Chapter 11

Question 1

Project Risk

Answer 1

• Possibility or probability that the project will not turn out as planned or desired
• Risk includes potential benefits (opportunities) as well as hazards
• Project not meeting performance requirements,
schedule, or budget

Question 2

Project “Failure”

Answer 2

Not meeting time, cost, or performance targets by a predefined margin

Question 3

Project Risk involves 2 concepts

Answer 3

1. The likelihood that some event will occur

2. The impact of the event if it does occur

Question 4

Project Risk Management Process

Answer 4

1. Identify risks
2. Assess the risks
3. Develop appropriate responses to risks
4. Track and control the risks

Question 5

When does the risk management process occur in the project?

Answer 5

The risk management process repeats throughout every phase of the project from Conception through Close-out

Question 6

1. Identify Risks: INTERNAL sources of risk

Answer 6

“Needs and Definition” risk

“Technical” risk

Question 7

“Needs and Definition” risk

Answer 7

Failure to correctly identify and define current

or changing customer needs and requirements

Question 8

“Technical” risk

Answer 8

Failure of the end item. Risk due to nature of the end item or the process to create it:

• high complexity
• low maturity
• low reliability, producibility, or testability
• high concurrency (overlap of project work)

Question 9

1. Identify Risks: EXTERNAL sources of risk

Answer 9

• Market conditions
• Government mandate
• Physical environment (weather, geography, etc.) • Labor and other resource availability
• Project priorities
• Customer/supplier relationships • Exchange rates

Question 10

1. Identify Risks: Sources and techniques of identifying risks

Answer 10

• Analogy - Experience and documentation
• Checklists - Experience and post-mortem reviews
• WBS and work packages
• Process flow charts
• Brainstorming, Delphi Technique, Cause-Effect analysis

Question 11

2. Assess the Risk

Answer 11

• Assess Risk “Consequence” (RC= Probability x Impact)
• Impact expressed as
- physical impact on time, cost or performance
- nominal rating
- interval rating

Question 12

2. Assess the Risk: 2 methods for assessing risk consequence

Answer 12

1. Quantitative method
   (RC= Probability x Impact)
2. Qualitative method
   Probability and impact expressed as nominal values

Question 13

Risk Priority

Answer 13

• Prioritize risks according to risk consequence (H,M,L)

* List in the Risk Register

Question 14

3. Risk Response Strategies: Ways of Handling Risks

Answer 14

• Do nothing – very low risks
• Contingencies – low to medium risks
• Mitigation – high risks
• Avoid risk – very high risks

Question 15

3. Risk Response Strategies: How can we reduce risk?

Answer 15

• reducing the impact

- reducing the probability

Question 16

4. Risk Monitoring and Response

Answer 16

• Maintain a risk register or log, where risks are rank ordered, greatest risk consequence first
• Continuously monitor project for trigger symptoms of previously identified risks, and for symptoms of risks newly emerging and not previously identified

Question 17

Risk Management Plan

Answer 17

• Specifies methods to identify, profile, assess, monitor, and handle risks
• Names the risk officer
• Contains a budget and schedule reserve

Question 18

Risk Profile

Answer 18

The likelihood, impact, trigger symptoms, monitoring methods, and response strategy for each identified risk