PROJECT RISK

SLIDE PRESENTATION

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Risk Management (EMRM5103)
- Slides Presentation
LECTURER;

ASSOCIATE PROFESSOR SAMIAPPAN

MARAPPAN

GROUP MEMBER;

1) MOHD. NORIZAM MD. SALLEH

IC NO: 670703-01-6045
STUDENT ID:CGS00534317
2

2) REIDZUAN BIN AHMAD

IC NO: 691218-04-5275
STUDENT ID: CGS00541817
 CONTENT
1. PROJECT BRIEF
2. DEFINATION RISK MANAGEMENT
3. OBJECTIVES
4. RISK MANAGEMENT 6 PROCESSES
5. MATRIX SHOWS THE SIX MAIN PROCESS & ALL OF THE DELIVERABLES
6. MATRIX SHOWS THE SIX PROCESS AND THE RESPONSIBILITIES
7. PLAN RISK MANAGEMENT
8. IDENTIFY RISK

DESIGN RISK

EXTERNAL RISK

ENVIRONMENTAL RISK

ORGANISATIONAL RISK

PROJECT MANAGEMENT RISK

ROW RISK

CONSTRUCTION RISK

ENGINEERING SERVICE RISK
9. RISK WERE PUT INTO WERW PUT INTO RISK BREAKDOWN STRUCTURE.
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10. RISK SHALL BE PUT INTO PROJECT RISK REGISTER (SAMPLE)
11. PERFORM RISK ANALYSIS – QUALITATIVE
CONTENT (conti.)
12. RISK BEEN PUT INTO PROBABILITY/IMPACT MATRIX (SAMPLE)
13. PROBABILITY/IMPACT MATRIX FOR QUALITATIVE RISK ASSESSMENT
(SAMPLE)
14. CHART SHOWING HIGH, MEDIUM, AND LOW RISK TECHNOLOGIES (SAMPLE)
15. TOP TEN RISK ITEM TRACKING.
16. TOP TEN RISK ITEM TRACKING (SAMPLE)
17. EXPERT JUDGEMENT.
18. PROJECT RISK GET RANKED (SAMPLE).
19. QUANTITATIVE RISK ANALYSIS
20. DECISION TREES AND EXPECTED MONETARY VALUE (EMV).
21. EXPECTED MONETARY VALUE (EMV) EXAMPLE.
22. SIMULATION
23. FINISHED DATE PROBABILITY - USING MONTE CARLO SIMULATION (SAMPLE).
24. PLAN RISK RESPONSE.
25. Risk Handling Techniques
26. Monitor & Control Risk
27. Some risk in this project (example) & How to Monitor & Control them???
A. Risk Funding Techniques.
B. CAPITAL RISK
C. Schedule Risks.
D. Cost Risks
E. Communication Risks
F. Quality Risks 4
G. CONSTRUCTION RISK
H. SAFETY RISK
28. THANK YOU
 1. PROJECT BRIEF
PROJECT: CONCTRUCTION OF REINFORCE
CONCRETE BRIDGE.

CLIENT: JABATAN KERJA RAYA MALAYSIA.

CONTRACTOR : ZR CONST SDN. BHD.

CONTRACTOR CLASS: A

CONTRACT AMOUNT: RM 20,000,000.00

CONTRACT SECURED: VIA TENDER.

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2. DEFINATION OF RISK MANAGEMENT

The process of planning, leading and

controlling the resources and activities of
an organization/project

To fulfill its objectives cost effectively

To protect and grow corporate assets

To enhance shareholder value

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 3. OBJECTIVES
 Understand what risk is and the importance of good project risk
management.

 Discuss the elements involved in risk management planning and

the contents of a risk management plan.

 List common sources of risks in this project.

 Describe the risk identification process, tools, and techniques to

help identify project risks, and the main output of risk
identification, a risk register.

 Discuss the qualitative risk analysis process and explain how to

calculate risk factors, create probability/impact matrixes, apply
the Top Ten Risk Item Tracking technique, and use expert
judgment to rank risks. 7
 3. OBJECTIVES
(CONT’D)

 Explain the quantitative risk analysis process and

how to apply decision trees, simulation, and
sensitivity analysis to quantify risks.
 Provide examples of using different risk response
planning strategies to address both negative and
positive risks.
 Discuss what is involved in risk monitoring and
control.
 Describe how software can assist in project risk
management.
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4. RISK MANAGEMENT 6 PROCESSES

Based on: PMBOK Chapter 11, APM PRAM Guide, AS/NZ S4360 9
5. MATRIX SHOWS THE SIX MAIN PROCESS & ALL OF THE
DELIVERABLES ASSOCIATED WITH PROJECT RISK MANAGEMENT

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6. MATRIX SHOWS THE SIX PROCESSES AND THE
RESPONSIBILITIES OF THE PROJECT MANAGER AND
STAKEHOLDERS.

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 7.PLAN RISK
MANAGEMENT
 Careful and explicit planning enhances the possibility of success of
the five other risk management processes.

 Risk Management Planning is the process of deciding how to

approach and conduct the risk management activities for a project.

 Planning of risk management processes is important to ensure that

the level, type, and visibility of risk management are commensurate
with both the risk and importance of the project to the organization,
to provide sufficient resources and time for risk management
activities, and to establish an agreed-upon basis for evaluating
risks.

 The Risk Management Planning process should be completed early

during project planning, since it is crucial to successfully
performing the other processes described in this handbook.

 The risk management plan identifies and establishes the activities

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of risk management for the project in the project plan (RMP)
8.IDENTIFY RISK

POTENTIAL RISK SECTOR ARE DETERMINE AS

FOLLOWS;

 ENVIRONMENTAL
 DESIGN
 RIGHT OF WAY
 ENGINEERING SERVICE RISK
 CONSTRUCTION
 PROJECT MANAGEMENT
 EXTERNAL
 NATURAL DISASTER

NOTE; RISK FOR EACH SECTOR ARE DETAIL OUT IN THE NEXT 8 13
SLIDES;
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9. RISK WERE PUT INTO RISK BREAKDOWN
STRUCTURE

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10. RISK SHALL BE PUT INTO PROJECT RISK REGISTER (SAMPLE)

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Notes; All the risk indentified shall be put in the register.
11. PERFORM RISK ANALYSIS -
QUALITATIVE

 Using established methods and tools,

qualitative risk analysis assesses the
probability and the consequences (impact) of
each identified risk to determine its overall
importance.

 Using these tools helps to correct biases that

are often presented in a project plan. In
particular, careful and objective definitions of
different levels of probability and impact are
the keys to the credibility of the results.

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12. RISK BEEN PUT INTO
PROBABILITY/IMPACT MATRIX (SAMPLE)

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13. PROBABILITY/IMPACT MATRIX FOR
QUALITATIVE RISK ASSESSMENT (SAMPLE)

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14. CHART SHOWING HIGH, MEDIUM, AND LOW
RISK TECHNOLOGIES (SAMPLE)

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 15. TOP TEN RISK ITEM TRACKING

 Top Ten Risk Item Tracking is a qualitative risk analysis tool

that helps to identify risks and maintain an awareness of risks
throughout the life of a project.

 Establish a periodic review of the top ten project risk items.

 List the current ranking, previous ranking, number of times the

risk appears on the list over a period of time, and a summary of
progress made in resolving the risk item.

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16. TOP TEN RISK ITEM TRACKING
(SAMPLE)

Monthly Ranking
Risk Item This Last Number Risk Resolution
Mont Mont of Progress
h h Months

Inadequate 1 2 4 Working on revising

planning the entire project plan
Poor 2 3 3 Holding meetings
definition of with project customer
scope and sponsor to clarify
scope
Absence of 3 1 2 Just assigned a new
leadership project manager to
lead the project after
old one quit
Poor cost 4 4 3 Revising cost
estimates estimates
Poor time 5 5 3 Revising schedule 29
estimates estimates
 17. EXPERT JUDGMENT

 Many organizations rely on the intuitive feelings

and past experience of experts to help identify
potential project risks.
 Experts can categorize risks as high, medium, or
low with or without more sophisticated
techniques.
 Can also help create and monitor a watch list, a
list of risks that are low priority, but are still
identified as potential risks.

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 18. PROJECT RISK GET RANKED (SAMPLE)
No. Rank Risk Description Category Root Triggers Potential Risk Probability Impact Status
Cause Responses Owner
R44 1

R21 2

R7 3

Note: The assigned project team members SHALL arrange the project risk
according to their rank.

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 19. QUANTITATIVE RISK
ANALYSIS

 Often follows qualitative risk analysis, but both

can be done together.

 Large, complex projects involving leading edge

technologies often require extensive quantitative
risk analysis.

 Main techniques include:

Decision tree analysis

Simulation

Sensitivity analysis

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20. DECISION TREES AND EXPECTED
MONETARY VALUE (EMV)

 A decision tree is a diagramming analysis technique

used to help select the best course of action in situations
in which future outcomes are uncertain.

 Estimated monetary value (EMV) is the product of a

risk event probability and the risk event’s monetary
value.

 You can draw a decision tree to help find the EMV.

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21. EXPECTED MONETARY VALUE (EMV)
EXAMPLE

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 22. SIMULATION

 Simulation uses a representation or model of a

system to analyze the expected behavior or
performance of the system.

 Monte Carlo analysis simulates a model’s

outcome many times to provide a statistical
distribution of the calculated results.

 To use a Monte Carlo simulation, you must have

three estimates (most likely, pessimistic, and
optimistic) plus an estimate of the likelihood of the
estimate being between the most likely and
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optimistic values.
23. Finished Date Probability - Using Monte Carlo
simulation (Sample).

The yellow arrow,

pointing at 08/05/02, this
is the date shown as the
project completion date
on the project plan. Now
that we’ve performed the
risk analysis we can
determine that our
chances of actually
finishing the project on
or before that date are
just 15%!

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 24. PLAN RISK
RESPONSE
 Risk Response Planning is the process of developing options, and
determining actions to enhance opportunities and reduce threats to
the project’s objectives.

 It focuses on the high-risk items evaluated in the qualitative and/or

quantitative risk analysis.

 In Risk Response Planning parties are identified and assigned to take

responsibility for each risk response.

 This process ensures that each risk requiring a response has an owner
monitoring the responses, although a different party may be
responsible for implementing the risk handling action itself.

 The project manager and the PDT identify which strategy is best for
each risk, and then design specific action(s) to implement that 37
strategy.
 25. Risk Handling Techniques
Risk Avoidance •Avoiding a high risk approach to software development by selecting a
lower-risk approach
•Statement – “I will not accept this risk; I will look for a less risky
solution to the problem”
–A lower risk approach is not always appropriate
–A higher risk approach has increased design flexibility, potentially lower
cost, or potentially early delivery of the product.
•Not every risk can be avoided.
•Avoiding risk in one area of a project might increase risk in another
area.
Risk Assumption •A decision to accept the consequences when an undesired event
occurs.
•Statement – “I am aware of the risk, and I chose to accept this risk
because of the potential benefits of this approach”
•Risk assumption acknowledges the existence of risk and a decision to
accept the consequences if problems occur.

Risk Control •Continuous monitoring of project status and the development of

other solutions if the risk becomes a problem.
•Statement – “I am aware of the risk, and I will develop options to 38
reduce the potential of the problem occurring and to reduce its effect
should the problem occur.”
 25. Risk Handling Techniques (contd.)

Risk Control [Contd.] •Uses reviews, verification and validation, development of

fallback positions, and similar management actions.
•Involves development of a risk reduction plan and tracking to
that plan.
•Involves continual measurement of project status and
development of options and fall-back positions to permit
alternative, lower risk approaches when the problem occur.

Risk Transfer •Transferring potential problems to other areas of responsibility.

•Care must be taken that transfer of a risk factor includes
transfer of responsibilities for a successful outcome
• Transferring a difficult technical issue to a subcontractor does
not eliminate the risk of product failure because failure of the
subcontractor will result in failure of the overall product.
Knowledge •Gathering additional information to further assess risk and to
Acquisition develop new contingency plans
•A continuous process that enables the participants to perform
risk management with greater confidence.
•Techniques – Prototyping, Benchmarking, Simulation and 39
modeling, Incremental development
 26. MONITOR & CONTROL
RISK

 Risk monitoring and control keeps track of the identified

risks, residual risks, and new risks.
 It also monitors the execution of planned strategies on the
identified risks and evaluates their effectiveness.
 Risk monitoring and control continues for the life of the
project. The list of project risks changes as the project
matures, new risks develop, or anticipated risks disappear.
 Typically during project execution there should be regularly
held risk meetings during which all or a part of the Risk
Register is reviewed for the effectiveness of their handling
and new risks are discussed and assigned owners.
 Periodic project risk reviews repeat the process of
identification, analysis, and response planning. Risk
ratings and prioritization commonly change during the
project lifecycle. 40
 26. Monitor & Control Risk (Contd.)

 If an unanticipated risk emerges, or a risk’s impact is greater

than expected, the planned response may not be adequate. The
project manager and the PDT must perform additional response
planning to control the risk.

Risk control involves:

Choosing alternative response strategies

Implementing a contingency plan

Taking corrective actions

Re-planning the project, as applicable

 The individual or a group assigned to each risk (risk owner)

reports periodically to the project manager and the risk team
leader on the status of the risk and the effectiveness of the
response plan. The risk owner also reports on any unanticipated
effects, and any mid-course correction that the PDT must 41
consider in order to mitigate the risk.
27. SOME RISK IN THIS PROJECT
(EXAMPLE)
& HOW TO MONITOR & CONTROL
THEM???

After we have ranked all the risks and some got

eliminated as they give minimal impact or eliminated
by the response action taken, the remaining risks shall
be monitored and controlled closely.

The next few slides shall discuss some of the risk in this
project and how they are monitor & control.

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A. Risk Funding Techniques:

• Current Expensing
• Unfunded Reserves
• Funded Reserves
• Borrowing
• Captive Insurers
• Commercial Insurance
• Contractual Transfer for Risk Financing

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B. CAPITAL RISK
THE BOTTOM LINE: IT ALL BOILS DOWN TO CAPITAL

 “Capital”

Assets less liabilities; owners’ equity; net worth

Support for (riskiness of) operations

Thus, supports profitability and solvency of firm

 “Capital Management”

Determine need for and adequacy of capital

Plans for increasing or releasing capital

Strategy for efficient use of capital

For our project, despite the estimated/forecast profit plays a big role in
its viability, finance cost, company net worth, escalation of material
price, politics , man powers, machineries are also important. 44
 C. SCHEDULE
RISKS

 Techniques to use;
 Algorithmic scheduling models
 Critical Path model
 PERT analysis
F 5
(2) K
3
C (1)
(3) L M
A 8 9 10
1 2 D (1) E (1 (1)
(1) (6) H K )
(6) (1) (1
B
G J )
4 (5) 6 7
(2)

Letters = Activities; Numbers = Milestones; (x) = Activity duration

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 C. SCHEDULE RISKS
(CONTD.)

 The schedule network is a source of identifying potential

risks
 Nodes or junction points with a high degree of fan-in and
those with a high degree of fan-out are potential risk areas.
 A node with a high degree of fan-in has many tasks that
must be completed before the milestone can be achieved.
[Node 8]
 No subsequent tasks can be initiated until all tasks fanning
into the node are completed.
 Delay in any one node will delay all subsequent tasks.
 Activity (nodes) on the critical path also are potential areas
of high risk [path ABGJKLM]
 A slip in schedule for any activity on the critical path will
result in a slip of the overall schedule.
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D. COST RISKS
 Aggregation of costs and associated risk factors for each element of the work
breakdown structure provides a detailed Cost-risk analysis.
 Budgets are determined using EFFORT (people * time) as the primary cost
factor.
 Nonlinear increase in cost with decreasing schedule may result in a very
high risk that the project cannot be completed within the budget.
 Other factors influencing cost and schedule
 Creeping requirements

 Schedule compression

 Unreasonable budgets

 Techniques (Monitor using);

 Algorithmic cost models

 Analysis of project assumptions

 S –curves

 Resources Vs Work Progress

 Nominated suppliers and sub-contractor (fixed price)

 Control resources.

 Training
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 Clear Job delineation

E. COMMUNICATION RISKS
COMMUNICATION
BREAKDOWN

• Client & consultant meeting

• Contract documents
• Proper job delineation
• proper correspondences
• Progress/site meeting
• Co-ordination meeting
• Tool box meeting
• Clear Job delineation

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F. QUALITY RISKS

 Many software project risks result from delivery of

unexpectedly poor software quality

Unreliable software

Unusable software

Unmaintainable software

Nonportable software

Nonexpandable software

 Techniques

Performance modeling

Reliability softwares

Quality factor analysis

Knowledge.

Training.

Experience personnel.
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G. CONSTRUCTION RISK
- Inability of a sub-contractor to perform

Technique;
 Choose contractor with specialist track record.

 Choose contractor with strong financial backup.

 Choose contractor technology “know how”.

 Contractor with experience personnel.

 Giving training.

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 H. SAFETY RISK
 Worker injured or killed
 A job accident that injures the public
 A construction vehicle is involved in an accident off the
project.

Solution;

Public awareness

Safety Briefing

Trainning

Contractor safety programs

Traffic management and signboard

Insurance
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28. Thank You

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