Project Risk Management – PMP/CAPM

Project Risk Management

Changes and Risks are inevitable, you can’t run from these. To be an effective project manager it is in your favour to plan for these calamities beforehand. The challenge with this planning is that both risks and changes are unknown and this is where Project Risk Management plays a vital role. The war room or continuous communication and face to face interaction helps in identifying the unknown.

Project Risk Management

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Project Risk Management is the route to the identification, evaluation, and response to any risk that emerges and assists the project remains on track and meet its ultimate goal. Risk management is an important part of the planning process to determine the risks that might happen and how to control. As a project manager, there’s nothing better to make you sleep well at night knowing that you have got the risk to your project under control and the stakeholders know about them.

“Anything that can go wrong, will go wrong.”  – Murphy’s Law

A risk is something that could potentially influence your project’s timeline, efficiency or budge. Once risks have become realities, they are defined as critical issues that need to be addressed immediately. Risk management is the process of classifying, sorting, ordering and planning for risks before they become problems. On large-scale projects, risk management stratagems may include detailed planning to make sure mitigation strategies are in place. While for smaller projects, risk management refers to simple and prioritized risks.

The risk is uncertainty and Risk management includes risk assessment and a mitigation strategy to increase the probability of positive risk and decrease the probability of negative risk.

Project Risk management

The Risk Management Process in Project Management by Stephanie Ray ProjectManager.com

Project Risk Management Processes

Plan Risk Management (Planning)

The very step involves the formulation of a risk management plan. It’s an important component of the overall project management plan. The process includes methodology, risk categories (marketplace, procurement, capitals, etc.) to determine the procedures for assessing risks, the risk of likelihood and influence. This should be early in the project life cycle so that everyone understands the risk tolerance limit and work to avoid reaching a risk threshold.

Identify Risks (Planning)

In this step, the value is created. It identifies the potential risks to the project’s budget, schedule and other crucial factors that make for great risk management. Here checklists are an effective resource along with expert judgment and prior project experience. Also, it’s imperative to understand that the opposite of risk is an opportunity. Be it the potential cost or schedule savings centred on project events or identifying the risk register, all it takes to those opportunities you will definitely want to avail. It is everyone responsibility to identify the risks. The two important output here which will remain as live document throughout are Risk Register/Risk Log and Risk Report. To jump-start, the process internationally excepted Prompt Lists can be used.

Project Risk management

PROJECT MANAGEMENT FOR INSTRUCTIONAL DESIGNERS

The next two processes deal with the evaluation/analysis of the risk based on the chances/probability of risk occurrence and what could be a loss/the impact if the event becomes a reality. It involves prioritizing the risks. This Risk analysis enables us to commit our resources in the right way.

Project Risk Management

Project Risk Management Basics from Project Management Skills.

Perform Qualitative Risk Analysis (Planning)

Every risk comes with primarily two components including the likelihood of occurrence and impact. These factors are ordered on the scale from 1-10. Each risk on the risk register is evaluated and ranking is allocated to the two fundamental variables. Lastly, the inclusive risk priority ranking is determined. This is more descriptive and relative in nature

Perform Quantitative Risk Analysis (Planning)

This step involves using the risk priorities found during the qualitative risk analysis, the effect on the project’s schedule and budget are figured out. Every task in the project is allocated a probability estimate for varying scenarios. Afterwards, the likelihood of meeting the entire cost and schedule is calculated. Here we usually talk about data points, historical information, numerical scale. techniques like Monte Carlo analysis and EMV are used here which uses the actual data

Plan Risk Responses (Planning)

Probability and Impact

Probability and Impact

An action plan is developed considering the most important risks in the project to either enhance the opportunity or to reduce the threat. Neither all risk can become reality nor the organizations have time and resources to mitigate all that is identified. The top identified risks immediately require response and monitoring to have the most primary possible warning. Risk response owners are identified as part of this exercise

Implement Risk Responses (Execution)

When a risk is activated, the response plan calls for action. The process takes place in the project implementation phase and requires effective interactive and leadership skills. Succeeding the risk response, risk register and issue log are rationalized.

Strategies for Threat Strategies for Opportunities Strategies for Project Risk
  1. Escalate
  2. Avoid
  3. Transfer
  4. Mitigate
  5. Accept
  1. Escalate
  2. Exploit
  3. Share
  4. Enhance
  5. Accept
  1. Avoid
  2. Exploit
  3. Transfer/Share
  4. Mitigation/Enhance
  5. Accept

 

Monitor Risks (Monitoring and controlling)

The risk register is monitored to make sure that assessment remains up to date. Besides, risk preferences can change due to varying factors being changed during the risk profile. It might be the probability and impact of the risk. A re-evaluation of risks leads to a revised risk response plan. PM or Project Management Team has to re-verify the assumptions, Identify new risk, re-assess the response strategies for their effectiveness

Key Deliverables for Project Risk Management

Risk Management Plan: It’s a manuscript that a project manager formulates to predict risks, evaluate impacts, and define responses to these risks. The plan comprises of risk assessment matrix.

Risk Register: It refers to Risk Log, a document which is developed in the initial stages of the project. It helps in tracking issues and addressing them as soon as they arise.

Further Readings

https://www.theirm.org/about/professional-standards/strategy-and-performance/risk-performance-and-reporting.aspx

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Project Stakeholder Management Introduction – PMP/CAPM

Project Stakeholder Management  (A high-level snapshot)

Project management is about knowing your audience and then manage their interests and expectations. Project Stakeholder Management knowledge area helps you understanding your stakeholders so that you can win the project champions and friend amongst them. The project manager and his team job is to asses the degree to which any project stakeholder will impact or are being impacted by the project. This way the project management team can develop strategies to gain the support from the top stakeholders for the project.

Project Stakeholder Management Knowledge Area Processes

Identify Stakeholders (Initiation)

  • It enables the project team to identify the appropriate focus for engagement of each stakeholder or group of stakeholders
  • the process of identifying project stakeholders regularly and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success
  • performed periodically
  • Identify Stakeholders early in the project is critical for project success so to analyze their levels of interest, their individual expectations, as well as their importance and influence.

Plan Stakeholder Engagement

  • It provides an actionable plan to interact effectively with stakeholders.
    Project Stakeholder Management Knowledge Area

    To Project Stakeholder Management Blog

  • the process of developing approaches to involve project stakeholders based on their needs, expectations, interests, and potential impact on the project
  • Performed periodically throughout the project as needed

Manage Stakeholder Engagement

  • it allows the project manager to increase support and minimize resistance from stakeholders
  • the process of communicating and working with stakeholders to meet their needs and expectations, address issues, and foster appropriate stakeholder involvement
  • performed throughout the project

Monitor Stakeholder Engagement

  • it maintains or increases the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes
  • the process of monitoring project stakeholder relationships and tailoring strategies for engaging stakeholders through modification of engagement strategies and plans
  • performed throughout the project

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Project Stakeholder Management – PMP/CAPM

Project Stakeholder Management

Every project has stakeholders. The project wouldn’t be existing without stakeholders. Project Stakeholder management helps to build a bridge which is needed for better understanding of our audience.

Stakeholders are individuals who either care about or have a vested interest in the project. They can be a supporter or adversary and may positively or negatively influence

The project sponsor is the main stakeholder who expects to receive the project’s deliverables.

Project Stakeholder Management

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Typically, there is a certain expectation at a particular time, budget, quality level, and other standards. A project can only be a success story if it meets its objectives and meets and sometimes exceeds the expectations of project stakeholders. The project manager must be aware of all the stakeholders, understand them, and keenly manage key stakeholders expectations and influences on the project. It’s a common scenario when many project issues are emerged due to stakeholders as they are considered minor and ignored.

The best of the project can be a failure if the key stakeholders are not happy therefore stakeholder management is pivotal to the success of a project

Project Stakeholder Management Processes

Identify Stakeholders

In this first step, all stakeholders of the project are identified. This is a very basic process for a project’s existence. The

Project Stakeholder Management

Figure 5.1: Project stakeholders. Illustration from Barron & Barron Project Management for Scientists and Engineers, Source: http://cnx.org/content/col11120/1.4/

PMBOK highlights the Project Charter in the Project Initiation process group. All major project stakeholders should be determined prior to the project has started. A project is introduced considering the major stakeholders. This is never ending process and you may have a different set of stakeholders at different stages. Here the information who needs what, how they need it, and what method or technology will be preferred are answered here. A qualitative and quantitative analysis is required to systematically determine the interest of stakeholders throughout the project.

Plan Stakeholder Engagement

The Stakeholder Management Plan is an important component of the Project Management Plan. The plan is developed specifying how the project will communicate with every stakeholder. The project manager determines and evaluates the two aspects for each stakeholder including the interest of stakeholder in the project and the competence to control it. Additionally, stakeholder’s technical information is another major factor to consider. The stakeholder apprehensions are presented and assessed to make sure the project is all ready to progress.

Stakeholder management and Communication management go hand in hand as frequent communication is required to understand their needs, manage conflicts and to manage the influences of the stakeholders effectively.

Manage Stakeholder Engagement

During the project, all stakeholders are referred time and again to make sure their needs are successfully met and to get extended support from stakeholders. Communicating with stakeholders is performed as per the Stakeholder Management Plan. Also, the changes to the plan are carried out as required.

Good communication keeps crucial stakeholders on board.

Monitor Stakeholder Engagement

In the Monitoring and Controlling phase, the project manager makes sure that all project essentials must be executed systematically to evaluate the efficiency of the Stakeholder Management Plan. This includes revising stakeholder interactions, collecting information about them, and even gaining their feedback about the project or on certain concerns, which help in promoting strong stakeholder relationships and tailoring strategies for better future engagement.

Managing stakeholders is far more challenging than just keeping social networking because of the conflicting requirements and conflicting objectives. Conflict management strategies play a vital role in keeping the project on track.

Project Stakeholder Management

Key Deliverables for Project Stakeholder Management

Stakeholder Management Plan

It’s an official document framing how stakeholders will be engaged in the project. A stakeholder is an individual who has a major interest in the project.

Stakeholder Register

It refers to a project management manuscript comprising the information regarding the project’s stakeholders. It determines the individuals, groups, and corporations that have any sort of interest or participation in the project. It helps the project team to identify the appropriate focus on the project stakeholders

Further Readings

Project Stakeholder Management

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Project Procurement Management – PMP/CAPM

Project Procurement Management – PMP/CAPM

No organization can deliver a project in a silo, they would need to buy a product, services or a combination of both from outside to deliver the project objectives. Project Procurement Management refers to the goods and services required

Project Procurement Management

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to complete the project. These can be procured from other parts of the organization involved in performing the project through resource management. It refers to the formal processes that many organizations follow to acquire goods and services.

Procurement Management is the procedure of choosing, monitoring, and closing vendor contracts. Managing project procurements require the project manager to effectively cooperate with the buying department on the procedure of scheduling and managing procurements. Procurement on the project will be heavily impacted how the performing organization deals with the procurement in general. What kind of policies and procedures are in place and who enjoys what approval rights. The procurement process may be impacted by the decision to stay centralized or do a de-centralization

Project Procurement Management is the subdivision of the application plan to figure out how the well-organized products needed for producing deliverables can be provided on time and within the given budget. One thing to notify that the plan will be important only for projects that deal with a substantial buy-in of expertise or investment items.

Note: The exam questions are based on USA law of Contracting.

Project Procurement Management

Project Procurement Management Processes

Plan Procurement Management (Planning)

Plan Procurement Management is the process of formulating procurement procedures to follow. The process standardizes the way the project team chooses vendors and administers contracts.  The process documents project buying decisions, postulating the tactic, and determining potential sellers. The plan includes the key objectives of the project, task description, summary milestones and the pre-approved monitory resources of the project. The plan helps in explaining the project to the potential sellers while the summary milestones and pre-approved financial resources determine when to acquire the required goods and services.

  • Create templates for procurement statement
  • Choose a contract type for every procurement
  • Formulate the procurement documents
  • Determine the source selection criteria
  • Identify risks and create appropriate risk response plans for risk mitigation

In simple words, it is to identify what external resources that are needed on the project to send out RFQ/RFI including SOW or TOR. Project Manager is involved with the procurement, but he is not supposed to deliver the full activity so he is not the buyer in most of the cases and the process is being handled by the dedicated department. For legal purposes also he is not the one who could administer the project but he is responsible for SOW and the deliverables acceptance. A project manager should be able to read and understand the contracts.

Conduct Procurement (Execution)

Project Procurement Management

Brannan, L. & Lee, W. (2007). Contracts—from the vendor and the buyer point of views. Paper presented at PMI® Global Congress 2007—North America, Atlanta, GA. Newtown Square, PA: Project Management Institute.

Conduct Procurement is the procedure of acquiring seller responses, analyzing their bids, choosing a seller, and awarding a contract. The process involves choosing experts with specialized knowledge in proposal evaluation, industry regulatory environment, government laws and regulations, technical matters and negotiations. Many organizations unify their procurement system to handle the details of the project procurement. Moreover, the process involves communicating with potential users with soliciting interest in bidding on a contract for procurement. The conferences make sure that every prospective bidder comes with clear information and understanding of the procurement. Lastly, the procedure includes proposal evaluation which uses the source selection criteria on which the bidder proposals are analyzed to make sure they are complete so there is no delay in the bidder conferences.

Control Procurement (Monitoring and Controlling)

Control Procurement is the procedure of managing procurement relations, monitoring agreement performance, and make changes when required. This is the execution phase of the procurement where you periodically monitor the progress after signing of the contract. The procurements are completed in this phase and a final inspection is done. Once it is approved, the procurement is considered close. The major benefit of the process is that it makes sure that both sellers and buyers operate according to the terms and conditions outlined in the procurement contract. The failure of the supplier/buyer or contractor could have a negative impact on budgets, cost and quality. In the worst case scenario, they can even fail  to deliver the objective which in turn could cost the main contractor

Control Procurements is the process of managing procurement relationships; monitoring contract performance,
and making changes and corrections as appropriate; and closing out contracts. PMBOK 6

The knowledge area helps you establishing and maintaining good working relationships with vendors/ subcontractors/ contractors of goods and services during the project life cycle while buying the requirements on most reasonable prices.

Agreements can be amended at any time prior to contract closure by mutual consent, in accordance with the change control terms of the agreement. Such amendments are typically captured in writing. PMBOK 6

Key Deliverables for Project Procurement Management

Procurement Plan

It refers to the annual document which describes the products and services that a public body will acquire from external suppliers. An effective procurement plan helps in procuring entity to explain their procurement requirements and choose when and where to procure.

Source Selection Criteria

It defines properties that are critical for a purchaser when deciding on a supplier. Individual judgement may be biased and therefore it requires balance with objective measures. The criteria are based on multiple factors like the project’s scope, schedule, requirements, payment terms and quality certifications. Risk factors and budgetary constraints are also considered while drawing out the source selection matrix

Agreement

It obligates the project manager and the contractor to provide the specified deliverables. Also, it obliges the project owner to pay for the rendered facilities. An agreement can never be legal without a contract.

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Project Procurement Management Introduction – PMP/CAPM

Project Procurement Management (A high-level snapshot)

Most companies need to search for services, products or results outside the company to deliver the project. It is important that while you are doing it you have a clear understanding of what needs to be procured, who should become your partner, and what kind of supplier-buyer relationship you are looking at. This is one important area which cannot be left alone to a contract Manager or Procurement manager. You as a Project Manager, need to get involved because at the end this is your project and your success. The most important factor here is to get the right partner to do the job, a partner who shares your enthusiasm and work culture.

Project Procurement Management Knowledge Area Processes

Plan Procurement Management (Planning)

  • it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire it
  • the process of documenting project procurement decisions, specifying the approach and identifying potential sellers
  • performed once or at predefined points in the project

Conduct Procurement (Execution)

  • it selects a qualified seller and implements the legal agreement for delivery.
    Project Procurement Management

    Project Procurement Management

  • The process of obtaining seller responses, selecting a seller, and awarding a contract
  • performed periodically throughout the project as needed
  • Established agreements including formal contracts

Control Procurement (Monitoring and Controlling)

  • it ensures that both the seller’s and buyer’s performance meet the project’s requirements according to the terms of the legal agreement
  • the process of managing procurement relationships; monitoring contract performance, and making changes and corrections as appropriate; and closing out contracts
  • performed throughout the project as needed

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