Leveraging Expertise: What Every Project Manager Really Needs to Know about Risk Management

Transcription

1 Leveraging Expertise: What Every Project Manager Really Needs to Know about Risk Management Laszlo A. Retfalvi P.Eng. PMP PMI-RMP Principal 25 November

2 Proprietary Notice This presentation contains sensitive information and or information proprietary to Retfalvi and Associates Inc. and/or other parties, and shall only be used in the manner and for the purpose for which it has been provided. Use of this documentation for any other purpose or disclosure of the documentation to third parties is strictly prohibited without prior written authorization from Retfalvi and Associates Inc. 2

3 Agenda of Session Key Take Aways Background Why Is Risk Management Overlooked? The Need for Project Management Leadership The Link Between Project Success and Risk Management Critical Success Factors Do s and Don'ts Review of Key Take Aways Summary Contact Information 3

4 Key Take Aways Understand the basics It s not all about bad news Project risk management doesn t have to be expensive or time consuming Address the critical success factors that impede success Success requires Project Management Leadership 4

5 Background Effective management of medium to large projects and programs is a difficult task Project staff tend to be overloaded as they are actively involved in a number of simultaneous and critical tasks Project plans are not read or followed Lessons learned are not found or ignored Key or emergent issues and risks within the project may be overlooked Fire fighting becomes the norm The PM must be able to understand what the key project risk and issue areas are and always be in a position to communicate these effectively to internal and external stakeholders 5

6 Why is Project Risk Management Overlooked? Perceived as difficult to do No tangible work product and seen as little value added Often taken for granted by people in charge of projects Resultant plans are not read or actively followed up Shelf ware Seen to be someone else s problem Seems to be always bad news 6

7 The Need for Project Management Leadership Project Management Leadership 4 critical and interactive components 1) Project management expertise 2) Core leadership skills 3) Risk-smart attitude 4) Accountability-based behaviour Mastering these is what makes a Project Manager an Outstanding Project Manager Critical to successful risk management 7

8 Question Time Take a few moments and ask yourself the following: Q1 How do you think you would rate yourself against the following? Q2 - How do you think your team would rate you against the following? 8

9 Project Management Leadership The true measure as to whether a Project Manager is a leader is whether they have willing followers Following a leader implies it is voluntary You want to do it This is based on your ability to inspire trust and confidence with your team and stakeholders. This is critical to risk management success. 9

10 Discussion Take a few moments to answer the following: What are the top 2 risks that you face in your current work? 10

11 The Link Between Project Success and Risk Management All projects implicitly have uncertainty and risks Following a structured project risk management method enables projects and organizations to Predict and respond to risks Better manage schedule and costs Deliver quality results that satisfy stakeholders In mature project management organizations, these project goals are directly linked to strategic business objectives, giving these organizations a powerful competitive advantage Basis of Project Portfolio Management (PPM) Organizations that adhere to ongoing risk management are consistently more successful than those that do not 11

12 Risk Management is Project Management Retfalvi and Associates Effective risk management is vital to project success 12

13 Critical Success Factors There are several factors that lead to successful risk management implementation Personal experience Straight forward Presentation addresses 11 CSFs Represents proven techniques which form the basis of no-nonsense project risk management which every project manager should address as part of their current projects Applicable at any point within the project life cycle Applies to programs and PPM 13

14 CSF # 1 Understand The Basics Risk is generally viewed as a state of uncertainty where some possible outcomes have an undesired effect or significant loss A more appropriate definition of a project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives Opportunity Threat It is important that the project manager be knowledgeable and fully versed on project risk management principles, concepts, and processes 14

15 Guidance and Frameworks PMI PMBOK Guide PMI Practice Standard for Project Risk Management Australian IT Security Handbook Control Objectives for Information and Related Technology (COBIT) CCTA Risk Assessment and Management Methodology (CRAMM) Dutch A&K Analysis Prince2 Management of Risks (MoR) ISO ETSI Factor Analysis of Information Risk (FAIR) AS NZS 4360:2004 Risk Management Standard Fundamental Information Risk Management (FIRM) Failure Modes and Effects Analysis (FMEA) Facilitated Risk Assessment Process (FRAP) Information Risk Assessment Methodologies (IRAM) ISAAM Information Security Forum (ISF) Methods ISO TR ISO/IEC IT Grundschutz RiskIT Methodologia the Analysis y Gestion de Reisgos de los Sistemas de Information (MAGERIT) MEHARI MIGRA Project Risk Analysis and Management Guide (PRAM) EBIOS ITIL V3 NIST SP NSA IAM/IEM/IA-CMM OCTAVE Agile Open Source Security Testing Methodology Manual (OSSTMM) Practical Threat Analysis( PTA) Simple to Ask Risk Assessment (SARA) Security Officers Management and Analysis Project (SOMAP) Simplified Process for Risk Identification (SPRINT) BABoK 15

16 PMBOK Risk Management Basic Steps PMI PMBOK Guide 16

17 An Alternate View There is no shortage of available risk management guidance Most have same basic approach and in fact reference each other Varying terminology does create confusion for the project management community Risk Circle of Life 17

18 CSF # 2 Understand the Big Picture Executive Project Summary High level Single-page view Swim Lanes Milestones Key activities Business oriented End date and time remaining clearly shown 18

19 Executive Project Summary A Closer Look 19

20 Which View is Easier to Understand? The EPS is a very useful tool in the Project Manager s toolbox 20

21 CSF # 3 Business Case Planning Organizations tend to rush the development of proper business cases Business value needs to be clearly articulated Do not rush this step Ensure a thorough review of risks and opportunities with all major stakeholders 21

22 CSF # 4 Determine the Appropriate Level of Risk Management Limited number of organizations claim to be satisfied with the application of risk management on their projects, or be able to demonstrate it successfully. Effective risk management requires the generation of a Risk Management Plan (RMP) of some type Two basic objectives Improving the ability to identify and influence risk while there is opportunity in the project lifecycle to do so Embedding the management of risk into the project environment itself There is no one size fits all RMP Be careful with available templates Does not reduce the work required 22

23 Tailoring the RMP The risk management activities planned for the project and included in the RMP should be tailored based upon: Project size, duration, and complexity The initial overall risk determination of the project The organizational risk tolerance and procedures Available staff and their skills levels for addressing risk management The available project data and its quality The key is to keep the scale and cost of managing risks in proportion to the scale of the project itself and the types of risks that are presented to the project and the organization. Too much time assessing and managing risks when it is not warranted for the project at hand can divert critical resources that could be used more effectively 23

24 CSF # 5 Properly Document and Analyze Project Assumptions The project manager and the complete project team must always be aware of all project assumptions and constraints Major assumptions and constraints must be clearly communicated to senior management and relevant stakeholders Even the most carefully considered assumptions typically carry with them a certain element of risk If not properly addressed, result is a false sense of security in the project, senior management team, and the Customer Not a good situation to be in and must be avoided 24

25 CSF # 6 Properly Identify Risks Risk Statements must be properly structured to be effective Significantly raises awareness Single words (such as schedule ) or phrases (such as available resources ) are not adequate Risk statements are required to be: Clear Unambiguous Must be explicit to state the risk, its causes, and its effects Need to use risk meta language Cause/Risk/Effect 25

26 Proper Risk Statement Due to... there is a risk that... resulting in... 26

27 Proper Risk Statement Cause - Due to using brand-new software we have no experience with Risk - there is a risk that unexpected integration and testing errors may occur, Effect - resulting in schedule delays to the project. 27

28 Discussion Take a few moments to answer the following: Using the C/R/E approach, rewrite the top 2 risks that you face in your current work? What are your observations? 28

29 CSF # 7 Consistent Risk Definitions Risk severity is a function of risk impact and its probability of occurrence There may be significant impacts and confusion due to the use of inconsistent definitions Definitions must be agreed to as part of the risk management plan 29

30 CSF # 8 Develop a Proper Schedule Project managers need to properly understand the implementation and use of proper scheduling methods as a tool to plan, coordinate and schedule the execution of projects Proper scheduling is difficult and not well understood by most project managers or staff Commercially available schedule assessment tools Critical for further schedule and cost risk activities Tendency is to force a deep dive too early because scheduling tools make it easy to do so A clear and agreed to overview of the project is required first Executive Project Summary 30

31 CSF # 9 Include Risk Activities in the Project Schedule A common mistake by project managers is to not include the activities associated with the management of risk in their project schedules Incorporate risk management activities into the project schedule and do not leave them in a separate risk register Increased visibility of these activities Risk triggers Response action plan progress and effectiveness reviewed on a regular basis and reported at project status meetings Supports the allocation of resources and budget for these activities 31

32 CSF # 10 Perform Schedule and Cost Risk Analysis Many project managers rely too heavily on the Critical Path Method (CPM) to provide the most likely completion date This results in schedules dates which most of the time are inaccurate and optimistic Further, project managers simply add up estimates as a way to build up a project cost estimate This results in cost estimates which are inaccurate and optimistic resulting in projects overrunning their cost estimates To make things worse, these activities tend to be done separately The end result is an inaccurate estimate of the project 32

33 Schedule and Cost Risk Analysis - A True Friend Project File: Apr (S) Oct (F) $ 776,660 K 33

34 Do s and Don'ts Do Clearly understand the Risk Circle of Life Establish trust and confidence with your team stakeholders. Apply the principles of project management leadership to help you succeed. Use the risk metalanguage approach to documenting risks Don t Ignore stakeholders and their risk attitudes Rush the development of the risk plan take the time it needs Work in isolation. Ask questions. Risk is all about communications. 34

35 The Power of Project Management Leadership www. pm-leadership.com 35

36 Key Take Aways Understand the basics Project risk management doesn t have to be expensive or time consuming Know the key drivers Address the critical success factors that impede success Ensure you lead by example Focus on what is important Not on what is easy! 36

37 Summary Ensure you understand the basics of risk management Increase your opportunity of success There are several critical success factors that lead to successful implementation Proven techniques which every Project Manager should address as part of their current or future projects Leadership is not an option when it comes to risk Project Management Leadership Reaching out is a strength not a weakness 37

38 Questions? 38

39 Contact Information Name: Laszlo A. Retfalvi P.Eng. PMP PMI-RMP Organization: Retfalvi and Associates Inc. Position: Principal Web: : [email protected] Phone: Skype: LRetfalvi Trusted Partners Helping Our Clients Succeed 39