Project Management and Risk

Project Management and Risk

INTRODUCTION
• Risk is an inherent element associated with every project and
in today’s uncertain and competitive time, none of the
manager can make plans without considering the key risks that
might a project can face.
• Therefore, every project manager creates risk mitigation plan
with the key aim to eliminate associated risky events or
occurrence.

Strategies of Risk management
• Risk identification
• Risk evaluation
• Risk mitigation plan
• Contingency plan

Risk Identification
• It is the disciplined process to identify likely risky events or
occurrence that may have negative impact on the project
• Risk Breakdown structure (RBS) can be designed to classify
and segregate different risk into sup-parts as follows:
• Technical
• Financial
• Political
• Environmental
• Contractual
• Cost overrun

Risk evaluation
• Some risk have catastrophic impact on project whereas others
may do not have a significant impact.
• Risk and impact matrix must be designed to know likelihood
and impact of different risks in a project.
• On the basis of it, risk events can be scored to high, law or
average.

Risk mitigation plan
• Project team must design a mitigation plan to avoid the
occurrence of unexpected events.
• It is necessary for the manager to first avoid such risk that will
impact project to a considerable extent.

Contingency plan
• Contingency plans are developed to set some fund aside as
reserves so that any unforeseen events such as financial issues
or cost overrun can be managed successfully.
• High-risky projects like construction work always maintain
some contingency budgets.

Contractual risk
• Every project needs various kinds of contracts with different
parties such as suppliers, employees and others.
• Contract management is the procedure of creating, executing,
analyzing and managing contract successfully.
• Failure of contractor in satisfying the decided conditions and
terms is known as contractual risk.

Key dimensions of contractual risk
• Procurement
• Utilization
• Pricing
• Fixed price (FP): Buyer has low uncertainty of cost
whereas seller has high margin uncertainty.
• Cost plus (CP): Buyer suffer high uncertainty due to high
cost whereas seller has low uncertainty of margin.
• Time and Material (T&M): Both the contractual parties
i.e. buyer and seller share uncertainties.

Risk management strategies
• Risk Avoidance
• Risk sharing
• Risk Reduction
• Risk transfer

Bibliography
• https
://pm4id.org/chapter/11-2-risk-management-process/
• https://
www.project-management-skills.com/project-risk-ma
nagement.html
• https://www.pmbypm.com/types-of-contracts-and-
risk/

Thank You!