Table of Contents
Project Risk Assessment
Conduct a preliminary risk analysis of your project. Use two techniques, one qualitative and one quantitative, in supporting your evaluation of project risk. To do this, you will need to:
• Generate a set of likely risk factors.
• Discuss them in terms of probability and consequences.
• Develop preliminary strategies for risk mitigation.
An effective risk analysis will demonstrate a clear understanding of relevant project risks, their potential impact (probability and consequences), and preliminary plans for minimizing the negative effects.
Sample Risk Analysis-ABC UPS, Inc.
Among the potential threats or uncertainties contained in this project, the following have been
1. Plant reorganization could take longer than anticipated. Process engineering may be more
complicated or unexpected difficulties could arise while the process alterations are underway.
2. A key project team member could be reassigned or no longer be able to work on the project. Due
to other requirements or top management reshuffling of resources, the project could lose one of its key core team members.
3. The project budget could be cut because of budget cutbacks in other parts of the company. The project budget could be trimmed in the middle of the development cycle.
4. Suppliers might be unable to fulfill contracts. After qualifying vendors and entering contracts
with them, it might be discovered that they cannot fulfill their contractual obligations, requiring the project team and organization to rebid contracts or accept lower-quality supplies.
5. New process designs could be found not to be technically feasible. The process engineers
might determine mid-project that the project’s technical objectives cannot be achieved in the
6. New products might not pass QA assessment testing. The project team might discover that
the equipment purchased and/or the training that plant personnel received are insufficient to allow for proper quality levels in output.
7. Vendors could discover our intentions and cut deliveries. Current vendors might determine
our intent to eliminate their work and slow down or stop deliveries in anticipation of our company canceling contracts.
8. Marketing might not approve the prototype cups produced. The sales and marketing department might determine that the quality or “presence” of the products we produce is inferior and the products are therefore unlikely to sell in the market.
9. The new factory design might not be approved during government safety inspections. The
factory might not meet OSHA requirements.
We can do it today.
QUALITATIVE RISK ASSESSMENT
Low Med High
High 5 8
Med 3, 9 2 1
Low 4 6, 7
QUANTITATIVE RISK ASSESSMENT
Probability of Failure
• Maturity (Moderate) = .50
• Complexity (Minor) = .30
• Dependency (Moderate) = .50
Consequences of Failure
• Cost (Significant) = .70
• Schedule (Moderate) = .50
• Reliability (Minor) = .30
• Performance (Moderate) = .50
Pm Pc Pd Pf
.50 .30 .50 .43
Cc Cs Cr Cp Cf
.70 .50 .30 .50 .50
Risk Factor = (.43) + (.50) – (.43)(.50) = .715 (High Risk)
Risk Mitigation Strategies
High-Risk Mitigation Strategy
1. Plant reorganization takes longer than anticipated.
1. Develop a comprehensive project tracking program to maintain a schedule.
2. Marketing does not approve the prototype cups produced.
2. Maintain close ties to the sales department—keep them in the loop throughout the project development and quality control cycles.
3. New process designs are found to not be technically feasible.
3. Assign sufficient time for quality assessment during the prototype stage.
4. A key project team member could be reassigned or no longer be able to work on the project.
4. Develop a strategy for cross-training personnel on elements of one another’s job or identify suitable
replacement resources within the organization.
5. The project budget could be cut. 5. Maintain close contact with top management regarding project status, including earned value and other control documentation.
6. Factory does not pass OSHA inspections. 6. Schedule preliminary inspection midway through
project to defuse any concerns.
7. Suppliers are unable to fulfill contracts. 7. Qualify multiple suppliers at the prototyping stage.
8. New products do not pass QA assessment testing. 8. Assign a team member to work with QA department on the interim inspection schedule.
9. Vendors discover our intentions and cut deliveries. 9. Maintain secrecy surrounding project
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