span explanation

A
  • Early life: risk and opportunity are high, severity of negative consequences is low, exposure level is also low
  • Middle: potential for negative consequences increases, risk is dropping and exposure increases
  • Final: uncertainty is still high, amount at stake is rapidly increasing
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10
Q

Goal of risk management strategy

A

to minimize the company’s exposure to uncertainty and potential for negative consequences

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11
Q

Four Stages of Risk Management

A
  1. Risk identification: process of identifying risks that could affect your project
  2. Analysis of probability and consequences: determine how likely they are to occur, and the effect they would have on the project
  3. Risk mitigation strategies: steps taken in order to minimize the potential impact
  4. Control and documentation: learn lesson and document for future projects
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12
Q

Risk identification: Financial

A

financial exposure a firm opens itself to when developing a project (development of a new airplane could represent as a serious financial risk)

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13
Q

Risk identification - Technical

A

when new project contain unique technical elements/ technology, they are being developed under technical risk

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14
Q

Risk identification - commercial

A

for projects that have been developed for commercial intent (profitability), there’s always uncertainty about how successful they will be once in the market

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15
Q

Risk identification - Execution

A

what are the specific unknowns related to the execution of the project?

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16
Q

Risk identification - Contractual or legal risk

A

risks from the terms and conditions that are set in the contract in advance

17
Q

Risk identification: common risks

A
  • Absenteeism
  • Resignation
  • Staff pulled away by management
  • Additional staff/skills not available
  • Training not as effective as desired
  • Initial specifications poor or incomplete
  • Work or change order multiplying due to various problems
  • Enhancements taking longer than expected
18
Q

Conducting risk factor identification: Brainstorming meetings

A

bringing members from the project team for a brainstorm meeting can generate a good list of potential factors

19
Q

Conducting risk factor identification: expert opinion

A
  • Delphi approach collects judgement from anonymous experts
  • simpler method consists of consulting people within the organization that have ran similar projects in the past
20
Q

Conducting risk factor identification: Past history

A

experience can be used to identify risk factors and leading indicators

21
Q

Conducting risk factor identification: multiple (or team-based) assessments

A

involving a group of people to identify the risks, using one person might be risky because they may overlook things or have a biased perspective

22
Q

Risk Breakdown Structure (RBS)

A
  • tool used to organise and categorise all risks in a project
  • Level 1: External or Internal
  • Level 2: Which area? (technical, market…)
  • Level 3: more specific (performance, customer acceptance…)
23
Q

Risk Breakdown Structure (RBS)

A
  • tool used to organise and categorise all risks in a project
  • Level 1: External or Internal
  • Level 2: Which area? (technical, market…)
  • Level 3: more specific (performance, customer acceptance…)
24
Q

Risk Impact Matrix

A
  • tool used to prioritize risk by looking at the probability of the risk to happen, and the consequence
  • Bottom left: low probability low risk
  • Top right: High risk High probability
25
Q

Risk mitigation strategies: Accept risks

A

because the consequences are so minor, they may be accepted and ignored

26
Q

Risk mitigation strategies: Minimize risk

A

strategies to minimize risk

27
Q

Risk Mitigation strategies: Share risk

A

risk can be shared among multiple group members

28
Q

Risk mitigation strategies: transfer risk

A
  • when it is impossible to change the nature of the risk (through elimination or minimization), it could be possible to shift the risks to another party (insurance, fixed-price contracts…)
29
Q

Contingency reserves

A

funds set aside within a project to cover unforeseen costs

30
Q

Task contingency

A

extra time or money set aside just in case something happens, helps cover budget cuts or schedule overruns

31
Q

Managerial contingency

A

“safety net” meant to protect the project from larger risks

32
Q

Insurance

A

protects against financial losses

33
Q

Workaround

A

dealing with a problem after it occurs (the problem was unplanned)

34
Q

Mentoring

A

pairing less experienced team members with more experienced managers

35
Q

Cross training

A

training members to do each other’s job, if someone is absent, another member can fill in

36
Q

Control and documentation

A

help managers classify risks and responses using a risk report form:
- What - identify source of risk
- Who - assign a team member to take responsibility
- When - establish a time frame
- Why - identify most likely reasons for the risk
- How - create a risk deduction plan

37
Q

PRAM (Project Risk Analysis and Management): key features

A
  1. Risk management follows a life cycle
  2. Risk management strategy changes over the project life cycle
  3. Synthesized coherent approach (using relevant risk management tools)
38
Q

PRAM Phases

A
  1. Define (make sure project is well defined)
  2. Focus (start planning how to manage risks)
  3. Identify (look for specific sources of risk)
  4. Structure (develop a system to classify risks)
  5. Clarify ownership of risks (determine which risks the project team will manage, and which the clients will take on)
  6. Estimate (estimate how risks will impact the project)
  7. Evaluate (evaluate results of estimate phase to determine plan for mitigating risks)
  8. Plan (develop a risk management plan)
  9. Manage (monitor the project’s progress and the effectiveness of the risk management plan)

Project Management (5 decks)

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