Identifying and managing project risk : essential tools for failure-proofing your project

CONTENTS Acknowledgments ix Introduction xi Chapter 1: Why Project Risk Management? 1 The Doomed Project 1 Risk 2 Benefits and Uses of Risk Data 8 The Risk Management Process 10 Anatomy of a Failed Project: The First Panama Canal Project 12 Chapter 2: Planning for Risk Management 17 Project Selection 18 Overall Project Planning Processes 20 Defining Risk Management for the Project 29 The PERIL Database 31 Key Ideas for Project Risk Planning 35 A Second Panama Canal Project: Sponsorship and Initiation (1902–1904) 35 Chapter 3: Identifying Project Scope Risk 37 Sources of Scope Risk 38 Defining Deliverables 41 High-Level Risk Assessment Tools 48 Setting Limits 53 Work Breakdown Structure (WBS) 55 Other Risks 61 Document the Risks 64 Key Ideas for Identifying Scope Risks 65 v vi Contents Panama Canal: Setting the Objective (1905–1906) 65 Chapter 4: Identifying Project Schedule Risk 68 Sources of Schedule Risk 69 Activity Definition 73 Estimating Activity Duration 74 Activity Sequencing 93 Document the Risks 101 Key Ideas for Identifying Schedule Risks 102 Panama Canal: Planning (1905–1907) 102 Chapter 5: Identifying Project Resource Risk 104 Sources of Resource Risk 105 Resource Planning 109 Staff Acquisition 114 Procurement Planning and Source Selection 119 Cost Estimating 127 Cost Budgeting 129 Document the Risks 129 Key Ideas for Identifying Resource Risks 130 Panama Canal: Resources (1905–1907) 130 Chapter 6: Managing Project Constraints and Documenting Risks 132 Analyze Constraints 133 Scope Options and Opportunity Management 138 Resource Options 143 Schedule Options 145 Assess Options and Update Plans 150 Seek Missing Risks 151 Key Ideas for Constraint Management and Risk Discovery 156 Document the Risks 156 Key Ideas for Constraint Management and Risk Discovery 156 Panama Canal: Improving the Plan (1906) 156 Chapter 7: Quantifying and Analyzing Activity Risks 158 Quantitative and Qualitative Risk Analysis 159 Risk Probability 160 Risk Impact 161 Qualitative Risk Analysis 164 Content s vii Quantitative Risk Assessment 169 Key Ideas for Activity Risk Analysis 179 Panama Canal: Risks (1906–1914) 179 Chapter 8: Managing Activity Risks 182 Root Cause Analysis 183 Categories of Risk 184 Risk Response Planning 186 Managing a Specific Risk 213 Key Ideas for Managing Activity Risks 217 Panama Canal: Risk Plans (1906–1914) 218 Chapter 9: Quantifying and Analyzing Project Risk 221 Project-Level Risk 222 Aggregating Risk Responses 224 Questionnaires and Surveys 225 Instructions for the Project Risk Questionnaire 226 Project Simulation and Modeling 233 Analysis of Scale 248 Project Appraisal 249 Project Metrics 251 Key Ideas for Project Risk Analysis 262 Panama Canal: Overall Risks (1907) 262 Chapter 10: Managing Project Risk 264 Project Documentation Requirements 265 Project Start-Up 267 Selecting and Implementing Project Metrics 271 Management Reserve 273 Project Baseline Negotiation 278 Project Plan Validation 282 Specification Change Management 282 Key Ideas for Managing Project Risk 288 Panama Canal: Adjusting the Objective (1907) 288 Chapter 11: Monitoring and Controlling Risky Projects 290 Applying the Plan 291 Project Monitoring 292 Collecting Project Status 295 Metrics and Trend Analysis 297 Responding to Issues 302 Communication 303 viii Contents Project Archives 311 Project Reviews and Risk Reassessment 312 Key Ideas for Risk Monitoring and Control 317 Panama Canal: Risk-Based Replanning (1908) 317 Chapter 12: Closing Projects 320 Project Closure 321 Project Retrospective Analysis 323 Key Ideas for Project Closure 329 Panama Canal: Completion (1914) 329 Chapter 13: Conclusion 331 Panama Canal: The Next Project 335 Appendix: Selected Detail from the PERIL Database 337 Selected Bibliography 345 Index 349