Risk Response Strategy

Plan Risk Response – the process of developing options and actions to enhance or exploit opportunities and to reduce or eliminate threats to project objectives. 

Risk Response planning must be appropriate to: Severity of the risk,Cost in meeting the challenge,Timely to be successful, Realistic, Agreed by all parties,Owned by responsible person.

 Strategies for Negative Risks and Threads:

1. Avoid (Avoidance):  The focus of this strategy is to eliminate the cause of the risks. Taking the action to ensure the risk does not occur. This often accomplished by removing people and/or activities.
2. Transfer (Transference): This responses transfers accountability and responsibility of a risk to a third party. The third party actually performs the work or takes accountability. There is normally a cost incurred when using the transfer or transference response. A prime example of transference is the purchase of insurance
3. Mitigate (Mitigation): This response take actions to reduce the probability of risk occurring, or the impact of risk if it occurs. This could be thought of as developing a Plan B. An example is training. We try to reduce the probability and impact of employees performing poorly on the job training them.
4. Accept (Acceptance). This response entails taking no immediate action until the risk occurs. There are two types of acceptance strategies listed below. One is passive and the other is active.

• Acceptance is a response strategy appropriate for BOTH negative and positive risks
• A contingency Plan or Fallback Plan may be developed for a risk you plan to accept. However, the response will not be initiated until the risk occurs
• Acceptance is often the only choice when risks are generated from external sources, or when risk responses are beyond the control of the Project Manager
• Passive Acceptance: This type of acceptance occurs when no Contingency Plans are created to address the risk.
• Active Acceptance: Develop Contingency Plans to address the risk when it occurs. Active Acceptance is a solid option when necessary to convince risk averse stakeholders that a response plan for accepted risks is in place

Strategies for Positive Risks and Opportunities:

1. Exploit (Exploitation): This is a response that takes action to make a cause occur. Steps are taken to ensure the risk happens. It may require additional time or resources to use the exploit response method. This is the opposite of the avoid response.
2. Share (Sharing): This response enlist the support of a third party to take advantage of the opportunities presented by a positive risk event. Partnering with a third party allows both parties to share in the benefits. This is the opposite of the transfer response. Teaming agreements are an example of a share response.
3. Enhance (Enhancing): This response aims to increase the probability of the risk occurring or the impact of a risk if it occurs. Incentives are a common example of an enhance response. This is the opposite of the mitigate response
4. Accept (Acceptance): Acceptance is a feasible risk response for both negative and positive risks.

 References:

1. Project Management Institute. "Project Management Body of Knowledge (PMBOK), fourth edition, 2008".
2. Daniel C. Yeomans, PMI-RMP, PMI-PMP, CMQ/QE. "Passing the Risk Management Professional (PMI-RMP) Certification Exam, The First Try"".

Project Risk Management

Risk Management is something that we always do even without thinking about it. Risk management involves minimizing the consequences of adverse events as well as maximizing the results of positive events. Therefore, risks can be good or bad events which are commonly called as opportunities or threads.

Risk management is a part of the project management process, and consistently following that process is important for getting results. It allows you to take control of the project, rather than letting the project control you. 

The six processes in Risk Management based on PMBOK Guide is designed to help manage end-to-end project risk. An acronym was developed to remember the steps in this process is PIER-C, Plan, Identify, Evaluate, Respond, and Control.

Risk Definition

Project risk is defined as "An uncertain event or condition that, if it occurs, has a positive or negative effect on at least one of the project's objectives" Project objectives are defined as scope, time, cost, and quality.

The PMI Risk Management Process: PIER-C

PMI developed an interrelated six (6) step approach to manage project risk.The PIER process activities or steps occur during Project Planning Process Group. The Monitor and Control Risks activity occurs during the Project Monitoring and Controlling Process Group, this is the C.

 

1.  Plan Risk Management:  This initial step defines how risk management will be accomplished (methodology). The ultimate goal is to develop a Risk Management Plan which describes how the entire end-to-end Risk Management Process will work.
2. Identify Risks: This steps requires you to develop a list of risk by project, activity, work package, etc. During this step, you define the risk, assign initial ownership, define risk causes, develop initial responses, and categorize each risk. The key output of identify risks is a document referred to as the Risk Register.
3. Perform Qualitative Risk Analysis: This step is the first evaluation step. This is subjective process. During this step, you use the Risk Register to classify risks by probability (likelihood the risk will occur) and impact (effect of the risk consequence on the project). At the end of this step, prioritize all risks and establish a short list of risks that must be aggressively managed. This is often referred to as the Urgent List. You also place low probability and impact risks in a separate section of the Risk Register, which is called Watch List. At the conclusion of this step is the risk register updated.
4. Perform Quantitative Risk Analysis: This step is optional. The Project Manager decides ! You may or may not Perform Quantitative Risk Analysis. This decision is determined by factors such as time, project priority, level of effort as compared to benefits, etc. This evaluation method numerically analyzes the impact of multiple risks to the project. This is an objective method that helps determine probability that stated budgetary and schedule outcomes can be met. The risk register updated is the output of this step.
5. Plan Risk Responses: During this step, develop responses to risks on the urgent or "short"list of risks. The level of response detail is dictated by the priority of the risk. Strive for the responses that address both positive risks (opportunities) and negative risks (threats). The risk register updated is the output of this step as well. In addition, contractual agreements may be developed to support responses that require third party involvement.
6.  Monitor and Control Risk: This is the final step in the Risk Management Process. During this step, monitor and reassess risks on the Risk Register. Implement risk responses as necessary. Identify new or emergent risks that were not identified during the identify risks activity. In addition, evaluate the effectiveness of the risk program for the overall project. 

When to Start Risk Management
PMBOK has nine knowledge areas. Risk management comes at the end of the project planning stage, because, for risk management, you need input from other knowledge areas. The only knowledge area that is planned after risk management is procurement management, because you often need to include causes to manage specific risks in your project. This only becomes clear after risk response planning. For example, you decide the contractor should be responsible for risks that may occur due to expected new legislations, then this must be spelled out in the agreement with the contractor.

Knowledge Area	Contribution to Risk Management
Scope Management	What is included in the project and what is not
Time Management	Work breakdown structure and schedule baseline
Cost Management	Cost baseline and budgeting
Quality Management	Quality standards and specification required for the project
Human Resource Management	Organizational chart, project team members, staff availability, etc
Communication Management	Know the stakeholders and their expectations, and the communication plan

References:

1. Abdulla J. Alkuwaiti, RMP, PMP. "Study Guide for the PMI. RIsk Management Professional Exam".
2. Daniel C. Yeomans, PMI-RMP, PMI-PMP, CMQ/QE. "Passing the Risk Management Professional (PMI-RMP) Certification Exam, The First Try"".
3. Rita Mulcahy, PMP. "Risk Management. Tricks of the trade for Project Managers and PMI-RMP Exam Prep Guide".

Project Human Resource Management

There are number of pertinent topics in Project Human Resources that are very important to memorize and understand if you want to take either PMP or PMI-RMP (Project Management Institute - Risk Management Professional) exam.

They include:

• Motivational Theories 
• Leadership Style
• Leadership Style Applicability
• Negotiation Methods

A. MOTIVATIONAL THEORIES

Motivation impact stakeholder attitudes. Be aware of the following motivational theories and the individuals who responsible for each when applicable

 

MOTIVATIONAL THEORY	KEY POINTS
Expectancy Theory	Employees believe effort leads to performance. Performance should be rewarded based on individual expectations. Rewards promote further productivity
McGregor's Theory X and Y	All workers fit into 1 of 2 groups.  Theory X, managers believe people are not to be trusted and must be watched. Theory Y, managers believe people should be trusted, want to achieve success, and are self-directed
Maslow's Hierarchy of Needs Theory	Maslow stated that motivation occurs in a hierarchical manner. Each level must be attained before moving to the next (Physiological - Safety - Social - Esteem - Self Actualization)
Achievement Motivation Theory	David McClelland states that there are three needs that must be met for people to be satisfied. They include achievement, affiliation, and power.
Hertzberg' Theory	There are hygiene factors and motivating agents. Hygiene factors such as salary, working conditions, benefits, etc. They do not increase motivation. Motivating factors such as responsibility, growth, and achievement are those that increase motivation.

B. LEADERSHIP STYLES

Leadership styles also impact stakeholder support of the Risk Management Process. Each style must be used on a situational basis.

LEADERSHIP STYLE	DEFINITION
Directive	Tell people what to do
Facilitative	Coordinate and solicit the input of others. A good Project Manager is facilitative
Coaching	Train and instruct others on how to perform the work
Supporting	Provide assistance and support as needed to achieve project goals
Consensus Building	Solve problems based on group input. Strive for decision buy in and agreement
Consultative	Invite others to provide input and ideas
Autocratic	Make decisions without input from others

Tuckman Model: is a common five-step model used to depict growth of a team from the moment it is formed. This model is used to determine appropriate situation leadership style

STAGE	CHARACTERISTICS
Forming	Team meets and learns about the project. Roles are discussed. Expect hesitancy, confusion, anxiety, lack of purpose, and lack of identity. Productivity is low
Storming	Team begins to address work, technical decisions, and project management approaches. Conflict can occur which may disrupt the team. Leadership is challenged, cliques form, etc. Productivity decreases
Norming	Team members begin to work together. They adjust individual habits to accommodate the team. There is open communication, purpose, confidence, motivation, etc. Productivity improves
Performing	Teams are independent, self-directed, and work through issues quickly and smoothly. There is pride and trust. Productivity peaks
Adjourning	Team completes all work and moves on

C. LEADERSHIP STYLE APPLICABILITY

Each leadership style can be used to support a variety of situations. The table shows common situations and recommended leadership

SITUATION	BEST LEADERSHIP STYLE
Team is forming and new. They need direction and task oriented information	Directive; Coaching
Team is storming. There is much conflict, frustration, and confusion	Facilitative; Consensus Building; Consultative
A decision must be made quickly. Time is of the essence. There is little time for input	Autocratic
The team is well established and skilled. They are in the norm or perform stages	Supporting

D. NEGOTIATION

There are some tips to negotiate with stakeholders:

• Understand and be able to explain the needs of the project. Be able to specifically spell out "what, why, who, where, when, and how factors" impacting project risk
• Be able to explain the business need for the project in an effort to gain support. The Functional Manager may not recognize project risks, benefits, etc
• Understand that key stakeholders have other jobs to do. Understand their work situations. Be realistic
• Build a relationship. Find out how to assist the stakeholder and create a win-win situation surrounding the need for their support
• Be willing to compromise. Be flexible

References:

1. PMBOK fourth edition 2008, Project Management Institute
2. Passing the Risk Management Professional (PMI-RMP) CertificationExam. The First Time 2011. Daniel C. Yeomans, PMI-RMP, PMP, CMQ/OE

 

Project Management Plan

What is Project Management Plan???

In terms of project management in planning process, a Project Management plan is the most important document that needed to perform work. The project management plan is the sole outputs of develop project management plan in integration management. 

Project Management Plan is a formal and approved document that defines how the project is executed, monitored and controlled. It may be in a form of an executive summary or a detailed document, and it may compose one or more subsidiary management plans and other planning documents

Project plan is used to:

• Guide project execution
• Document project planning assumption
• Document project planning decision based on the selected alternatives
• Facilitate communication among stakeholders
• Define key management review 
• Provide a baseline for progress measurement and project control

The keys to understanding the project management plan:

1. The project management plan is formal. It is important to think of the project management plan as a formal, written piece of communication.
2. The project management plan is a single document. It is not 15 separate plans. One those separate documents are approved as the project plan, they become a single document.
3. The project management plan is approved. In other words, there is a point in time at which it officially becomes the project plan. Who approves it is going to differ based on the organizational structure and other factors, but typically it would be the project manager, the project sponsor, the functional managers who are providing resources for the project.  
4. The project management plan defines how the project is managed, executed, and controlled. This means that the document provides the guidance on how the bulk of the project will be conducted.
5. The project management plan may be summary or detailed. 

Components of Project Management Plan:

• Change Management Plan
• Configure Management Plan
• Scope Management Plan
• Time Management Plan
• Cost Management Plan
• Quality Management Plan
• Process Improved Plan
• Human Resources Plan
• Communication Management Plan
• Risk Management Plan
• Procurement Management Plan
• Requirements Management Plan
• Scope Baseline
• Cost Performance Baseline
• Schedule Baseline

 

Project Scope Management

Project Scope Management includes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully.

Remember, Scope Management means:

- Constantly checking to make sure all the work are completed
- No additional work include in the Project Charter
- Preventing extra work or gold platting

Process in Project Scope Management:

1. Collect Requirements, the process of defining and documenting stakeholder’s needs to 

     meet the project objectives

 

     Key Inputs: Stakeholder Register

     Key Tools & Techniques:  Facilitated Workshops, Group Creativity Techniques

     Key Outputs: Requirement Documentation, Requirement Traceability Matrix

 

2.  Define Scope: the process of developing a detailed description of project and product

     

     Key Inputs:Project Charter, Requirement Documentations

     Key Tools & Techniques:  Alternatives Identification

     Key Outputs: Project Scope Statement

3.  Create WBS: the process of subdividing project deliverable and project work into smaller 

     and more manageable components

     Key Inputs:Project Scope Statement

     Key Tools & Techniques:  Decomposition

     Key Outputs: WBS, WBS Dictionary, Scope Baseline

4.  Verify Scope: the process of formalizing acceptance of the completed project deliverable

     Key Inputs:Project Management Plan

     Key Tools & Techniques:  Inspection

     Key Outputs: Accepted Deliverable, Change Request

5.  Control Scope: the process of monitoring project status, product scope, and managing 

     changes 

     Key Inputs:Project Management Plan, Work Performance Information

     Key Tools & Techniques:  Variance Analysis

     Key Outputs: Work Performance Measurements

Differences between Verify Scope and Perform Quality Control

Verify Scope:

- Is often performed after Perform Quality Control

- Is primarily concerned with completeness

- Is concerned with the acceptance of the product by the project manager, the sponsor, the 

  customer and others

Perform Quality Control:

- It is not unusual for these processes to be performed at the same time

- Is primarily concerned with correctness

- Is concerned with adherence to the quality specification

 

Important Note: 

If the project is canceled before completion, Verify Scope should be performed to document

where the product was in relation to the scope at the point when the project ended 

 

 

Project Integration Management

Project Integration Management is the processes required to ensure that the various project elements are coordinated effectively. Integration management is the practice of making certain that every part of the project is coordinated.

Process Group	Integration Management Process
Initiating	Develop Project Charter
Planning	Develop Project Management Plan
Executing	Direct and Manage Project Execution
Monitoring & Controlling	Monitor & Control Project Work Perform Integrated Change Control
Closing	Close Project or Phase

Process	Key Outputs
Develop Project Charter	Project Charter
Develop Project Management Plan	Project Management Plan
Direct and Manage Project Execution	Deliverables Work Performance Information Change Request
Monitor & Control Project Work	Change Request
Perform Integrated Change Control	Change Request Status Updates
Close Project or Phase	Final Product, Service, or Result Transition

DEVELOP PROJECT CHARTER

Project Charter is used to authorize a project to begin and to provide the project manager with the authority necessary to execute the project. The Project Manager should be identified and assigned as early in the project as is feasible, but always prior to project planning and preferably during project charter development. The project charter should be issued by project sponsor or other persons at a level sufficient in the organization to commit funding.

Input:

• Project Statement of Work (a written description of the project's product, service, or result)
• Business Case
• Contract
• Enterprise Environmental Factors
• Organizational Process Assets

Project Charter outline: business need, product description, constraint, assumption, statement of authority and accountability, project manager authority, project manager responsibilities.

DEVELOP PROJECT MANAGEMENT PLAN

Project plan is used to:

• Guide project execution
• Document project planning assumption
  
• Document project planning decision based on the selected alternatives
• Facilitate communication among stakeholders
• Define key management review
• Provide a baseline for progress measurement and project control
  

Inputs to the develop project management plan process:

1. Preliminary project scope statement
2. Project management process
3. Enterprise environmental factors
4. Organizational process assets

Tools and techniques used to develop the project management plan:

1. Project management methodology
2. Project management information system
3. Expert Judgement
   

DIRECT AND MANAGE PROJECT EXECUTION

The purpose of the direct and manage project execution is to execute the work defined in the project management plan in order to achieve the project requirements detailed in the project scope statement. In this phase, the majority of the project’s budget is spent.

Tools and techniques for the direct and manage project execution process

1. Project management methodology
2. Project management information system

Outputs from the direct and manage project execution process

1. Deliverables
2. Requested changes
3. Implemented change request
4. Implemented corrective actions
5. Implemented preventive actions
6. Implemented defect repair
7. Work performance information

MONITOR AND CONTROL PROJECT WORK
The process of tracking, reviewing, and regulating the progress to meet the performance objectives defined in the Project Management Plan

Input

• Project Management Plan
• Performance Reports
• Enterprise Environmental Factors
• Organizational Process Assets

Tools & Techniques

• Expert Judgement

Output

• Change Request
• Project Management Plan Updates
• Project Document Updates
  

PERFORM INTEGRATED CHANGE CONTROL

means coordinating changes across the project. The process includes reviewing requests, approving changes and controlling changes to the deliverable (any unique and verifiable product, result or capability to perform a service that is identified in the project management planning documentation and must be produced and provided to complete the project).

Output

• Change Request Status Update

Tools & Techniques

• Expert Judgement
  

Concerned with:

• Influencing the factors that create changes to ensure that changes are agreed upon
• Determining that change has occurred
• Managing the actual change when they occurs

CLOSE PROJECT OR PHASE
The process of finalizing all activities across Project Management Process Groups to formally complete the project or phase.
Close Project or Phase is all about shutting the project down properly. This includes creating the necessary documentation and archives, capturing the lesson learned, ensuring that contract is properly closed, and updating all organizational process assets.

Output

• Final product, service, result transition

Tools & Techniques

• Expert Judgment