Project Risk Management and Project Risk Management Processes - Revision history

Tkokotas at 15:26, 18 December 2018

2018-12-18T15:26:58Z

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			''Developed by Charalampos Filis''


	The '''Risk Management''' is a methodology which aims to control the uncertainties that may occur in a project.The methodology started to be studied after the World War II, when large companies with diversified portfolios began to be developped and the need for insurance against the risks started to grow. Project and Risk managers must eliminate the uncertainties, in order to ensure that the project will achieve its goals. The uncertainties and the risks can be related to the duration of activities, to the absence of adequate resources, to the time and cost or other external factors, that can cause undesired effects to the project's performance. In order to manage these risks effectively and efficiently there are processes that can be implemented to deal with risks. The processes include 2 different phases:the 1st phase is the '''risk analysis''' which identifies,analyzes and prioritizes the risks of a project. The 2nd phase is the '''risk management''' which includes the development of the risk management planning, the evaluation of the progress and the reevaluation of the existing or potential risks. To enhance the effectiveness of the project risk management methodology and its processes a root cause analysis and its corrective actions can be implemented, in order to ensure that the causes of the problems during the project will not reoccur later in the project or future projects		The '''Risk Management''' is a methodology which aims to control the uncertainties that may occur in a project.The methodology started to be studied after the World War II, when large companies with diversified portfolios began to be developped and the need for insurance against the risks started to grow. Project and Risk managers must eliminate the uncertainties, in order to ensure that the project will achieve its goals. The uncertainties and the risks can be related to the duration of activities, to the absence of adequate resources, to the time and cost or other external factors, that can cause undesired effects to the project's performance. In order to manage these risks effectively and efficiently there are processes that can be implemented to deal with risks. The processes include 2 different phases:the 1st phase is the '''risk analysis''' which identifies,analyzes and prioritizes the risks of a project. The 2nd phase is the '''risk management''' which includes the development of the risk management planning, the evaluation of the progress and the reevaluation of the existing or potential risks. To enhance the effectiveness of the project risk management methodology and its processes a root cause analysis and its corrective actions can be implemented, in order to ensure that the causes of the problems during the project will not reoccur later in the project or future projects

Ch.filis: /* The Scope of Project Risk Management */

2015-09-27T19:50:49Z

The Scope of Project Risk Management

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	===Benefits of effective Project Risk Management===		===Benefits of effective Project Risk Management===

	The risk management has a great impact on a project's performance. The correlation between project processes and their outcomes have been investigated over the last years. There is a general agreement that risk management is one of the most influential processes for providing benefits<ref name="Benefits"> Benefits of Risk Management in Projects, ~~Programms~~ and Portfolios Kenneth K.(2008)</ref> in terms of project time, cost and quality. Moreover, using risk management in an effective way will enhance the ability of stakeholders to make better ~~decissions~~ in order to achieve mission and goals. It also provides managers with useful tools to anticipate changes and to allocate appropriate resources. Specifically, project risk management enhances the flexibility ~~withing~~ a business, while at the same time enables a better compliance management system for the company.		The risk management has a great impact on a project's performance. The correlation between project processes and their outcomes have been investigated over the last years. There is a general agreement that risk management is one of the most influential processes for providing benefits<ref name="Benefits"> Benefits of Risk Management in Projects, Programs and Portfolios Kenneth K.(2008)</ref> in terms of project time, cost and quality. Moreover, using risk management in an effective way will enhance the ability of stakeholders to make better decisions in order to achieve mission and goals. It also provides managers with useful tools to anticipate changes and to allocate appropriate resources. Specifically, project risk management enhances the flexibility within a business, while at the same time enables a better compliance management system for the company.

	==Project Risk Management Processes==		==Project Risk Management Processes==

Ch.filis: /* Uncertainty in Project Management */

2015-09-27T18:34:32Z

Uncertainty in Project Management

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	<br clear=all> '''Fig. 2''': Areas of uncertainty		<br clear=all> '''Fig. 2''': Areas of uncertainty

	All these areas are really important and they affect the project's final performance. As the list goes down the areas become fundamentally more important to the project's performance. For instance the variability associated with estimates involves the other four areas and each of them ~~invloves~~ dependencies on later areas in the list.		All these areas are really important and they affect the project's final performance. As the list goes down the areas become fundamentally more important to the project's performance. For instance the variability associated with estimates involves the other four areas and each of them involves dependencies on later areas in the list.

	===The six Ws framework for the roots of uncertainty===		===The six Ws framework for the roots of uncertainty===

Ch.filis: /* Root Cause Analysis and Corrective Actions */

2015-09-27T17:12:47Z

Root Cause Analysis and Corrective Actions

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	==Root Cause Analysis and Corrective Actions==		==Root Cause Analysis and Corrective Actions==

	During the project's life cycle all the major processes aim to reduce the project risks. However, for the unforseen risks or problems that may occur throughout the project, the risk management considers to be too late since it has already been completed and the lessons learned is too early since that is conducted in the end of the project. For this purpose, project managers and project teams need to deal with these risks in a direct and effective way in order to ensure the final performance of the project.'''Root Cause Analysis'''<ref name="Root"> Root Cause Analysis and Corrective Actions by Gareth Byatt (2011)</ref> is a critical process which identifies how,what and why an event occurred so that actions can be taken to prevent future occurrences. Unfortunately, the actions taken by the project teams in order to solve a problem often only address the problem itself and not the underlying causes. ~~In other words~~, ~~solving only a problem and~~ not ~~its causes~~ implies that the ~~problem probably~~ will reoccur ~~later in~~ the project or future ~~projects~~. Corrective actions consist of two major phases :		During the project's life cycle all the major processes aim to reduce the project risks. However, for the unforseen risks or problems that may occur throughout the project, the risk management considers to be too late since it has already been completed and the lessons learned is too early since that is conducted in the end of the project. For this purpose, project managers and project teams need to deal with these risks in a direct and effective way in order to ensure the final performance of the project. '''Root Cause Analysis'''<ref name="Root"> Root Cause Analysis and Corrective Actions by Gareth Byatt (2011)</ref> is a critical process which identifies how, what and why an event occurred so that actions can be taken to prevent future occurrences. Unfortunately, the actions taken by the project teams in order to solve a problem often only address the problem itself and not the underlying causes. As a result, the source of the risks or problems is not solved which implies that the risks or problems will reoccur during the project's life cycle or in the future. Hence, the effective implementation of a root cause analysis requires '''Corrective Actions''' to be taken which aim to deal exclusively with the causes of the problems or risks. The corrective actions consist of two major phases :

	[[File:Figuresx.png\|570px\|thumb\|right\|'''Fig. 5''' :Ten-step problem solving model]]		[[File:Figuresx.png\|570px\|thumb\|right\|'''Fig. 5''' :Ten-step problem solving model]]

Ch.filis: /* Root Cause Analysis and Corrective Actions */

2015-09-27T16:52:22Z

Root Cause Analysis and Corrective Actions

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	==Root Cause Analysis and Corrective Actions==		==Root Cause Analysis and Corrective Actions==

	During the project's life cycle all the major processes aim to reduce the project risks. However, for the unforseen problems that may occur throughout the project, the risk management considers to be too late since it has already been completed and the lessons learned is too early since that is conducted in the end of the project. '''~~Corrective actions~~'''<ref name="Root"> Root Cause Analysis and Corrective Actions by Gareth Byatt (2011)</ref> is a critical process which ~~deals with problems~~ that ~~may occur during the project~~. Unfortunately, actions taken to solve a problem often only address the problem itself and not the underlying causes. In other words, solving only a problem and not its causes implies that the problem probably will reoccur later in the project or future projects. Corrective actions consist of two major phases :		During the project's life cycle all the major processes aim to reduce the project risks. However, for the unforseen risks or problems that may occur throughout the project, the risk management considers to be too late since it has already been completed and the lessons learned is too early since that is conducted in the end of the project. For this purpose, project managers and project teams need to deal with these risks in a direct and effective way in order to ensure the final performance of the project.'''Root Cause Analysis'''<ref name="Root"> Root Cause Analysis and Corrective Actions by Gareth Byatt (2011)</ref> is a critical process which identifies how,what and why an event occurred so that actions can be taken to prevent future occurrences. Unfortunately, the actions taken by the project teams in order to solve a problem often only address the problem itself and not the underlying causes. In other words, solving only a problem and not its causes implies that the problem probably will reoccur later in the project or future projects. Corrective actions consist of two major phases :

	[[File:Figuresx.png\|570px\|thumb\|right\|'''Fig. 5''' :Ten-step problem solving model]]		[[File:Figuresx.png\|570px\|thumb\|right\|'''Fig. 5''' :Ten-step problem solving model]]

Ch.filis: /* Limitations of the methodology */

2015-09-26T12:45:30Z

Limitations of the methodology

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	* '''Motivation :''' Employees that are already associated to their mundane activities need to adjust to new measures.		* '''Motivation :''' Employees that are already associated to their mundane activities need to adjust to new measures.

			*'''Subjective Judgement:''' People perceive things in a different way, in the sense that everyone can see things from his perspective. Specifically, in projects some people identify some factors as risks, while others can see opportunities behind those factors.

			*'''Update risks in real time:''' Risks are evolving in time, due to the fact that projects take place under different circumstances every time. However, managers fail to update and revaluate these risks periodically and the project's performance can be negatively affected.

	= References =		= References =
	<references/>		<references/>

Ch.filis: /* Limitations of the methodology */

2015-09-26T12:19:57Z

Limitations of the methodology

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	* '''Lack of data :''' Many risk assessment analysis techniques involve gathering data. Unfortunately, creating accurate models or simulations that will be able to predict events that may occur is a procedure that requires extensive data collection, which can be expensive and not completely reliable.		* '''Lack of data :''' Many risk assessment analysis techniques involve gathering data. Unfortunately, creating accurate models or simulations that will be able to predict events that may occur is a procedure that requires extensive data collection, which can be expensive and not completely reliable.

	* '''Insufficient Analysis Expertise and Time :''' Using computer software to simulate activities that can cause negative impacts on a project, has become a more cost-time efficient method. However, it ~~erquires~~ high level of skills and knowledge to intepret the results correctly. Complex projects with many variables require trained personnel, who may not be assigned to the project.		* '''Insufficient Analysis Expertise and Time :''' Using computer software to simulate activities that can cause negative impacts on a project, has become a more cost-time efficient method. However, it requires high level of skills and knowledge to intepret the results correctly. Complex projects with many variables require trained personnel, who may not be assigned to the project.

	* '''Training :''' A part of the time that is spent on research and development will have to be allocated for training to ensure proper execusion of the project risk management.		* '''Training :''' A part of the time that is spent on research and development will have to be allocated for training to ensure proper execusion of the project risk management.

Ch.filis: /* History */

2015-09-26T12:12:14Z

History

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	[[File:Table.png\|400px\|]]		[[File:Table.png\|400px\|]]
	<br clear=all> '''Fig. 1''': Milestones in the history of Risk Management~~<ref name="Georges Dionne (2013)"></ref>~~		<br clear=all> '''Fig. 1''': Milestones in the history of Risk Management

	==Uncertainty in Project Management==		==Uncertainty in Project Management==

Ch.filis: /* History */

2015-09-26T12:04:49Z

History

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	[[File:Table.png\|400px\|]]		[[File:Table.png\|400px\|]]
	<br clear=all> '''Fig. 1''': Milestones in the history of Risk Management		<br clear=all> '''Fig. 1''': Milestones in the history of Risk Management<ref name="Georges Dionne (2013)"></ref>

	==Uncertainty in Project Management==		==Uncertainty in Project Management==

Ch.filis: /* The Scope of Project Risk Management */

2015-09-26T09:19:13Z

The Scope of Project Risk Management

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	==The Scope of Project Risk Management==		==The Scope of Project Risk Management==

	Project Risk Management<ref name="Project Risk Management"></ref> is the systematic process of identifying, analyzing and responding to project risks, in order to take advantage of the impact of positive events that may occur and to decrease the probability of negative events to occur. The project risk management is based on an integrated analysis of all the sources of uncertainty that outlined above. Really effective '''PRM''' will develop plans that will address all the six Ws questions. The '''PRM''' includes important processes that must be designed and planned at the highest level within a company. The project managers are responsible for the management of the risks, while at the same time they have to gain the support of the stakeholders as far as the risk identification, the planning and the implementation of the responses are concerned.		Project Risk Management(PRM)<ref name="Project Risk Management"></ref> is the systematic process of identifying, analyzing and responding to project risks, in order to take advantage of the impact of positive events that may occur and to decrease the probability of negative events to occur. The project risk management is based on an integrated analysis of all the sources of uncertainty that outlined above. Really effective '''PRM''' will develop plans that will address all the six Ws questions. The '''PRM''' includes important processes that must be designed and planned at the highest level within a company. The project managers are responsible for the management of the risks, while at the same time they have to gain the support of the stakeholders as far as the risk identification, the planning and the implementation of the responses are concerned.

	===Why do we need Risk Management ?===		===Why do we need Risk Management ?===