Textbook+Notes

I've started writing notes based on the textbook chapters which seem to match up with the weekly topic. Please feel free to add you notes as well! -AB

Chapter 7 - Managing Risk (possible parallel to Week 5 lecture: Risk Management and Risk Assessment Techniques)
 * risk is an uncertain event/condition that will **positively** or negatively affect project outcomes
 * risk management identifies
 * as many risk events as possible (what can go wrong)
 * ways to minjimize the impact of potential risks before beginning the project
 * risk management creates
 * contingency plans to respond to risks if they occur
 * fund pools to cover risk events
 * chances of a risk occurring are greatest during concept, planning and start-up phases but cost the least to deal with and have the most potential for their impact to be minimized
 * at later stages of a project, the cost of responding to a risk increases exponentially
 * examples of potential risks
 * external: inflation, market acceptance, exchange rates, government regulations
 * external risks are sometimes called threats


 * Risk Management Process**
 * = Risk Identification ->Risk Assessment ->Risk Response Development->Risk Response Control**

RISK IDENTIFICATION
 * meeting of core team members led by project manager
 * an activity of critical thinking
 * open mind mentality encouraged: brainstorming and other problem identifying techniques (what these are I don't know)
 * focus on events that could produce consequences, not the objective that must be met
 * a useful **tool** is a Risk Breakdown Structure or RBS to identify risks that can affect the whole project
 * next breakdown work into specific deliverables and create risk management reports for these
 * typically this step is done by the small sub-teams working on these sections
 * a risk profile is another useful **tool: list of questions addressing traditional areas of uncertainty on a project**
 * the best profiles are tailored to the organizations strengths and weaknesses
 * address both technical and management risks
 * generated, updated and stored by personnel from the project office
 * if risk profiles are not available, use historical records of past projects

RISK ASSESSMENT
 * reconsider identified risks to eliminate inconsequential/redundant ones and rank the others in terms of urgency
 * **scenario analysis technique**: assess each risk according to probability and impact
 * example: personnel leaving the organization would have a significant impact and, in some cases, be a common occurence - mitigate risk by offering incentive schemes or preliminary training of other members in case of turnover
 * create numeric based probability scales and numeric, rank order, or qualitative impact scales
 * impact depends on a project's priority: time vs. cost
 * categorize conclusions into a risk assessment matrix typically structured around the impact and probability measures set on the x-y axis
 * Failure Mode and Effects Analysis (FMEA): Impact x Probability x Detection = Risk Value
 * uses a five point scale
 * for detection, 1 indicates risk appears completely obvious and 5 indicates the problem can only be seen after the event has occurred
 * Probability Analysis
 * decision tree: alternative coursers of action using expected values
 * net present value (NPV): assess cash flow risk using a minimum desired rate of return discount (e.g. 15 percent) (this causes my eyes to glaze over (@_@)
 * Project Evaluation and Review Techniques (PERT): look at overall cost and schedule risk to determine the likelihood that the project will be completed on time and on budget
 * PERT simulation simulates the network using a random network generator to discover the relative probability of an activity becoming critical
 * okay, that last bit has killed my will to continue for now. MORE LATER.
 * okay, that last bit has killed my will to continue for now. MORE LATER.