Advanced Risk Management Practicing

Risk manager professional credential (PMI‐RMP) preparation training 2015/2016

Prepared and presented by:
Hosam Kandeel , PMP, EVP, CRA, PMI‐RMP, PMI‐SP, CIPM, ASCE‐CMP, CCMP, M.Sc.
 Risk – Historical note
The word risk is quite modern; it entered the English language in the
mid 17th century, coming from the French word risqué. In the second
quarter of the 18th century the Anglicized spelling began to appear in
insurance transactions.
I’m like fate, don’t play with dies & don’t believe in coincidence
(William Shakespeare)

Je suis comme le destin, je ne joue pas avec les morts et je ne crois pas
aux coïncidences

Copy righted for Hosam Eid Mohammed (kandeel)

Presentation Outlines
What Do We have here……?
Risk – Historical note
Part (1): Introduction To Risk &value of Risk

Part (2): What IS Risk…?

Part (3): What we need before effectively begin risk management…?

Part (4): Global Risk Processes according to PMBK‐ 5th edition

Part (5): Project Risk Communication

Part (6): Project Risk Analysis (Qualitative & Quantitative)

Part (7): Project Risk Response planning

Part (7): Risk Governance

Copy righted for Hosam Eid Mohammed (kandeel)
Introduction To Risk &value
of Risk
Copy righted for Hosam Eid Mohammed (kandeel)
What Is Risk……?????? Threats
The Primary study to the situation of
Getting A phone call in a Shining morning
Stating that :
Contractor Client
The Shop drawing or Materials Approval Is delayed The contactor performance will lead to a failure to achieve A milestone
The on site activities have been stopped The Design consultant delay the final Design Drawing
The subcontractor is on a stick , escaped or fail to start the work I’m Mr.
New Economical Requirements for the project
Client,
The Delivery of a main material has been delayed Contractor Leakage of Project fund
or Engineer
The Exterior scaffolding fall down New Strategic visions changes the priorities of project

We hit a cable, water pipe, drainage line or Telephone cable Major AOG‐ Storms , earthquakes or Hurricanes

The consultant rejected the Steel for the 5th time Inflation rates that affect the fund providing for the project

Concrete cubes are failed in the stress test for the 3rd time Change of Management approaches toward reserve

AHU Connection dose not match the delivered pipes The contractor fail to provide the Desired Quality

Elevator doors Opening are not matching the door size The contractor fail to provide the Desired Safety requirement

The suspended ceiling level is not compatible with the Duct size Compotator achieve a good marketing for the same product before the project end

Unexpected price rises for labor and materials The project exceeds the risk rating during the execution processes

20% of the working Engineers are resigned & on the notice period The consultant failed to guarantee the required Quality on site

Have a Potential impact on Have a Potential impact on

Schedule Cost Quality Strategic Vision IRR Investment

What Is Risk……?????? Opportunities

The Primary study to the situation of

Getting A phone call in a Shining morning
Stating that :
Contractor Client

We may use the Excavated materials somewhere in the construction processes The contactor performance will lead to a Exceed achieving A milestone

The Soil founded after excavation is sand while it was predicted to be rock The Design consultant Finalize Design Drawing early
I’m Mr.
We developed a method to set 3 shuttering for slabs in the same time New Economical Requirements for the project
Client,
The Delivery of a main material finished before scheduled Contractor New Funds for the Project
or Engineer
One of the project staff has an experience in a complicated assigned task New Strategic visions changes the priorities of project
The MDB is available in the local market & no need to purchase it from Inflation rates that affect the fund providing for the project
outside the country
Change of Management approaches toward reserve
A scheduled Hurricane wont take place
New Technology is released that decrease time
We have an expert in the county for the time being

New Technology is released that decrease time The consultant Manage to guarantee the required Quality on site

Customer change some requirements into others already in A claim from the contractor for loss and expense caused by the
our stores late production of design details by the design team

Have a Potential impact on Have a Potential impact on

Schedule Cost Quality Strategic Vision IRR Investment

What IS Risk…?
Copy righted for Hosam Eid Mohammed (kandeel)
 Brainstorming
Agreed or ..? 1‐ The concept of risk can be applied to nearly every human decision‐making
action of which the consequences are uncertain

Agreed or ..? 2‐ Business models based on realizing benefits after investing in executing
projects are More risky

Agreed or ..?
3‐ Risk Management is a powerful decision making tool in all industries

Agreed or ..? 4‐ For To many organizations, risk is a four letter word and they try
to insulate themselves from risk, They position themselves to unload
unexpected costs onto others. Increased costs are passed on to
consumers by raising prices

Agreed or ..? 5‐ This approach may well have worked in the past, but it can be a
recipe for disaster. As international competition becomes stronger,
saddling consumers with increased costs becomes more difficult.
Shifting financial risk onto sub‐contractors, the least able to resist
does not encourage high levels of trust and commitment
 Risks Definitions
Possible – Uncertain – Event that may positively or negatively
impact the project
Pure Risk Insurable Risks – Only Risk of loss – Ex. Fires
Type of Risks
Business Risk Risk of gain or loss – Ex. Product that can be lose money
or gain money

Analytical technique
Used to understand and define the overall risk management context .

Risk management context

A combination of stakeholder risk attitude and the strategic risk exposure of a
given project based on overall project context

Stakeholder profile Grade and qualify the project

analysis may be To stakeholder risk appetite of
performed tolerance
 Organizations behavior toward Risk

Organization Behavior toward Risk

‘The umbrella approach’ where you must allow for every possible
1 eventuality by adding a large risk premium to the price

‘The ostrich approach ‘ where you burry your head in the sand
2 and amuse everything will be alright, that somehow you will
muddle through
3 ‘the intuitive approach’ that say don’t trust all the fancy analysis,
trust your intuition and gut feel
‘The brute force approach’ that focuses on the uncontrollable risk
4 and says we can force things to be controlled, which of course
they cannot
The project from the Investment Decision Stage Up to occupancy
(Client/Developer Point of View)
 Monitor and
control risk
Plan Risk
response
p
Quantitative
risk analysis
y
Qualitative
risk analysis
y
Identify Risks
Plan Risk
management
g
To have the ability & Culture to Do Risk management
Now We Know what is Risk…

To Do What……?
General Procedures & Response

1 Contingency Plans Substitution for subcontractor/ Main

contractor
Expert Hiring / Consultant for Services
Contingency vendor & suppliers

2 Fall back Plans What to do If the Contingency Plan fails

3 Reserve Management Additional Money or Time to feel safe

Now We Know what is Risk…

To Do What……?
Major Application in
Construction Industry

4 Probability & Scenarios Management

To Develop a Time (& / Or) cost lined Curves due to the

Construction logic & Risk management process to define the
Mandatory
Requirements
probability of Achieving the General & precise project Goals
taking into consideration all the factors & scenarios that
could happened in the project life cycle

1 List of Identified Risk – Risk Register

2 Impact & probabilities Analysis for the Risks

3 All Possible Scenarios

4 The Probability & Impact of each scenarios

What We Need Before Effectively Begin
Risk Management…?
Copy righted for Hosam Eid Mohammed (kandeel)
1 Project Background Information

2 Approved Project Charter

3 Stockholders Register (Output From Planning Processes)

4 Project Scope Statement

5 Assumptions

6 Work Breakdown Structure (WBS)

7 Network Diagram

8 Estimates For Time & Cost

9 Communications Through Project

Organization Processes Assets (When Sealing & Company It
10 Really Worth To Have)
What we need before effectively begin risk management…?

1 Project background information

Corporate Objectives
Time Scope Cost
Priority of this project Resources Performance
Project constrains Risk (Score) Quality

Culture Issues & suggested Protocol, language barriers & social customs (religions)

2 Approved Project charter

High level directive for management outlining the overall objectives of the Project

3 Stakeholders Register (output from planning processes)

People within the Performing organization Who are the Stakeholders People from outside the performing organization

Project Sponsor (director ‐ CFO or CEO) Customer (Client or Engineer)

Management End users
Project Manager Suppliers & Vendors
Project team Experts
Procurement Dep. Public
QA/QC Environment
What we need before effectively begin risk management…?

4 Project scope statement

What to be done & most important what should not be done

5 Assumptions
Things are accepted to be true, but they may not be true & the validity of such assumptions will be tested in the
project life cycle

6 Work breakdown Structure (WBS)

7 Network Diagram
Summary Level – Rolling Up for Activities Duration & Logic

S Activity (A) – Duration = XX F

Estimates Activity (B) ‐ Duration = YY

The Critical path(s) Activity (C) ‐ Duration = ZZ

The near Critical path(s) Dependencies

Path Convergence (many paths with probabilities)
What we need before effectively begin risk management…?

8 Estimates for time & cost

Who created the estimates?

What is the estimator’s confidence level of the estimates?

You should ask……?
Is the estimate based on detailed schedule or work packages (contract & BOQ)?

9 Communications through Project

What information needs to be collected ?

who will collect the information ?

You should Know……?
when such information to be communicated ?

10 Organization Processes assets (when sealing & company it really worth to have)
Risk Management policies, Procedures & templates

Historical Records from previous project

List of potential risks

List of planned responses

Evaluation of such responses

Global Risk Processes and Risk
Planning
Copy righted for Hosam Eid Mohammed (kandeel)
 Validating
Standing in Weighting the
Passenger
the line baggage (s)
data

Printing the
Labeling the To
Boarding Immigration
Baggage (S)
Pass
Map your Mind
Risk
Uncertain
Risk Zone
Risk
Duration

Cost Risk
Risk

Duration
Risk
Cost
Risk

Duration
Deterministic Zone Cost
Risk

Duration
Cost

Risk
 Project Risk Management
Planning
Inputs
1. Plan Risk Management
Outputs
Tools & Techniques
Project Charter Analytical techniques

Project management plan Meeting Analysis Risk Management Plan

Expert judgment
Stakeholder register

EEF & OPA

Reserves
Risk Response, Contingency, and
Fall‐back Plans

Production Checking the reliability of

Time and Cost Estimates
 Timing
Probability
Tracking &
Auditing Impact
Matrix

Budgeting Reporting Format

Roles &
Categories
Responsibility

Methodology
RM Stakeholders’
Tolerance
Plan

How Risk Management Will Be Structured And

Performed On The Project
 To have the Ability & Culture to Implement Risk If Not Don’t waste your time & money
Analysis

If
Yes

Who..? Do what..? When..? How..? How much..?

Plan Risk
Management Risk Team, Risk Manager & RAM
Customer scales of Probability &
All Risk Qualitative impacts
Engineering Dep. information get Risk Analysis Probability & impact for
Evaluated
Outside Experts Each risk

Identify Score & ranking

Estimation
Risks Watch List
Cost Control
Create Risk Quantitative
Procurement
Detailed Risk Breakdown Risk Analysis Simulations
Register structure
Construction
RBS Sub Decisions
HR
Probabilistic Scenarios Plan Risk Contingencies&
Coordinators
Responses Fallback Plans
Reserves & Management
Top Management

Monitor & control Risks, Through Risk meetings Evaluate Responses Document the New Risks & create lessons learned
Starting From the risk Planning process
Advanced Risk Management Practicing
Planning
Inputs
1. Plan Risk Management
Outputs
Tools & Techniques
Project Charter Analytical techniques

Project management plan Meeting Analysis Risk Management Plan

Expert judgment
Stakeholder register

EEF & OPA

Planning
Inputs
2. Identify Risks
Outputs
Tools & Techniques
Risk Management Plan
Documentation Review
Activity Cost Estimates
Activity Duration Estimates Information Gathering Tec. Risk Register
Check lists analysis
Scope Baseline
Assumptions Analysis List of Potential Risks
Stakeholder Register
Diagramming Techniques
Cost management plan
List of Potential Responses
SWOT Analysis
Schedule management plan
Expert Judgment
Quality management plan
Project Documents
EEF & OPA
Advanced Risk Management Practicing
Planning
Inputs
3. Perform Qualitative Risk Analysis
Outputs
Tools & Techniques
Risk Register
Risk Probability & Impact assessment (project documents ) Risk
Risk Management Plan Probability & Impact Matrix Register Update
OPA and EEF Risk & Quality Assessment
Updated List of Potential Risks
Risk Categorization

Risk Urgency Assessment Updated List of Potential Responses

Expert Judgment

Planning
Inputs
4. Perform Quantitative Risk Analysis
Outputs
Tools & Techniques
Risk Management Plan
Data Gathering & Representing Tec.
Risk Register Information Gathering Tec. (project documents ) Risk
Register Update
Cost management plan Quantitative Risk Analysis Modeling
Techniques
Schedule management plan Updated List of Potential Risks
Expert Judgment

OPA and EEF

Updated List of Potential Responses
Advanced Risk Management Practicing
Planning
Inputs
5. Plan Risk Responses
Outputs
Tools & Techniques
Risk Register
Strategies for Negative Risks – Threats
(project documents ) Risk
Risk Management Plan Strategies for Positive Risks – Opportunities
Register Update
Contingent Responses Strategies
Updated List of Potential Risks
Expert Judgment
Updated List of Potential Responses

PM Plan Update
Exploit Transfer
Avoid
Enhance
Mitigate
Share
Accept
Advanced Risk Management Practicing

Monitoring & controlling

Inputs
6. Monitor & Control Risks
Outputs
Tools & Techniques
Project Management Plan
Risk Assessment
Risk Register (project documents ) Risk
Risk Audit Register Update
Work Performance Data Variance & trend Analysis
Updated List of Potential Risks
Work Performance Report Technical Performance Measurement
Reserve Analysis Updated List of Potential Responses

Status meeting OPA Update

Change Request
PM Plan Update

Project Document Update

Advanced Risk Management Practicing
New Edition

Risk Strategy And Planning 18 – 20 %

Stakeholder Engagement 18 – 20 %

Risk Process Facilitation 25 – 28 %

Risk Monitoring And Reporting 18 – 20 %

Perform Specialized Risk Analysis 14 – 16 %

Project Risk Communication
Copy righted for Hosam Eid Mohammed (kandeel)
 To have the Ability & Culture to Implement Risk If Not Don’t waste your time & money
Analysis

If
Yes

Who..? Do what..? When..? How..? How much..?

Plan Risk
Management Risk Team, Risk Manager & RAM
Customer scales of Probability &
All Risk Qualitative impacts
Engineering Dep. information get Risk Analysis Probability & impact for
Evaluated
Outside Experts Each risk

Identify Score & ranking

Estimation
Risks Watch List
Cost Control
Create Risk Quantitative
Procurement
Detailed Risk Breakdown Risk Analysis Simulations
Register structure
Construction
RBS Sub Decisions
HR
Probabilistic Scenarios Plan Risk Contingencies&
Coordinators
Responses Fallback Plans
Reserves & Management
Top Management

Monitor & control Risks, Through Risk meetings Evaluate Responses Document the New Risks & create lessons learned
Starting From the risk Planning process
Agreed or ..? The Most Important Process of Risk management – if we will do RM – Is to Identify the Risks Processes of RM
Agreed or ..? Most of the Construction risks are linked to the construction schedule Construction Point
of View
Agreed or ..? Most of the Risks In Construction are with high Impact & Controlled Probability

Agreed or ..? Risk as A decision making tool & the Scenario management can be mostly Used in Construction Decide To Do RM &
Agreed or ..? Risk as A decision making tool Can not be done in the Detailed Level of Schedule
RM Planning

Identify Risks
Use a prompt list – List of Risk Categories
Analyze Risk
Review your Own Company’s historical
records and other documentation Score & Ranking for Risks Team
Plan Risk Responses
Brainstorming High Level Risk Analysis for Cost
Executives Simply How we are going
Conduct a ‘’ Pre‐mortem' Imagine the High Level Risk Analysis for Time to deal with risks
project is completed or failed
Matrices & Templates for Risk Categories Complicatedly What is the
Affinity diagrams – Grouping of Identified effect of our responses to
Detailed Level Scenarios Analysis for Time & Cost
Expert interviews the Risks probabilities &
All Time An cost Scenarios outputs Reviewed Impacts
Nominal group technique – Group thinking
Use the New Modified
Delphi technique – Individual Experts Probabilities & Impact To
Cause and effect diagram – Fish bone Re – Simulate the Project
outputs
Failure modes and effects analysis
Exploit Enhance Transfer Avoid Plan Risk Responses
Strengths, weaknesses , opportunities , and
Share Accept Mitigate Categories
threats (SWOT)

Monitor & control Risks, Through Risk meetings Evaluate Responses, Document the New Risks & create lessons learned
Starting From the risk Planning process
The Most Important Process of Risk management – if we will do RM – Is to Identify the Risks
Most of the Construction risks are linked to the construction schedule

Most of the Risks In Construction are with high Impact & Controlled Probability
Risk as A decision making tool & the Scenario management can be mostly Used in
Construction
Risk as A decision making tool Can not be done in the Detailed Level of Schedule

Identify Risks
Use a prompt list – List of Risk Categories
Review your Own Company’s historical records and other documentation
Brainstorming
Conduct a ‘’ Pre‐mortem' Imagine the project is completed or failed
Affinity diagrams – Grouping of Identified
Expert interviews
Nominal group technique – Group thinking
Delphi technique – Individual Experts
Cause and effect diagram – Fish bone
Failure modes and effects analysis

Strengths, weaknesses , opportunities , and threats (SWOT)

Advanced Risk Management Practicing
Planning
Inputs
1. Plan Risk Management
Outputs
Tools & Techniques
Project Charter Analytical techniques

Project management plan Meeting Analysis Risk Management Plan

Expert judgment
Stakeholder register

EEF & OPA

Planning
Inputs
2. Identify Risks
Outputs
Tools & Techniques
Risk Management Plan
Documentation Review
Activity Cost Estimates
Activity Duration Estimates Information Gathering Tec. Risk Register
Check lists analysis
Scope Baseline
Assumptions Analysis List of Potential Risks
Stakeholder Register
Diagramming Techniques
Cost management plan
List of Potential Responses
SWOT Analysis
Schedule management plan
Expert Judgment
Quality management plan
Project Documents
EEF & OPA
Agreed or ..? The Most Important Process of Risk management – if we will do RM – Is to Identify the
Risks

Steps To Identify Risks

Collect historical information
Determine who may have insight into risks
Determine which Risk Identification methods to use, and with what
groups
Make a list of all identified risks on a risk Register
Determine which the risk team’s assistance, how Confident you are that the major risks have
been identified (Data Quality Assessment)

If you are not confident that you have identified all the risks, redo the previous steps,
If you are confident, determine whether questions remain and what information is still needed to understand and
analyze the identified risks

Ask the remaining questions, and collect the information

Add new risks to the list and eliminate any items identified as not really risks in your
data collection
Discuss remaining risks as necessary to understand them
 Delphi Technique

• Reach consensus
from EXPERTS.

• ANONYMOUS: no
bias

• Written questionnaire

• Two or more rounds.

“Clearly” Define Risk Categories (RBS)
Source – PMP preparation – Rita Malachi
Templates
 The Case‐Study “Risks Identification”

Consultant
Contractor

Authority
Employer
Operator

Police
PMC
Procurement
Contractual
Financial
Design
Engineering
Construction
Logistics
Quality
HSE
40
We have COP directors in many various fields with
PMI‐AGC does not have a fixed office in Riyadh
high experience & well Educated
We are working in a booming era in the filed of
SWOT Analysis
PMI‐AGC does not have a fixed training Schedule
project management

The market is hungry for project management PMI‐AGC does not have a fixed training place in
Riyadh
We have a well established relations with the
The service of the PMI‐AGC especially in trainings
largest clients & Contractors in many fields
in Riyadh is week
We have well Experienced members of the COP
Providing Practical application in specified
board in the training filed
industries is not strong enough
We know that the most wanted service now ins
Surveys for the market needs (PM) tools are not
trainings
strong enough
PMI‐AGC is an official representative of PMI

The awareness of PMI‐AGC now increasing

Strength Weakness
the PMI certificate became a requirement in
practicing Project management

Opportunities Threats

Hard physical communication with PMI‐AGC

Make use COP experience for indoor awareness &
increasing of members
Loosing the advantages of providing the training
Make Use of the booming in the filed of PM to based on the right processes as PMI‐AGC does not
provide standard practices awareness have a fixed training place
Using the cross relationships to improve
The service of the PMI‐AGC especially in trainings
cooperation with practitioners in the PM filed
in Riyadh is week
Use the members of COP board & other volunteers
Other Practical application in specified industries
experiences in the filed of training services
Will Replace PMI Standard
Enhance & sustain awareness of PMI‐AGC
Loosing the peaks of the market needs In PM filed
 Template Risk Register
Risk

Score
Risk Factors ‐ QL Factors‐ QN Risk Potential

S co re
ID Action Notes
Owner Response
Cause Description effect P I P I Owner
As we don’t have which wil cause a

Multiplication of the 2 quantitative factors

we might hit an
(High, Moderate or Low)

On a small scale (1 to 3)
R_001 the proper existing delay of 10 days &

Quantitative Rank
existing cable Qualitative Rank
utilities drawings penalty of 1000 SR

Score
R_002

R_003

R_00X
 Probability Definitions
The Likelihood of having the event on reality, based on
Experience or Lessons learned
Impact
The effect (time or money) as number for Quantitative Analysis or as category (large,
Medium, Low effect) for Qualitative Analysis that the project will suffer if the Event
happened
Risk Score for Each Risk or Activity
Multiply the Probability times Impact to get a value (Qualitatively or Quantitatively) for
the Risks & the Activities (threats are positive Values & Opportunities are negative
values))
Risk Score for Project
The Sum of all the Scores of all the Risks or the Activities in the Project
Risk Ranking
The Arrangement of Risks due to there Scores

Risk Rating
Is A number Between 1 & 10 chosen to evaluate the Probability or Impact of a Risk
Expert interviews – The most Effective method of Identifying Risk
1‐ I wanted to ask your advice because I heard
you have a lot of experience with this issue!
“This will get them more interested in helping
you. Watch out, though‐ your compliment
must be a real one and not just fluff such as,
“I heard you are great.”

I have brought with me Nicole from the

design team and Joe from the integration
team. They will both be helping me by
taking notes so that I can concentrate on
the questions. Will that be all right with
you?
 Ask an open‐ended question
 What problems do you foresee if we use this
method?
 What problems have you had on similar projects in
the past?
 What are you most worried about on this project?
 What might go wrong?
 What might go right?
 What additional opportunities do you see us being
able to realize as result of this project?
`

“You said you were most worried about

the software delivery being late. Why does
this concern you? What impact do you see
it having on the project? What would you
estimate is the probability of it occurring?”
 “I have talked to others and analyzed the project
requirements, and we are worried about a
particular problem. Do you think this problem
might occur? When? How many times? What
specifically might happen if this problem occurs?
What do you estimate the impact to the project to
be in hours if this problem occurs? In days? How
likely do you think it is that this problem will arise,
on a scale of 1 to 10?”

“I have talked to others and analyzed the project

requirements, and we are worried about a particular
problem. Do you think this problem might occur? When?
How many times? What specifically might happen if this
problem occurs? What do you estimate the impact to the
project to be in hours if this problem occurs? In days?
How likely do you think it is that this problem will arise,
on a scale of 1 to 10?”
“You mention that we should be concerned with the
source of the equipment we purchase for the project.
Why would this be a major concern? What sources
should we avoid? How can we be sure to get a good
source?”
Clarify responses
“Have any other ideas come to mind as we have been
talking?”

“You have given me a lot of new ideas. In the next

few days, I will be investigating them and may need
to ask you some follow‐up question. I may also get
some ideas from others and want to get your
opinion on those. Would it be all right if I were to
contact you again?”
“it always happens that while you are going
home at night or the next morning in the
shower you will think of things you for get to
mention. Here is my e‐mail address (or
business card). I will be looking for other
ideas from you in the next few days. Please
feel free to contact me.”

Thanking & Finishing

“Your input will really help this project
meet its objectives. Thank you so much for
taking the time to talk to me.”
 What we need to Guarantee in Planning Stage for a Successful
Model for Projects
Complete
Stakeholder
Integrated Engagement
Well‐ Risk Register
Established
Schedule

50
Project Risk Analysis (Qualitative &
Quantitative)
Copy righted for Hosam Eid Mohammed (kandeel)
Agreed or ..? The Most Important Process of Risk management – if we will do RM – Is to Identify the Risks Processes of RM
Agreed or ..? Most of the Construction risks are linked to the construction schedule Construction Point
of View
Agreed or ..? Most of the Risks In Construction are with high Impact & Controlled Probability

Agreed or ..? Risk as A decision making tool & the Scenario management can be mostly Used in Construction Decide To Do RM &
Agreed or ..? Risk as A decision making tool Can not be done in the Detailed Level of Schedule
RM Planning

Identify Risks
Use a prompt list – List of Risk Categories
Analyze Risk
Review your Own Company’s historical
records and other documentation Score & Ranking for Risks Team
Plan Risk Responses
Brainstorming High Level Risk Analysis for Cost
Executives Simply How we are going
Conduct a ‘’ Pre‐mortem' Imagine the High Level Risk Analysis for Time to deal with risks
project is completed or failed
Matrices & Templates for Risk Categories Complicatedly What is the
Affinity diagrams – Grouping of Identified effect of our responses to
Detailed Level Scenarios Analysis for Time & Cost
Expert interviews the Risks probabilities &
All Time An cost Scenarios outputs Reviewed Impacts
Nominal group technique – Group thinking
Use the New Modified
Delphi technique – Individual Experts Probabilities & Impact To
Cause and effect diagram – Fish bone Re – Simulate the Project
outputs
Failure modes and effects analysis
Exploit Enhance Transfer Avoid Plan Risk Responses
Strengths, weaknesses , opportunities , and
Share Accept Mitigate Categories
threats (SWOT)

Monitor & control Risks, Through Risk meetings Evaluate Responses, Document the New Risks & create lessons learned
Starting From the risk Planning process
 To have the Ability & Culture to Implement Risk If Not Don’t waste your time & money
Analysis

If
Yes

Who..? Do what..? When..? How..? How much..?

Plan Risk
Management Risk Team, Risk Manager & RAM
Customer scales of Probability &
All Risk Qualitative impacts
Engineering Dep. information get Risk Analysis Probability & impact for
Evaluated
Outside Experts Each risk

Identify Score & ranking

Estimation
Risks Watch List
Cost Control
Create Risk Quantitative
Procurement
Detailed Risk Breakdown Risk Analysis Simulations
Register structure
Construction
RBS Sub Decisions
HR
Probabilistic Scenarios Plan Risk Contingencies&
Coordinators
Responses Fallback Plans
Reserves & Management
Top Management

Monitor & control Risks, Through Risk meetings Evaluate Responses Document the New Risks & create lessons learned
Starting From the risk Planning process
 Important Single Formula – Risk Factors

Probability Impact Number Related

Factors
Risk

Expected Time of Risk to occurs to the Risk

Frequency of Risk event

Quantitative Amount
Qualitative Score
(Money or Time)

express the Risk category Used to calculate reserves

location of Risk in the Used in Quantitative

Probability & Impact Matrix Simulation

Identify the total Project Risk Identify the total Project Risk
Score & Go/No Go Decision Score & Go/No Go Decision
Advanced Risk Management Practicing
Planning
Inputs
3. Perform Qualitative Risk Analysis
Outputs
Tools & Techniques
Risk Register
Risk Probability & Impact assessment (project documents ) Risk
Risk Management Plan Probability & Impact Matrix Register Update
OPA and EEF Risk & Quality Assessment
Updated List of Potential Risks
Risk Categorization

Risk Urgency Assessment Updated List of Potential Responses

Expert Judgment
Source – PMP preparation – Rita Malachi
Templates
 Score > 8 Score Bt. 5 ‐ 8 Score <5

5 5 10 15 20 25

4 4 8 12 16 20

3 3 6 9 12 15

2 2 4 6 8 10

1 1 2 3 4 5

1 2 3 4 5
Advanced Risk Management Practicing
Planning
Inputs
1. Plan Risk Management
Outputs
Tools & Techniques
Project Charter Analytical techniques

Project management plan Meeting Analysis Risk Management Plan

Expert judgment
Stakeholder register

EEF & OPA

Planning
Inputs
2. Identify Risks
Outputs
Tools & Techniques
Risk Management Plan
Documentation Review
Activity Cost Estimates
Activity Duration Estimates Information Gathering Tec. Risk Register
Check lists analysis
Scope Baseline
Assumptions Analysis List of Potential Risks
Stakeholder Register
Diagramming Techniques
Cost management plan
List of Potential Responses
SWOT Analysis
Schedule management plan
Expert Judgment
Quality management plan
Project Documents
EEF & OPA
Advanced Risk Management Practicing
Planning
Inputs
3. Perform Qualitative Risk Analysis
Outputs
Tools & Techniques
Risk Register
Risk Probability & Impact assessment (project documents ) Risk
Risk Management Plan Probability & Impact Matrix Register Update
OPA and EEF Risk & Quality Assessment
Updated List of Potential Risks
Risk Categorization

Risk Urgency Assessment Updated List of Potential Responses

Expert Judgment

Planning
Inputs
4. Perform Quantitative Risk Analysis
Outputs
Tools & Techniques
Risk Management Plan
Data Gathering & Representing Tec.
Risk Register Information Gathering Tec. (project documents ) Risk
Register Update
Cost management plan Quantitative Risk Analysis Modeling
Techniques
Schedule management plan Updated List of Potential Risks
Expert Judgment

OPA and EEF

Updated List of Potential Responses
 Risk analysis framework- The case

Excavation zone Point

B

Excavation line

No existing utilities
map
Point
Low accuracy existing
A utilities map

A lot of illegal existing utilities

Hidden or dangerous existing utilities

 Risk analysis framework- The Probability

The causes Weighing Rating

No existing utilities map 100 80

Low accuracy existing utilities maps 100 80
Low accuracy existing utilities maps 100 80
Unforeseen soil conditions Data 50 20
Low qualification of the operator collection 50 20
Size of the excavators 30 5
Non-sufficient number of trail-pits 30 5
Total 260 130
 Risk analysis framework- The Probability
Weighing
Weighing
Number of the existing utilities – if any XX

80 The age of the existing utilities – if any YY

80 Reliability tracing of the existing utilities – if any ZZ

80 Data quality assessment for the drawings SS

20
20
5
5
130
 Risk analysis framework- The Probability breakdown structure

Causes 1 Causes 2 Causes 3 Causes 4

Causes Causes Causes Causes

measurement measurement measurement measurement
factor 1 factor 2 factor 1 factor 2

Factor Factor Factor Factor

p
component 1 p
component 1 p
component 1 p
component 1

Component Component Component Component

measure 1 measure 1 measure 1 measure 1
 Score > 8 Score Bt. 5 ‐ 8 Score <5

5 5 10 15 20 25

4 4 8 12 16 20

3 3 6 9 12 15

2 2 4 6 8 10

1 1 2 3 4 5

1 2 3 4 5
 Risk analysis framework- The Probability

Representing Uncertainty Mathematically

Classical two-value logic:  Lack of knowledge

not differentiated
0.70 0.30
Probability Probability  May lead to false
hypothesis is true hypothesis is false
P(H)
assertions
1-P(H)

Evidence based three-value logic:

 Honest about what is
0.28 0.30 not known
Evidence supporting Evidence refuting
hypothesis hypothesis  Allows better
Remaining analysis of how to
uncertainty tackle the remaining
uncertainty
Evidence For + Evidence Against + Uncertainty = 1
 Project Risk Management
Templates

As Output of Qualitative Risk Analysis – Lessons learned

 Templat
Source – Experience es

Probability & Impact Strategic Matrix – Company Policies

Advanced Risk Management Practicing

Planning
Inputs
4. Perform Quantitative Risk Analysis
Outputs
Tools & Techniques
Risk Management Plan
Data Gathering & Representing Tec.
Risk Register Information Gathering Tec. (project documents ) Risk
Register Update
Cost management plan Quantitative Risk Analysis Modeling
Techniques
Schedule management plan Updated List of Potential Risks
Expert Judgment

OPA and EEF

Updated List of Potential Responses
 The Scenario (Model)
Finishing of R. Concrete work for chemical Chimney for electrical station, Then,
Deterministic Path
Outside High Advanced Isolation & Smoke Filtering

Finishing of R. Concrete work for Chemical Chimney for

Power Planet
Advanced Isolation & Smoke Filtering

Uncertainties
Finishing of R. Concrete work for
Chemical Chimney for Power Planet
FS

Repair for the chimney BR1 ‐ Duration 1 60%

Finding Internal Network 1

Structural Cracks
Branching Support & replace Some Parts BR2 ‐ Duration 2 38%
Point Network 2

Demolishing & Restructure BR3 ‐ Duration 3 2%

Remaining Duration Zero
Network 3
All FS
Probability = 50%

Advanced Isolation & Smoke Filtering

 The Scenario (Model)
Cost (Labor/Material) – Man‐hours – Manpower & Equipment Numbers

Manpower Equipments Materials

Resources

Rates of Manpower, The Number of

Materials or Equipment has The Performance of the Labors People/Equipment needed to
a level of Uncertainties due is Variable due to Productivity be assigned to the activity is
to Economical and Rates, and Skills of Manpower uncertain due to availability
Environment Risks or unfixed quantities
The Scenario (Model)
 Project Risk Management

4. Perform Quantitative Risk Analysis

After every single group of analysis The previewed curve took place Target

Variables (Duration, Cost , Man‐hours, Finish date or Start Date )

 Project Risk Management

4. Perform Quantitative Risk Analysis

Sensitivity Analysis
 Critical Risks for the Model
Risk 2

Risk 3

Risk 4

Risk 5
Sub‐Network (Fragment 1)
Risk 6

Sub‐Network (Fragment 2) Risk 7

Sub‐Network (Fragment 3) Risk 8

Sub‐Network (Fragment 4) Risk 9

Risk 10
Sub‐Network (Fragment 5)
Risk 11
Sub‐Network (Fragment 6)
Risk 12
75
Now What have we done…….? Based On fluctuation in Schedule variables,
(duration, Resources rates or Productivities) (A)
Identify Risks
Group Of
Effort Based On Some possible Scenarios (Group B)
Score & Ranking for Risks Analysis
Based & depend on the Identified risks & there
High Score Risks for further analysis Detailed Level Probability , Impact & Activity Sensitivity (Group C)

Summary Level – Rolling Up for Activities Duration & Logic

S Activity (A) – Duration = XX F

Activity (B) ‐ Duration = YY

Activity (C) ‐ Duration = ZZ

Group (A) ‐ Analysis Number (1) – Duration Analysis – Direct Numbers Entry
This Analysis Take place when an expert Opinion or possibilities of EX. The Delivery Period of AHU is (60D in
events could State more than 1 possible duration for an activity the BCS, Probably 90D but could be
For a Single activity Pert Duration delivered in120D)

Most Probable
Optimistic
Duration 4 Duration
(deterministic )
Pessimistic
Duration

6
For Analysis across a time schedule the probable durations are set
to the Uncertain Activities & Based on the Logic a Software could
Develop iterations up to 1,000,000 (IT) to produce the Shown
Curve giving the probability of achieving various durations for the
Project, work packages & Activities Duration
Group (A) ‐ Analysis Number (2) – Resources Rates & Productivities)‐ Direct Numbers Entry
Manpower (hr) Equipments Materials

Resources

The Performance of the Labors is

The Number of People/Equipment
Rates of Manpower, Materials or Variable due to our Productivity rates in
needed to be assigned to the activity is
Equipment has a level of Uncertainties OPA – Can’t be applicable unless the
uncertain due to availability or unfixed
due to Economical Risks company have a certain Productivity
quantities
records

Cost of Labor /Materials Man‐hours Uncertainty Manpower/Equipment

Uncertainty based on deferent Number Uncertainty
Productivities

Cost (Labor/Material) – Man‐hours – Manpower & Equipments Numbers (for Projects)

 Group (B) ‐ Analysis Number (1) – Based On Possible Construction Scenarios – Logic & Paths Probabilities
Case (1) – Existence Probability
Deterministic Path (Excavation – Duration = XX) – (PC – Foundation Duration= YY)
Uncertainties
Excavation – Duration = XX
Excavation – Duration = XX
PC – Foundation Duration= YY
20%

FS 10%

Possible Soil Replacement

20% Possibility (1)
Duration only
Probabilistic

Due to clay condition

FS
Possible Rock
10% Possibility (2)
Breaking

FS

PC ‐ Foundation

(Excavation – Duration = XX) – (Possible Soil Replacement Due to clay condition ‐ Duration = Z1 or Z2 or Z3) ‐ (PC – Foundation Duration= YY)
Probable Path (1) 20%
(Excavation – Duration = XX) – (Possible Rock Breaking ‐ Duration = N1 or N or N3) ‐ (PC – Foundation Duration= YY)
Probable Path (2) 10%
After Collecting & Applying All the Probable paths in the Time schedule a software can do Iterations up one Million
Times to adjust the Curve of possible Dates & Durations for the Whale project, work packages, Summary Levels &
Activities
 Group (B) ‐ Analysis Number (1) – Based On Possible Construction Scenarios – Logic & Paths Probabilities
Case (2) –Probabilistic Branching
(Finishing of R. Concrete work for chemical Chimney for electrical station )
Deterministic Path
Uncertainties – (Outside High Advanced Isolation & smoke filtering )

Finishing of R. Concrete work for

Finishing of R. Concrete work for chemical Chimney for electrical station–
chemical Chimney for electrical Duration = XX
Outside High Advanced Isolation & smoke
station– Duration = XX
Example (1)

filtering Duration= YY
FS

Repair for the chimney BR1 60%

Duration only
Probabilistic
Duration = Zero Finding Internal &
External Support & replace Some Parts BR2 38%
Probability = 50% Structural Cracks
Branching Point
Relation = FS Demolishing & Restructure BR3 2%

All are FS

Outside High Advanced Isolation & smoke

filtering Duration= YY

Successor Activity with normal logic ‐

Duration= YY

After Collecting & Applying All the Probable Branches in the Time schedule a software can do Iterations up one
Million Times to adjust the Curve of possible Dates & Durations for the Whale project, work packages, Summary
Levels & Activities
 Group (B) ‐ Analysis Number (1) – Based On Possible Construction Scenarios – Logic & Paths Probabilities
Case (2) –Probabilistic Branching
Deterministic Path Excavation & Padding for cables – Cable Pulling & Connection for JP
Uncertainties

Excavation & Padding for cables–

Excavation & Padding for cables– Duration = XX
Duration = XX Cable Pulling & Connection for JP ‐
Example (2)

Duration= YY
FS

Remove & Replace EX. UT BR1 30%

Duration only
Probabilistic
Duration = Zero Due to Absence of
Utility maps old Re‐ Direction for the Cable
Probability = 40% utilities could be trenching BR2 15%
found
Relation = FS Branching Point Use Special construction (HDD) BR3 55%

All are FS

Cable Pulling & Connection for JP ‐

Duration= YY

Successor Activity with normal logic ‐

Duration= YY

After Collecting & Applying All the Probable Branches in the Time schedule a software can do Iterations up one
Million Times to adjust the Curve of possible Dates & Durations for the Whale project, work packages, Summary
Levels & Activities
After every single group of analysis The previewed curve took place
Targe
t

Variables (Duration, Cost , Man‐hours, Finish date or Start Date )

Other Application for Risk Analysis on A construction project

Sensitivity Analysis & Diagram

Sensitivity Analysis Is A computerized Analysis Done with the same data entered to the Previous Analysis to
determine the most Sensitive activities to impact the Critical Path(S)

Most Critical

Lowest Critical
Group (C) ‐ Based & depend on the Identified risks & there Probability , Impact & Activity Sensitivity – Using
Risk Register & Qualitative & Quantitative Risk Analysis & Risk Responses

Pre mitigated Curve Post – Mitigated Curve

Cost (Labor/Material) – Man‐hours – Manpower & Equipments Numbers (for Projects)

Group (C) ‐ Based & depend on the Identified risks & there Probability , Impact & Activity Sensitivity – Using Risk
Register & Qualitative & Quantitative Risk Analysis & Risk Responses

Post – Mitigated Curve

Pre mitigated Curve

The main target of Risk management is to define the impact of Risks as a probabilistic curve before mitigating
risks & after to show who dealing with Uncertainties could reduce our cost & Achieve time limits for a project
Project Risk Response planning
Copy righted for Hosam Eid Mohammed (kandeel)
Advanced Risk Management Practicing
Planning
Inputs Outputs
5. Plan Risk Responses
Tools & Techniques
Risk Register
Strategies for Negative Risks – Threats
(project documents ) Risk
Risk Management Plan Strategies for Positive Risks – Opportunities
Register Update
Contingent Responses Strategies
Updated List of Potential Risks
Expert Judgment
Updated List of Potential Responses

PM Plan Update
Exploit Transfer
Avoid
Enhance
Mitigate
Share
Accept
Advanced Risk Management Practicing

Monitoring & controlling

Inputs
6. Monitor & Control Risks
Outputs
Tools & Techniques
Project Management Plan
Risk Assessment
Risk Register (project documents ) Risk
Risk Audit Register Update
Work Performance Data Variance & trend Analysis
Updated List of Potential Risks
Work Performance Report Technical Performance Measurement
Reserve Analysis Updated List of Potential Responses

Status meeting OPA Update

Change Request
PM Plan Update

Project Document Update

 Based & depend on the Identified risks & there Probability , Impact & Activity Sensitivity – Using
Risk Register & Qualitative & Quantitative Risk Analysis & Risk Responses
Qualitative Ranked
Identified RISK New Risks

Residual Risks
Pre – Mitigated Risks Data Post – Mitigated Risks Data
Mandatory Data To be
Mandatory Data To be Defined to Defined to Software or
Software or manual analysis manual analysis

Threat or Opportunity & Essay details Threat or Opportunity & Essay details
Cause & Effect ,Title & Description for Risk Cause & Effect ,Title & Description for Risk
Probability as Qualified (Low, Medium, High & Probability as Qualified (Low, Medium, High &
percentage) percentage)
Schedule Impact (Low, Medium, High & Value) Schedule Impact (Low, Medium, High & Value)
Project
Cost Impact (Low, Medium, High (Rank & Value) Cost Impact (Low, Medium, High (Rank & Value)
Cost Impact (Low, Medium, High (Rank & Value) Cost Impact (Low, Medium, High (Rank & Value)
Performance Impact Description Performance Impact Description

Score (calculated) Score (calculated)

Assignment on the Activities (Impacted Assignment on the Activities (Impacted
Activities) Activities)
Special Quantitative Probabilities & Impacts on Special Quantitative Probabilities & Impacts on
the Assigned Activities (cost &/or Schedule the Assigned Activities (cost &/or Schedule
Risk Owner Exploit Enhance Transfer Avoid
Fall Back Plans
Risk Action Owner Share Accept Mitigate
Contingency Plans
Risk Manager
Plan Risk Responses After Mitigation
Risk Governance
Copy righted for Hosam Eid Mohammed (kandeel)
 The Story of the project
Company RTCC is a big company working in construction projects as a
contractor, in the past 5 years, despite the huge number of projects the
company has been awarded, the company suffered a lot of cash problems
and over budgeting, searching in the reasons the analysis pointed out to a
leak of project control and qualified centralized (global) project
monitoring and controlling team, an ambitious manager decided to invest
in a 6 month project to develop a global project control team handling the
enterprise projects control processes, report the problems, suggest and
apply corrective action and supervise applying such action.
The project manager is going to build this team from scratch, assign the
job to them after training them and co‐locate them.
Business case
Statement of work
Name of the
Project
EEF and OPA
Initial time
project
manager
charter
Initial budget
 Monitor and
control risk
Plan Risk
response
p
Quantitative
risk analysis
y
Qualitative
risk analysis
y
Identify Risks
Plan Risk
management
g
To have the ability & Culture to Do Risk management
To have the ability & Culture to Do Risk Analysis If Not Don’t waste your time & money
If
Yes

Plan Risk Management Who…? Do what…? When…? How..? How much..?

Customer
Risk Team , Risk manager & RAM As out put
All Risk
Engineering Dep. Qualitative scales of Probability
information are
available & Risk Analysis & impacts
Outside Experts

As out put
Evaluated with Probability &
Estimation Dep. acceptable quality impact for Each risk
Choose for
Cost Control Dep. Identify Further Score & ranking
YES
Analysis
Procurement Dep. Risks Watch List
Create Risk
Construction Dep. Quantitative
Breakdown Simulations

out put
structure Risk Analysis

As
HR Dep. Detailed
Risk Register RBS Sub Decisions
Coordinators
Probabilistic Scenarios Management
As out put Plan Risk Contingency &
Top Management
Reserves & Management Responses Fallback Plans
 1. Plan Risk
Management Our Project
2. Identify Risks Risk
Risk Factors ‐ QL Factors‐ QN Risk Potential
3. Perform Qualitative ID Action Notes
Owner Response
Risk Analysis
Cause Description ef ect P I P I Owner

S
4. Perform Quantitative
As we don’t have which wil cause a

Multiplication of the 2 quantitative factors

Risk Analysis
we might hit an

or Low)
o )

e ((1 to 3)
5. Plan Risk R_0 1 the proper existing delay of 10 days &

Quantitative Rankk
Rankk
existing cable

ode ate o
Responses util ties drawings penalty of 1000 SR

scale
( g , Moderate
Qualitative

Score
a sca
On a ssmall
R_0 2

l
Risk Management plan

(High,
R_0 3

O
Risk Register
R_0 X
QUESTION NO: 1
Lisa is the project manager of the SQL project for her company. She
has completed the risk response planning with her project team and
is now ready to update the risk register to reflect the risk response.
Which of the following statements best describes the level of detail
Lisa should include with the risk responses she has created?

A. The level of detail is set by historical information.

B. The level of detail should correspond with the priority ranking.

C. The level of detail must define exactly the risk response for each identified risk.

D. The level of detail is set of project risk governance.

QUESTION NO: 3
You work as the project manager for Bluewell Inc. Your project has
several risks that will affect several stakeholder requirements. Which
project management plan will define who will be available to share
information on the project risks?

A. Risk Management Plan

B. Stakeholder management strategy

C. Resource Management Plan

D. Communications Management Plan

QUESTION NO: 4
You work as a project manager for BlueWell Inc. Your project is using a new
material to construct a large warehouse in your city. This new material is cheaper
than traditional building materials, but it takes some time to learn how to use the
material properly. You have communicated to the project stakeholders that you will
be able to save costs by using the new material, but you will need a few extra
weeks to complete training to use the materials. This risk response of learning
how to use the new materials can also be known as what term?

A. Team development

B. Benchmarking

C. Cost of conformance to quality

D. Cost‐benefits analysis
QUESTION NO: 5
Jenny is the project manager of the NHJ Project for her company.
She has identified several positive risk events within the project and
she thinks these events can save the project time and money. You, a
new team member wants to know that how many risk responses
are available for a positive risk event. What will Jenny reply to you?

A. Four

B. Three

C. Seven

D. Acceptance is the only risk response for positive risk events.

Advanced Risk Management Practicing
Risk manager professional credential (PMI‐RMP) preparation training 2013/2014
Prepared and presented by:
Hosam Kandeel , PMP, EVP, CRA, PMI‐RMP, PMI‐SP, CIPM, ASCE‐CMP, M.Sc.