Summary:
Project risk analysis allows you to identify and analyze information about the uncertainty of the duration and cost of your tasks. This extra information can be used to produce more accurate and realistic plans. It can also help you to manage your project more effectively by answering questions such as:
1. What is the chance of finishing the project on time?
2. What chance do I have of finishing the project on the 12th December?
3. What date can I be 80% confident of finishing by?
4. What tasks are most likely to cause project delay?
Our Project risk analysis (PRA) services provide organizations with tools to identify, address and mitigate risks related to the management, execution, and control of projects. We help organizations to optimize the execution of project management activities by providing risk management services based on our comprehensive PRA methodologies. Project Risk analysis can be useful for project managers in many industries, including:
• information technology;
• engineering and construction;
• manufacturing;
• agriculture;
• pharmaceutical;
• petroleum and mining; and,
• many others.
What is Risk?
Risk is an uncertain event or condition that, if it occurs, have positive or negative impact to the project or situation.
Project Risk Analysis:
The business world is filled with uncertainty. Will a new product launch be successful? Will a project go off schedule and over budget? Will a key supplier fail to deliver materials on time? The project risk analysis helps to understand and plan for uncertainty using a comprehensive quantitative risk analysis approach. Project risk analysis/management is the systematic process of identifying, analyzing, and responding to project risk. Successful project risk analysis will greatly improve the probability of project success. It is necessary to deploy risk management activities to attain improvements in the project management process.
Risk management is a fairly simple concept; it refers to the process of making decisions based on an evaluation of the factors that present a threat to the business. A risk management plan, which lays out the way specific tools will be used to reduce the risks to an acceptable level. The steps involved in performing a risk analysis can be broken down into a few categories:
• Identifying the risks (in this case, the risks to your organization that are presented by your network or
team.
• Determining the potential impact of the threats.
• Weighing the cost of safeguards against the impact
of the threats.
• Making the decision on how to address risks
effectively and cost efficiently.
• Implementing risk controls.
• Assessing effectiveness.
The project risk management process helps project sponsors and project teams make informed decisions regarding alternative approaches to achieving their objectives. In order to increase the likelihood of success in meeting or exceeding the most important objectives (e.g. time) sometimes at the expense of other objectives (e.g. cost). Risk management encourages the project team to take appropriate measures to Minimize adverse impacts to project scope, cost, and schedule (and quality, as a result). Maximize opportunities to improve the project’s objectives with lower cost, shorter schedules, enhanced scope and higher quality. Minimize management by crisis. The impact or threat refers to the severity of the threat and the probability of a loss resulting from it. Probability x severity = the risk exposure.
Why Risk Analysis?
Risk and uncertainties are everywhere. In fact, almost all complex natural, business, and technological processes are probabilistic. Deterministic analysis in most cases is just an approximation of complex problems. When we are talking about weather forecasts, project management, financial analysis, geophysical surveys, military planning – all these processes have uncertainties, which require probabilistic methods of the analysis. Where are these uncertainties are coming from? Uncertainties can be related to the possible variations and random errors in the values of the parameters and their estimates. An example of such uncertainties is geological properties. Another group of uncertainties is related to lack of our knowledge about certain subjects. It most cases, it is lack of knowledge about something, which has not yet occurred. A clear example of this is predicting a stock price. Managing of uncertainties includes the steps of identification, analysis, and, if required, risk mitigation. Different risk analysis methods and tools are widely available and used in many industries. In most cases, different statistical methodologies are applied to particular subject areas.
Benefits of Risk Management :
supporting strategic and business planning;
• supporting effective use of resources;
• promoting continuous improvement;
• fewer shocks and unwelcome surprises;
• quick grasp of new opportunities;
• enhancing communication between departments;
• reassuring stakeholders;
• helping focus internal audit program;
• etc.
Methodology for Project Risk Analysis:
Success of project lies in close co-ordination of all stakeholders. In context to project risk analysis, we require, Work breakdown structure(WBS), Resource allocated to activities and associated fixed and variable cost from customer. On the basis of input from you, we shall analyze your project to:
• Assess the probability that a risk will occur and
specify the criteria used to assess the probability
• Assess the impact of risks on project cost, time,
scope, and quality objectives, and specify the
criteria used to assess the impact.
• The magnitude of the impact should a threat-source
successfully exercise the vulnerability.
• The adequacy of planned or existing security
controls for reducing or eliminating risk.
• Identify the most like likely, min and max. project
duration and cost.
• Generate s-curves to give the clear picture about
the project cost, finish time and duration.
Conclusion:
Project Risk Analysis enables to identify, analyze & mitigate risk and uncertainties. It helps to prepare a correct action plan during project planning to get rid of threats during project execution.