FIT2002 Lecture Notes - Lecture 7: Project Risk Management, Project Plan, Delphi Method
13 May 2018
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• Project risk management – art/science of identifying, analysing, responding to risk
throughout life of a project, in best interests of meeting project objectives
• Advantages of project risk management include anticipating problems, preventing surprises,
meeting customer commitments, etc.
• Risk – possibility of loss or injury.
• Negative risk involves understanding problems that might occur in project and how they
might impede project success.
• Positive risks – result in good things happening. Sometimes called opportunities.
• Organisations should not only address tactical and negative risks.
• Risk appetite – degree of uncertainty entity is willing to take on in anticipation of a reward.
• Risk tolerance – maximum acceptable deviation entity is willing to accept as potential
impact.
• Risk utility – amount of satisfaction/pleasure received from potential payoff.
• Six major processes of project risk management:
o Planning risk management – produces a risk management plan.
o Identifying risks
o Performing qualitative risk analysis
o Performing quantitative risk analysis
o Planning risk responses
o Controlling risks
• Risk management plan addresses:
o Methodology
o Roles and responsibilities
o Budget/schedule
o Risk categories
o Risk probability/impact
o Revised stakeholders’ toleraes
o Tracking – how will team track risk management activities
o Risk documentation
• Contingency plans – predefined actions that project team will take if identified risk event
occurs.
• Fallback plans – for high impact risks, put into effect if attempts to reduce the risk are not
effective.
• Contingency reserves/allowances – provisions held by project sponsor/organisation to
reduce risk of cot or schedule overruns to acceptable level. As opposed to management
reserves.
• Broad categories of risk:
o Market risk
o Financial risk
o Technology risk
o People risk
o Structure/process risk
• Risk breakdown structure – hierarchy of potential risk categories for a project
• Risk identification tools/techniques:
o Information gathering techniques
▪ Brainstorming
▪ Delphi technique
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