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Risk Management Contingencies

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1. Contingency plans are predefined actions that the project team will take if an identified risk event occurs. 2. Fallback plans are developed for risks that have a high impact on meeting project objectives, and are put into effect if attempts to reduce the risk do not work. 3. Contingency reserves or contingency allowances are provisions held by the project sponsor or organization to reduce the risk of cost or schedule over-runs to an acceptable level. Could also include management reserves for unknown risks.

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Common Source of Risks

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Do I have the right users? Did I involve the users early and often? Do I have a quality relationship with the users? Do I make involvement easy? Did I find out what the users need?

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Broad Categories of Risk

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Market Risk - will the product be useful tot he organization or marketable for others? Financial Risk - can the organization afford to undertake the project? Technology Risk - is the project technically feasible? People Risk - does the organization have people with the appropriate skills to complete the project successfully? Structure/process Risk - What degree of change will the new project introduce into user areas and business procedures?

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Risk Breakdown Structure

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A hierarchy of potential risks categories for a project. The highest level categories are typically business, technical, organizational and project management.

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Brainstorming

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A technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgement.

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Probability / Impact Matrix or Chart

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Lists the relative probability of a risk occurring and the relative impact of the risk occurring.

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Watch List

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A list of risks that have low priority but are still identified as potential risks.

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Expected Monetary Value (EMV)

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The product of a risk event probability and the risk event's monetary value.

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Sensitivity Analysis

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Used to see the effects of changing one or more variables on an outcome.

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Response Strategies for Negative Risks

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1. Risk Avoidance - eliminate a specific threat 2. Risk Acceptance - accept the consequence if the risk occurs 3. Risk Transference - shift the consequences or responsibility to a t

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Response Strategies for Positive Risks

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1. Risk Exploitation - do whatever you can to make sure the positive risk happens. 2. Risk Sharing - allocating ownership of the risk to another party. 3. Risk Enhancement - changing the size of the opportunity by identifying and maximizing key drivers of potential risk. 4.

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Workarounds

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Unplanned responses to risk events when they do not have contingency plans in place.

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Bid

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A document prepared by sellers to provide pricing for standard items that the buyer has clearly defined; also called a tender or quote.

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Constructive Change Orders

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Oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order.

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Contract

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A mutually agreement that obligates the seller to provide specified products or services and obligates the buyer to pay for them.

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Cost Plus Award Fee (CPAF) Contract

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A contract in which the buyer pays the supplier for allowable performance costs plus an award fee based on the satisfaction of subjective performance criteria.

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Cost Plus Fixed Fee (CPFF) Contract

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A contract in which the buyer pays the supplier for allowable performance costs plus a fixed fee payment that is usually based on a percentage of estimated costs.

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Cost Plus Incentive Fee (CPIF) Contract

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A contract in which the buyer pays the supplier for allowable performance costs along with a predetermined fee and an incentive bonus.

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Cost Plus Percentage of Costs (CPPC) Contract

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A contract in which the buyers pays the supplier for allowable performance costs along with a predetermined percentage based on total costs.

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Cost-Reimbursable Contracts

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Contracts that involve payment to the supplier for direct and indirect actual costs.

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Fixed-Price Contract

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A contract with a fixed total price for a well-defined product or service; also called a lump-sum contract.

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Lump-Sum Contract

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A contract with a fixed total price for a well-defined product or service; also called a fixed-price contract.

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Make-or-Buy Decision

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An organization's decision to make certain products and perform certain services inside the organization or to buy them from an outside organization.

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Point of Total Assumption (PTA)

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The cost at which the contractor assumes total responsibility for each additional dollar of contract cost in a fixed-price incentive fee contract.

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Procurement

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Acquiring goods and services from an outside source.

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Project Procurement Management

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The processes required to acquire goods and services for a project from outside the performing organization.

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Proposal

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A document prepared by sellers when there are different approaches for meeting buyer needs.

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Request for Proposal (RFP)

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A document used to solicit proposals from prospective suppliers.

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Request for Quote (RFQ)

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A document used to solicit quotes or bids from prospective suppliers.

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Sellers

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Contractors, suppliers, or providers who provide goods and services to other organizations.

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Statement of Work (SOW)

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A description of the work required for procurement.

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Termination Clause

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A contract clause that allows the buyer or supplier to end the contract.

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Time and Material (T&M) Contracts

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A hybrid of fixed-prices and cost-reimbursable contracts.

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Unit Pricing

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An approach in which the buyers pays the supplier a predetermined amount per unit of service, and the total value of the contract is a function of the quantities needed to complete the work.

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Contingency Allowances

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Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level; also called contingency reserves.

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Contingency Plans

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Predefined actions that the project team will take if an identified risk event occurs.

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Contingency Reserves

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Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level; also called contingency allowances.

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Decision Tree

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A diagramming analysis technique used to help select the best course of action when future outcomes are uncertain.

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Delphi Technique

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An approach to derive a consensus among a panel of experts to make predictions about future developments.

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Fallback Plans

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Plans developed for risks that have a high impact on meeting project objectives, and implemented if attempts to reduce the risk are not effective.

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Flowcharts

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Diagrams that show how various elements of a system relate to each other.

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Influence Diagram

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A diagram that represents decision problems by displaying essential elements, including decisions, uncertainties, and objectives, and how they influence each other.

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Interviewing

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A fact-finding technique that is normally done face to face, but can also occur through phone calls, e-mail, or instant messaging.

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Known Risks

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Risks that the project team has identified and analyzed and that can be managed proactively.

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Management Reserves

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Funds held for unknown risks.

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Monte Carlo Analysis

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A risk quantification technique that simulates a model's outcome many times to provide a statistical distribution of the calculated results.

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Probability/Impact Matrix or Chart

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A matrix or chart that shows the relative probability of a risk occurring and the relative impact of the risk.

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Residual Risks

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Risks that remain after all of the response strategies have been implemented.

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Risk

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An uncertainty that can have a negative or positive effect on meeting project objectives.

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Risk Acceptance

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Accepting the consequences if a risk occurs.

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Risk Appetite

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The degree of uncertainty an entity is willing to take on in anticipation of a reward.

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Risk-Averse

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Have a low tolerance for risk.

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Risk Avoidance

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Eliminating a specific threat or risk, usually by eliminating its causes.

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Risk Enhancement

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Changing the size of an opportunity by identifying and maximizing key drivers of the positive risk.

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Risk Events

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Specific uncertain events that may occur to the detriment or enhancement of the project.

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Risk Exploitation

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Doing whatever you can to make sure a positive risk happens.

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Risk Factors

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Numbers that represent the overall risk of specific events, given their probability of occurring and the consequence to the project if they do occur.

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Risk Management Plan

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A plan that documents the procedures for managing risk throughout a project.

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Risk Mitigation

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Reducing the impact of a risk event by reducing the probability of its occurrence.

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Risk-Neutral

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A balance between risk and payoff.

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Risk Owner

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The person who will take responsibility for a risk and its associated response strategies and tasks.

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Risk Register

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A document that contains results of various risk management processes, often displayed in a table or spreadsheet format.

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Risk-Seeking

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Having a high tolerance for risk.

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Risk Sharing

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Allocating ownership of a risk to another party.

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Risk Tolerance

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The maximum acceptable deviation an entity is willing to accept on a project or business objectives as the potential impact.

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Risk Transference

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Shifting the consequence of a risk and responsibility for its management to a third party.

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Risk Utility

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The amount of satisfaction or pleasure received from a potential payoff.

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Runaway Projects

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Projects that have significant cost or schedule overruns.

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Secondary Risks

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Risks that are a direct result of implementing a risk response.

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Top Ten Risk Item Tracking

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A qualitative risk analysis tool for identifying risks and maintaining an awareness of risks throughout the life of a project.

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Triggers

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Indications for actual risk events.

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Unknown Risks

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Risks that cannot be managed proactively because they have not been identified and analyzed.

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Blogs

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Journals on the Web that allow users to write entries, create links, and upload pictures, while readers can post comments to journal entries.

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Communications Management Plan

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A document that guides project communications. 1. Stakeholder communications requirements. 2. Information to be communicated, including format, content, and level of detail. 3. Who will receive the information and who will produce it. 4. Suggested methods or technologies for conveying the information. 5. Frequency of communication. 6. Escalation procedures for resolving issues. 7. Revision procedures for updating the communications management plan. 8. A glossary of common terminology.

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Google Docs

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Online applications offered by Google that allow users to create, share, and edit documents, spreadsheets, and presentations online.

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Lessons-Learned Report

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Reflective statements written by project managers and their team members to document important information they have learned from working on a project.

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Progress Reports

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Reports that describe what the project team has accomplished during a certain period of time.

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Project Archives

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A complete set of organized project records that provide an accurate history of the project.

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SharePoint Portal

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A tool that allows users to create custom Web sites to access documents and applications stored on shared devices.

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Status Reports

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Reports that describe where a project stands at a specific point in time.

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Wiki

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A Web site that enables anyone who accesses it to contribute or modify content.

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Processes for Project Management Communication

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1. Planning communications management - determining the information and communications needs of the stakeholders. 2. Management communications - involves crating, distributing, storing, retrieving, and disposing of project communications based on the communications management plan. 3. Controlling communications involves monitoring and controlling project communications based on the communications management plan.

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Misc

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Short face-to-face meeting are often more effective than electronic communications, particularly for sensitive information.

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Misc.

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People also have a tendency to avoid reporting bad news.

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Misc.

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Oral Communication via meetings and informal talks helps bring important information positive or negative into the open.

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Determining the number of Communications Channels

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n(n-1)/2

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Misc.

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Information about the content of essential project communications comes from the work breakdown structure (WBS).

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Broad Classification for Communications Methods

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1. Interactive Communication: Two or more people interact to exchange information via meetings, phone calls, or video conferencing. 2. Push Communication: Information is sent or pushed to recipients without their request via reports, e-mails, faxes, voice mails, and other means. 3. Pull Communication: Information is sent to recipients at their request via Web sites, bulleting boards, e-learning, knowledge repositories like blogs, and other means.

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Forecasts

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Predict future project status and progress based on past information and trends.

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Running Effective Meetings

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1. Determine if a meeting can be avoided 2. Define the purpose and intended outcome of the meeting 3. Determine who should attend the meeting 4. Provide an agenda to participants 5. Prepare handouts and visual aids, and make logistical arrangements ahead of time 6. Run the meeting professionally 7. Set the ground rules for the meeting 8. Build relationships

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Misc.

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Post installation audit should be part of the project archives.

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Misc.

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Risk management can have a positive impact on selecting projects, determining their scope, and developing realistic schedules and cost estimates.

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Risk Management Processes

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1. Planning risk management involves deciding how to approach and plan risk management activities. 2. Identifying risks involves determining which risks are likely to affect a project and documenting the characteristic of each. 3. Performing qualitative risk analysis involves prioritizing risks based on their probability and impact of occurrence. 4. Performing quantitative risk analysis involves numerically estimating the effects of risks on project objectives. 5. Planning risk responses involves taking steps to enhance opportunities and reduce threats to meeting project objectives. 6.controlling risk involves monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies.

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Broad Categories of Risk

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1. Market Risk: will the project be useful to the organization or others? 2. Financial Risk: can the organization afford to undertake the project? 3. Technology Risk: is the project technically feasible? 4. People Risk: does the organization have people with the appropriate skills to complete the project successfully? 5. Structure/process Risk: What degree of change will the new project introduce into user areas and business procedures?

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Response Strategies for Negative Risks

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1. Risk avoidance 2. Risk acceptance 3. Risk transference 4. Risk mitigation

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Response Strategies for Positive Risks

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1. Risk exploitation 2. Risk sharing 3. Risk enhancement 4. Risk acceptance

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Outsourcing Accomplishments

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1. Access skills and technologies 2. Reduce both fixed and recurrent costs 3. Allow the client organization to focus on its core business 4. Provide flexibility 5. Increase accountability

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Project Procurement Management Processes

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1. Planning procurement management involves determining what to procure and when and how to do it. 2. Conducting procurements involves obtaining seller responses, selecting sellers, and awarding contracts. 3. Controlling procurements involves managing relationships with sellers, monitoring contract performance, and making changes as needed. 4. Closing procurements involves completion and settlement of each contract or agreement, including resolution of any open items.

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Project Procurement Best Practices

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1. Changes to any part of the project need to be reviewed, approved, and documented by the same people in the same way they approved the original part of the plan. 2. Evaluation of any change should include an impact analysis. 3. Changes must be documented in writing. 4. When procuring complex information systems, project managers and their teams must stay closely involved to make sure the new system will meet business needs and work in an operational environment. 5. Have backup plans in case the new system does not work as planned. 6. Several tools and techniques can help in contract administration, such as formal contract change control system, buyer-conducted procurement performance reviews, inspections and audits, performance reporting, payment systems, claims administrations, and records management systems.

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Stakeholder Management Processes

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1. Identifying stakeholders involves identifying everyone involved in the project or affected by it, and determining the best ways to manage relationships with them. 2. Planning stakeholder management involves determining strategies to effectively engage stakeholders in project decisions and activities based on their needs, interests, and potential impact. 3. Managing stakeholder engagement involves communicating and working with project stakeholders to satisfy their needs and expectations, resolving issues, and fostering engagement in project decisions and activities. 4. Controlling stakeholder engagement involves monitoring stakeholder relationships and adjusting plans and strategies for engaging stakeholders as needed.

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