2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

The process of prioritizing risks for further analysis or action

by assessing and combining their probability of occurence
and impact

Assign Assign Calculate

Probability Impact the Severity
• High, • High, • Probability x
Medium, Low Medium, Low Impact
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

INPUTS TOOLS & TECHNIQUES OUTPUTS

• Risk Management Plan • Risk Probability and • Project Documents

• Scope Baseline Impact Assessment Updates
• Risk Register • Probability and Impact
• Enterprise Matrix
Environmental Factors • Risk Data Quality
• Organizational Process Assessment
Assets • Risk Categorization
• Risk Urgency
Assessment
• Expert judgment
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Inputs Description
Risk Management Plan Include roles and responsibilities for conducting risk management,
budgets, schedule activities for risk management, risk categories,
definitions of probability and impact, the probability and impact
matrix, and revised stakeholders’ risk tolerances
Scope Baseline Defines project objectives and assumptions, lists constraints that
make you see the project as a whole.
Risk Register Provides the initial list of risk so you can evaluate and rank them.
Note that the Risk Register will be updated during this activity.
Enterprise Industry studies of similar projects by risk specialists, and risk
Environmental Factors databases

Organizational Process Include risk databases, historical information, lesson learned, etc.
Assets include information on prior, similar completed projects.
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Determine which risk events warrant a response

Determine the probability and impact

Determine which risk to further analyze or go directly to risk response

planning

Document non critical risks

Determine the project overall risk ranking

2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

• Describe in qualitative terms:

– High, moderate, low
• Risk probability is the likelihood that a risk
will occur
• Risk consequence is the effect on project
objectives if the risk event occurs
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

1. Estimate 2. Estimate 3. Calculate 4. Use Severity

Probability Impact the Severity to identify
• 10% through • High=3 • Probability x • the risks worth
90% • Medium=2 Impact = Severity planning
• Low=1

Risk Description Probability Impact Severity

(0.1 – 0.9) (1 – 3) (P * I))
Resources may be constrained due to 70% 2 1.4
team members working on multiple
projects with conflicting priorities
Significant schedule delays may occur 80% 3 2.4
because the team is unfamiliar with the
new application
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

• A condition based on the combined probability

and impact scales
• Risk probability scale:
– General scale : 0.0 (no probability) up to 1.0 (certainly)
– Ordinal scale : very unlikely to almost certain
• Risk impact scale:
– Ordinal scale : very low, low, moderate, high, very high
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Rating à Very Low Low Moderate High Very High

Threats

Impact to Cost Insignificant <5% cost 5-10% cost 10-20% cost >20% cost
cost increase increase increase increase increase
Impact to insignificant <1 month 1-3 months 3-6 months >6 months
Schedule slippage slippage slippage slippage slippage
Opportunities

Impact to Cost Insignificant <1% cost 1-3% cost 3-6 cost >5% cost
cost reduction decrease decrease decrease decrease
Impact to insignificant <1 month 1-3 months 3-6 months >6 months
Schedule improvement improvement improvement improvement improvement
Probability 1-9% 10-19% 20-39% 40-59% 60-99%
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Probability Range Natural Language Expression Numeric Score

91% through 99% “Very likely” to occur 5

61% through 90% “Probably” will occur 4

41% through 60% “May occur” about half of the time 3

11% through 40% “Unlikely” to occur 2

1% through 10% “Very unlikely” to occur 1

2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Natural Language Numeric

Impact Description Example of Expression Score

An event that, if it occurred, would cause schedule adjustment

project failure (inability to achieve minimum >2 month Critical 10
acceptable requirements) cost impact > 40%
An event that, if it occurred, would cause schedule adjustment
major cost/ schedule increases. Secondary >1 month Serious 8
requirements may not be achieved. cost impact >20%
An event that, if it occurred, would cause schedule adjustment
moderate cost/ schedule increases, but > 2 weeks Moderate 5
important requirements would still be met. cost impact > 10%
An event that, if it occurred, would cause schedule adjustment
only a small cost/schedule increase. > 1 week Minor 3
Requirements would still be achieved. cost impact > 5%
An event that, if it occurred, would have no schedule adjustment
effect on the project. < 2 day Negligible 1
cost impact <5%
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

High Medium High High

Probability

Medium Medium Medium High

Low Low Medium Medium

Low Medium High

Impact
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Probability-Impact (P-I)
matrix: the multiplication of
the scale value of
probability and impact (P x
I). The result is classified
into high risk, moderate
risk, or low risk
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

• Low impact/Low probability: Risks in the

bottom left corner are low level and can be
ignored most of the time.
High
Critical
R8 • Low impact/High probability: Risks in the top
Risk R1 left corner are of moderate importance, and
R9 we can cope with them and move on;
however, we should try to reduce the
Probability of Occurrence

Medium likelihood that they’ll occur.

Level
• High impact/Low probability: Risks in the
R4
Risk
bottom right corner are of high importance,
R5 but they’re very unlikely to happen. For these
Low Level
R3
we should do what we can to reduce the
Risk
impact and should have a contingency plan
R6
in place.
R7
R2
• High impact/High probability: Risk toward
Low the top right corner are of critical importance
with top priorities, and we must pay close
Low Impact of Risk High
attention to them.
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Potential Risk
Category Risk Description Root Causes Impact Probability Impact
Responses Score

The Urgent List for high priority risk

Procurement Terjadinya Keterlambatan Pekerjaan Membuat jadwal Medium High High
keterlambatan pembayaran terlambat pembayaran termin
pembayaran dari termin dari dikarenakan yang disepakatin
kontraktor utama pemilik proyek subkon bersama dan
kepada subkon berhenti melakukan
pembuat jalur bekerja monitoring rutin
disable sampai untuk pencairan
termin termin ke pemilik
pembayaran proyek
turun
Risk that are high priority place on the Urgent List. Responses are developed. Low priority risks are placed on Watch List.
Responses are developed if Risk Score increases.
The Watch List for low priority risk
Cost Terjadinya Perubahan Biaya Melakukan antisipasi Low` Low Low
perubahan harga Nilai Tukar material kenaikan harga
material yang dibeli Rupiah meningkat material dengan
dari luar negeri mencantumkan di
kontrak untuk
penyesuaian jika
terjadi kenaikan
harga
2014 © Avenew Indonesia Module #05 Perform Qualitative Risk Analysis

Risks requiring near-team response:

• Risks that require immediate responses should be
organized into separate groups.

List of risk for additional analysis management:

• Risk with high or moderate impacts may be further analyzed
using additional techniques.

“Watch list” of low priority risks:

• Qualitative analysis may have revealed risks that are
considered low but should be monitored for any changes.
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Risk
Register
Updates. Assumption
Include assessments of probability Log
As new information
and impacts for each risk, risk Updates. becomes available
ranking or scores, risk urgency through the qualitative
information or risk categorization, and risk assessment,
a watch list for low probability risks or assumptions could
risks requiring further analysis change.
2014 © Avenew Indonesia Course #04 Perform Qualitative Risk Analysis

Effect to Risk Risk Risk

Risk Causes Category Probability Impact
Project Owner Response Score

Initial Initial
Add in this process

The Urgent List for high priority risk

Risk that are high priority place on the Urgent List. Responses are developed. Low
priority risks are placed on Watch List. Responses are developed if Risk Score
increases.
The Watch List for low priority risk
2014 © Avenew Indonesia Module #05 Perform Qualitative Risk Analysis

q Develop Risk Register with your

group
q Assign Risk Rating: Probability &
Impact
q Calculate Risk Ranking
q Short list into Urgent List & Watch
List