KEYULKUMAR DAVEPMP, Six sigma Black belt| ThailandBanchang, Rayong Province, Thailand
Hi,
Yesterday during my work i came across Overall all risk of Project.
What is overall risk of project?
How it is derived?
Qualitative risk analysis gives picture to individual risk but how it is affecting overall project risk? Saving Changes...
Gordon AlexanderSenior Principal - Global Programme Director| IndepndentChelmsford, Essex, United Kingdom
Hi Keyulkumar,
as you can read there are a few answers on this and most companies will have their own view to how they quantify it based on their appetite for risk.
The key for an overall project risk is usually 1-5 or none - extremely high. A lot will be gained from the answers so far but also some of this will be gained by viewing the control/influence you have over the risks, if everything is high impact but unlikely and all within your control then it may be evaluated as a low risk. If on the other hand the control is outside of your direct influence (Government regulation/3rd party supplier) this may increase your view as to the overall risk. The more that is outside of your sphere of influence, with med - high likelihood and large financial impact the higher you should view the overall risk.
Hope this doesn't add to the confusion.
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1 reply by KEYULKUMAR DAVE
Apr 08, 2019 9:24 PM
KEYULKUMAR DAVE
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Thanks Gordon,
It is really helpful in identifying risk which are having high impact and outside Project Manager/Team control. and these risks probability can give view on overall project risk rating.
Please let me know if my understanding is not ok.
Saving Changes...
KEYULKUMAR DAVEPMP, Six sigma Black belt| ThailandBanchang, Rayong Province, Thailand
Apr 08, 2019 6:57 PM
Replying to Gordon Alexander
...
Hi Keyulkumar,
as you can read there are a few answers on this and most companies will have their own view to how they quantify it based on their appetite for risk.
The key for an overall project risk is usually 1-5 or none - extremely high. A lot will be gained from the answers so far but also some of this will be gained by viewing the control/influence you have over the risks, if everything is high impact but unlikely and all within your control then it may be evaluated as a low risk. If on the other hand the control is outside of your direct influence (Government regulation/3rd party supplier) this may increase your view as to the overall risk. The more that is outside of your sphere of influence, with med - high likelihood and large financial impact the higher you should view the overall risk.
Hope this doesn't add to the confusion.
Thanks Gordon,
It is really helpful in identifying risk which are having high impact and outside Project Manager/Team control. and these risks probability can give view on overall project risk rating.
Please let me know if my understanding is not ok. Saving Changes...
KEYULKUMAR DAVEPMP, Six sigma Black belt| ThailandBanchang, Rayong Province, Thailand
Apr 08, 2019 11:21 AM
Replying to Mario Coquillat
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If you want to obtain overall risk of a project typically you need to use quantitative analysis to consider the interactions and interdependencies between individual risks.
Thanks Mario.
I had few questions for it.
1. Do we have to follow quantitative risk analysis for every project? Generally Qualitative risk analysis can give everything and risk response can be planned.
2. For risk Analysis which method is Used; Sensitivity Analysis or Monte carlo Risk Analysis? Saving Changes...
According to PMI guide,Overall project risk is defined as “the effect of uncertainty on the project as a whole. more than the sum of individual risks within a project, since it includes all sources of project uncertainty. represents the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.”
Risk identification techniques can use a variety of frameworks to structure the search for overall project risk, including:
PESTLE – Political, Economic, Social, Technological, Legal, Environmental
PESTLIED – as PESTLE, with the addition of International (or Informational) and Demographic
STEEPLE – as PESTLE, with the addition of Ethics
InSPECT – Innovation, Social, Political, Economic, Communications, Technology
SPECTRUM – Socio-cultural, Political, Economic, Competitive, Technology, Regulatory/legal, Uncertainty/risk, Market
TECOP – Technical, Environmental, Commercial, Operational, Political
VUCA – Volatility, Uncertainty, Complexity, Ambiguity Saving Changes...
As far i learned through pmbok, all the risk identified and collected in the risk register will be ranked prioritized and subjectively analysed in the qualitative analysis and further numerically the probability analysis EMV the list of risks were refined using simulation tools and planned for appropriate response and monitored to obtain performance reports. Correct me if i am wrong. But practically i have nt handled these tools.
Rgds
Lenin Saving Changes...
Thanks to all,
Please correct me if my understanding is not at par, individuate risk probability and impact will be summarized and it will gives the overall project risk.
It will be used at Program level and to select best project of same NPV (for decision making process).
Also if overall project risk is higher it required more attention from sponsor or stakeholders.
But Steve I still have not agreed that overall project risk never change during project life cycle.
I agree in principle, but our projects are very large and lengthy, and typically the overall project risk level does not change during the life of the project. The overall project risk is determined early on to assign levels of approval authority. Yes, project risks will come and go, but the overall project risk and complexity remain fairly constant as were are speaking typically in the billions of dollars.
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1 reply by KEYULKUMAR DAVE
Apr 10, 2019 12:49 AM
KEYULKUMAR DAVE
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Thanks Steve for bringing culture of Big Project.
I have a another question can please light it up.
Two organization are working on same type of product launch. Risk is very high if another organization launch the product first. Will risk rating will change for first organization if second organization launch the product first?
Real life example is PS3 is launched after Xbox 360 launch. So the impact was very high for PS3.
Saving Changes...
KEYULKUMAR DAVEPMP, Six sigma Black belt| ThailandBanchang, Rayong Province, Thailand
Apr 09, 2019 10:06 AM
Replying to Steve Ratkaj
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I agree in principle, but our projects are very large and lengthy, and typically the overall project risk level does not change during the life of the project. The overall project risk is determined early on to assign levels of approval authority. Yes, project risks will come and go, but the overall project risk and complexity remain fairly constant as were are speaking typically in the billions of dollars.
Thanks Steve for bringing culture of Big Project.
I have a another question can please light it up.
Two organization are working on same type of product launch. Risk is very high if another organization launch the product first. Will risk rating will change for first organization if second organization launch the product first?
Real life example is PS3 is launched after Xbox 360 launch. So the impact was very high for PS3.
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1 reply by Gordon Alexander
Apr 10, 2019 5:10 AM
Gordon Alexander
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I think at that stage the horse has bolted!. This would no longer be a risk as the team has been unable to mitigate the risk and would become an issue.
At the point where the team identify that they are not going to be the first to market it should be flagged as an issue and the strategy may change. You may delay the launch further to see if the other product gets a good reception, or to add in additional components, or change marketing or Sales strategy.
Saving Changes...
Gordon AlexanderSenior Principal - Global Programme Director| IndepndentChelmsford, Essex, United Kingdom
Apr 10, 2019 12:49 AM
Replying to KEYULKUMAR DAVE
...
Thanks Steve for bringing culture of Big Project.
I have a another question can please light it up.
Two organization are working on same type of product launch. Risk is very high if another organization launch the product first. Will risk rating will change for first organization if second organization launch the product first?
Real life example is PS3 is launched after Xbox 360 launch. So the impact was very high for PS3.
I think at that stage the horse has bolted!. This would no longer be a risk as the team has been unable to mitigate the risk and would become an issue.
At the point where the team identify that they are not going to be the first to market it should be flagged as an issue and the strategy may change. You may delay the launch further to see if the other product gets a good reception, or to add in additional components, or change marketing or Sales strategy. Saving Changes...
KEYULKUMAR DAVEPMP, Six sigma Black belt| ThailandBanchang, Rayong Province, Thailand
Thanks Gordon
So depend on change in Risk/ Market changing strategy will always help. Saving Changes...
