Acquire knowledge from Cradle to Grave --Prophet Muhammad (PBUH)

By: Dr. Mohammed Farid Abdulghany Ahmed Fathalbab Financial & Management Consultant
Ph.D, DBA, MBA, IRCA, CPhM, CPES, CWM, CSSBB CPA, PMP, SAQC, SOCPA. PMI

"Todays business climate is both dynamic and complex. Management faces many risk challenges due to changing requirements and increasing demands, as well as tight budgets and fast turnaround demands. Organizations are struggling to do more with less fewer resources, including less money, and, in many cases a reduced workforce. Therefore, it is essential to optimize every aspect of business, particularly project management. " Dr. Mohammed Farid

>>Risk creates opportunity, >>Opportunity creates value, >>Value Abdulghany Ahmed Fathalbab Dr. Mohammed Farid ultimately creates shareholder wealth.

Risk management and Project management Partnership

RM

Introduction

Risk management have never been a choice for project management or any other types of management but it is a must, we are all risk managers somehow, the rapid changes in the environmental condition (for both internal and internal) and the consequence change in the requirements and specification which reflected on the continuous shrinking of product life cycle PLC , which added extra uncertainty , instability and poor ability for appropriate forecasting and planning, being more subjective depending on qualitative and not quantitative techniques in decision making added more importance to a dynamic risk management. Pivot A risk management approach is applicable throughout the project life cycle, the earlier in the project life cycle the risks are recognized; the more realistic the project plan and expectation results will be. RM continues to add value all over the project life cycle. If there is a single key to making project risk management stick in your organization, it is to make it an integral part of all project phases and to treat it just as seriously or more than you do to project scope, budgeting, scheduling and resources location and allocation. The simplest means of building project risk management into your project is to ensure that the early steps, identification, analysis, prioritization and mapping, and risk resolution planning are a normal part of all the project phases, processes and activities. Organizations often build risk identification into the beginning of the project and require a list of a risk as deliverable at the first project review. But since they do not continue with full range of risk management activities, they merely identify risks without receiving the benefits that can be gained from effective risk management through the later phases of product development.

Risk & Risk management

Risk is a measure of the potential inability to achieve overall project objectives within defined cost, schedule, and technical constraints. It has two components: 1) The probability/likelihood of failing to achieve a particular outcome, and 2) The consequences/impacts of failing to achieve that outcome. Risk events are elements of an acquisition that should be assessed to determine the level of risk, i.e., things that could go wrong in a project. The

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

events should be defined to a level where an individual can comprehend the potential impact and its causes. For example, a potential risk event for a turbine engine could involve a turbine blade vibration. Related to this vibration could be a series of potential risk events that should be selected, examined, and assessed by subject-matter experts. The relationship between the two components of riskprobability and consequence/ impact is complex. To avoid obscuring the results of an assessment, the risk associated with an event should be characterized in terms of its two components. As part of the assessment, there is also a need for backup documentation containing the supporting data and assessment rationale. Risk management is the act or practice of dealing with risk. It includes planning for risk, assessing (identifying and analyzing) risk areas, developing risk-handling options, monitoring risks to determine how risks have changed, and documenting the overall risk management program. 1. Risk planning is the process of developing and documenting an organized, comprehensive, and interactive strategy and methods for identifying and tracking risk areas, developing risk handling plans, performing continuous risk assessments to determine how risks have changed, and assigning adequate resources. 2. Risk assessment is the process of identifying and analyzing project areas and critical technical process risks to increase the probability/likelihood of meeting cost, schedule, and performance objectives. Risk identification is the process of examining the project areas and each critical technical process to identify and document the associated risk. a) Risk analysis is the process of examining each identified risk area or process to refine the description of the risk, isolating the cause, and determining the effects. It includes risk rating and prioritization in which risk events are defined in terms of their probability of occurrence, severity of consequence/impact, and relationship to other risk areas or processes. b) Risk Identification is Determining which risks are likely to affect the project and documenting them, it is Performed on a regular basis; address internal and external risks, Identify cause and effect and effects and causes; what could happen vs. what outcomes should be avoided. 3. Risk handling is the process that identifies, evaluates, selects, and implements options in order to set risk at acceptable levels given project constraints and objectives. This includes the specifics on what should be done, when it should be accomplished, who is responsible, and the associated cost and schedule. The most appropriate strategy is selected from these handling options. For purposes of this Practice, risk handling is an all-encompassing term whereas risk mitigation is one subset of risk handling.

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

4. Risk monitoring is the process that systematically tracks and evaluates the performance of risk-handling actions against established metrics throughout the acquisition process and develops further riskhandling options, as appropriate. It feeds information back to the other risk management activities of planning, assessment, and handling as shown in Figure 1. 5. Risk documentation is recording, maintaining, and reporting assessments, handling analysis and plans, and monitoring results. It includes all plans, reports for the PD/PM and decision authorities, and reporting forms that may be internal to the PD/PM.

Risk management Success Factors:

1) Recognize the values of project management as a positive Figure ROIProject Risk Management structure potential 1. for organizational management, Project stakeholders (both internal and external, project management and team members. 2) Individual commitment and responsibility for all project stakeholders for risk management activities. 3) Open and honest communication as everyone in the organization are somehow involved in the risk management activities, any action or attitude that hinder communication about project risk reduce the effectiveness of PRM in terms of proactive and effective decision making. 4) Organizational commitment through the alignment of Project risk management with the organizational goals and values. It is Important to know that the risk management required a higher level managerial support. 5) Risk effort scaled to project as project risk management activities should be consistent with the value of the project to the organization and with its level of project risk. 6) Integration with project management as risk management are involved with all the project management phases.

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

Figure 2. Project Risk Management success factors

Risk management and Project management phases

The Project management phases are classified into five consequence phases as follows: 1. 2. 3. 4. 5. Initiation phase Planning phase Execution phase Control phase Close phase

Figure 3. Project Management Phases

Figure 3. Project Management Phases A risk management approach is applicable throughout the project life cycle, the earlier in the project life cycle the risks are recognized; the more realistic the project plan and expectation results will be. RM continues to add value all over the project life cycle. If there is a single key to making project risk management stick in your organization, it is to make it an integral part of all project phases and to treat it

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

just as seriously or more than you do to project scope, budgeting, scheduling and resources location and allocation. The involvements of risk management are vary from one phase to another and from one process to another in the same phase as the type of risk and its impact vary from one phase to another and from process to another as well which will be explained in this paper. 1.

Initiation phase:

The Project Initiation Phase is the first phase in the project lifecycle and is the predecessor to the Project Planning Phase. The following diagram, figure 3 can describe the flow of processes and the sub phases within this phase.

Figure 4. Project Management initiation phase breakdown a) The Define sub phase:

The first activity in the initiation phase is to define the project by developing the project description statement. The project description statement is an informal, high-level statement that describes the characteristics of the product or service expected from the project. It explains the business purpose of the new product or service and identifies why the product or service is needed. District b) Analyze: Project Analysis

The purpose of the analysis activity is to identify the best solution to solve the identified business need or issue. The project analysis activity involves: Analysis of the business problem; Identification of potential solutions; Studies to determine technical and economic feasibility of potential solutions; Comparison of potential solutions; and, Identification of the best solution to recommend. A feasibility study: is a preliminary study which investigates the deliverables of the proposed project and determines the resource requirements, costs, benefits,

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

and feasibility of a proposed project. Feasibility studies typically involve cost/benefit analysis including the level of risk as " high risk = high return. If costs & benefits can be quantified, they are called "tangible" i.e. increase in revenue if not they are called "intangible", i.e. increase in customer satisfaction. The feasibility of a proposed system can be evaluated in terms of 2-major categories: 1) Organizational feasibility: How well the proposed Project supports the strategic objectives of the organization. 2) Economic feasibility : is concerned with whether: a) Expected cost savings, b) Increased revenue. c) Increased Profits, d) Reduction in required investment, and e) Other types of benefits which exceed the costs of developing & operating a proposed system. 3) Technical feasibility can be demonstrated if reliable resources are capable of meeting the needs of the proposed Project or can be acquired or even developed by the business in the required time. c) Recommend: Project Proposal

The project proposal describes the project in detail and ensures that the project is consistent with the organizations Strategic Plan As a formal project deliverable, it identifies project objectives, provides a project description, defines the approach, and supplies other top level planning information which, taken together, establish the scope of the project. Ideally, the project proposal provides decision makers with information necessary to make project initiation decisions. The project proposal is the foundation for initiation of the project, through issuance of the project charter. Specifically the document defines: What is to be done? Why it is to be done? How it is to be done? A Project Proposal Template and Project Proposal Preliminary Risk Assessment Worksheet are provided to assist in development of the project proposal. d) Decide: Project Charter

How much risk is involved?

The project charter formally authorizes a project. Approval of the project charter marks the end of the Project Initiation Phase and the beginning of the Project Planning Phase. Information in the project charter comes from the project analysis documents, the project proposal, and other documents that identify business requirements and establish senior management commitment. In order to complete the charter, an informal plan is required to detail the project management tasks for completing the initiation phase and conducting the planning phase of the project. Normally a plan for this purpose can be a simple schedule of tasks or a Gant chart and should include: A task list required to complete the Project Initiation Phase and the Project Planning

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

 Phase, (Include any anticipated procurement activities if the project planning will be done by a contractor). A time estimate to complete the Project Initiation Phase and Project Planning Phase The resources needed to complete the Project Initiation Phase and Project Planning Phase. A cost estimate to complete the Project Initiation Phase and Project Planning Phase Information on the cost and time required for project planning will also be important if the agency needs to fund these phases outside of the project funds. A Project Charter Template is provided to insure that essential elements required to begin a project are included in the charter.

2.

Planning Phase Overview

Project planning is the process of defining an orderly arrangement of activities and resources to deliver a unique product or service. The project plan is the primary document developed during the planning phase and communicates project activities in terms of: a) b) c) d) What tasks will be performed; who will perform the tasks; When will the tasks be performed; What resources will be applied to accomplish the tasks; and How the tasks will be sequenced.

Time spent developing the appropriate structure for organizing and managing project activities reduces risk through improves performance in the Execution and Control Phase.

Project Plan components and risk management partnership

There are exponential relation between risk discovery during PLC and the cost, as the late risk discovered during the PLC the higher the cost will be. The Work break down structure WBS which represents the first planning activity are actually a risk management technique where project are dissolved into a more clearer pieces which can easily be understood and resources can efficiently be assigned .The planning phase components and risk management partnership can be explained clearly as follows: 1. Business Problem (BP) risk assessment BP As stated in the Project Charter. The risk of poor business problem definition may lead to waste of scarce resources as it will propagate to the coming phases and lead to the whole project failure. 2. Assumptions risk assessment - List of the Assumptions made about the project in the Project Charter. List of any identified changes to the original assumptions or additional assumptions made during project planning. The risk of

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

poor Assumptions definition or update may lead to waste of scarce resources due to wrong conclusions. 3. Project Description risk assessment Project description shows the project approach, specific solution, customer(s), and benefits. The Project Description is stated in the Project Charter. If there are changes to the description because of project planning, clearly identify the changes or additions made to the project description. The risk of poor project approach definition or updates negatively affects the Project planning processes and will definitely lead to waste of scarce resources. 4. Project Scope risk assessment a detailed description of the Project Scope found in the Project Charter and a detailed description of any new identified scope additions or changes resulting from detailed project planning. The risk of poor translation of requirements and specification in to appropriate scope and the needed updates will definitely lead to waste of scarce resources. 5. Performance Plan risk assessment Measures of success are metrics that measure the success or failure of a project. The measures of success are based on the project scope and objectives. The risk of wrong selection of the right measurement tools or scales that measures what really needed to be measured will l definitely lead to misleading conclusions and waste of valuable resources. 6. Critical Milestone risk assessment Summarizing the Project Schedule by listing the Milestones or Events on the critical path of the Project Schedule may be a way to mitigate the risk accompanied with this process, but still there is a risk of either the appropriate assessment of the critical millstone or the occurrence of new critical paths due to the detailed project planning. 7. Budget Planning risk assessment Provide a summary in table form of the expenditures and source of funding for the project during the life of the project. Identify and explain deviations from the approved funding outlined in the Project Charter. There are many types of risks in this regards such as the wrong budgeting implemented technique which lead to a creation of tool that will either lead to wrong definition funds requirement or being a serious barrier for project progress technique. 8. Procurement Plan risk assessment Summarize the Procurement Plan for this project. Include information about major procurements, procurement strategies, and projected dates for critical procurement activities. The risks in this regards are many such as suppliers commitments and capabilities, the appropriate calculation of lead period, the changes of supplies specification and prices. 9. Risk Planning Summarize the Risk Management Strategy for the project. Describe the process for identification of risk, evaluation and prioritization of risk, identification of options for mitigating risk, the process for maintaining the risk

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

plan and risk monitoring, and the responsibilities of individuals all over the project life cycle.

Figure 5. Project Management Knowledge Areas, Lifecycle, Recurring Activities, and over whole
PRM

3.

Project Execution and Control Phase Overview

The Project Execution and Control Phase is the part of the project and product lifecycle where the tasks that build the deliverables are executed. The Project Execution and Control Phase begin when the project plan is approved and the resources necessary for executing the starting task are assembled. Project execution should be in accordance with the approved project plan. a) Executing the Project

Execution is the act of carrying out planned activities. The execution of the project plan is simply the act of performing task and activities that result in the production of the project deliverables. Task and activities performed must be completed effectively and efficiently and here will be the risk. The project plan serves as a road map and a common frame of reference for all members of the project team. The project plan is therefore, the foundation for successful delivery of projects. In a perfect world, plans are executed precisely as written. In reality

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the risk is, no plan is ever performed with such precision. Plans are forward looking documents that cannot anticipate all eventualities. During execution, the project team to mitigate the risk must continuously monitor its performance in relation to the baselined project plan. By measuring and evaluating the actual execution of project activities against the baseline plan, the project team and stakeholders can gauge the progress of the project. b) Start Up

Moving from planning into execution can be a major obstacle in successful project delivery. A project kick off meeting is a valuable risk management tool as it mitigates risks through facilitating the transition from planning activities and tasks to executing them. A kick off meeting enhances execution by focusing the team on the project and by defining a starting point for beginning project execution. Additionally, it is a milestone when all resources needed to begin execution are assembled and available to the team. The kick-off meeting mitigates risks as well through providing an opportunity for communication and establishing the commitment of the team and stakeholders to the success of the project. The focus of the meeting is communications, identification of team members and stakeholders, reviewing the project scope and business objectives, identifying the challenges, and identifying the next step in getting the project underway. At this point, team members and team leads must, at a minimum, have copies of the schedule. The schedule must identify to each person his specific tasks and dates for starting and completing them. c) Project Performance Monitoring

Performance monitoring is a risk mitigating techniques as it can provide assurance that the project is progressing as planned or reveal the need to intervene and take action to ensure the achievement of the desired business objectives. The execution of project task and activities occur in a cycle were the task is executed, execution is measured, the results are reported, and management controls needed are applied. Performance monitoring involves the collecting, analyzing, and reporting project performance information to provide the project team and stakeholders with information on the status of project execution. The right Measurements, or metrics, are used to monitor project progress and are based on information or data collected about the status of project activities or tasks.

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

Figure 6. Project Execution and Control Phase Processes

4.

Project Closeout Phase

The Project Closeout Phase is the last phase in the project lifecycle. Closeout begins when the user accepts the project deliverables and the project oversight authority concludes that the project has meet the goals established. The major focus of project closeout is administrative closure and logistics. Project closeout includes the following key elements which can be viewed as source of risks elements: a) Turnover of project deliverables to operations b) Redistributing resourcesstaff, facilities, equipment, automated systems c) Closing out financial accounts d) Completing, collecting, and archiving project records e) Documenting the successes of the project f) Documenting lessons learned g) Planning for Post Implementation Review and

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

Figure 7. Project close out Processes a) Turnover to Operations

The most important aspect (risk) of project closeout is the physical turnover of control of the product, good, or service delivered by the project. All project deliverables will need to be maintained and supported after the project team disbands. An operational unit of the organization (for which the deliverable is developed) assumes responsibility for the support of the deliverable. Procedures for this turnover and acceptance by the operational unit must be determined. Turnover and acceptance activities include but are not limited to knowledge transfer, documentation transfer, and physical transfer of the deliverable. The knowledge transfer and documentation is a risk management technique to mitigate the chance of occurrence or reoccurrence of the undesired events in future. A formal acknowledgement of receipt (acceptance) of the project deliverable is executed by the operations and project managers. b) Administrative Closure

Administrative closure involves the preparation of administrative documentation, collection of project documentation, disposition of project documents, and logistics activities that ensure that the project resources are redistributed. Administrative closure includes, but is not limited to, task such as archiving, financial account closure, facilities turnover (or closure), contract closure, and personnel reassignment. 1) Collecting Project Archive Data - Historic project data is an important source of information to help improve future projects. As a risk management technique a Summary of technical information should be electronically stored for historical reference to facilitate later review. The project archive should include a description of the files being submitted, the application (including version) used to create the archived materials, and a point of contact. 2) Personnel - If personnel have been committed to the project fulltime, it is important to get the people back into the available resource pool Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

as quickly as possible. This will ensure that the staff stays busy and that there is no risk of other projects within the organization do not fall short of resources. 3) Facilities - If the project team has occupied agency facilities for a long period of time during the project, it is a good idea to let the controlling facilities personnel know that the space used for the project will become available again. Be sure to check facilities guidance documentation to determine whether changes made to the project team area (structure, equipment, or technical modifications) are the responsibility of the project team after the project is complete. Returning the facility and equipment to its original state could add unanticipated cost and manpower to a project. 4) Financial Account Closure - Financial closure is the process of completing and terminating the financial and budgetary aspects of the project. Financial closure includes both (external) contract closure and (internal) project account closure. All expenditures must be accounted for and reconciled with the project account. When financial closure is completed, all expenditures made during the project have been paid as agreed to in purchase orders, contracts, or inter-agency agreements. 5) Contract closure - Contract closure is the process of terminating contracts with external organizations or businesses. These contracts may be vehicles for providing technical support, consulting, or any number of services supplied during the project that the agency decided not to perform with internal resources. Contracts can be brought to closure for a variety of reasons, including contract completion such as early termination, or failure to perform which represents a source of risk to the project. Contract closure is a typical but important part of project management. It is a simple process, but close attention should be paid so that no room is left for further liabilities of the agency.

Conclusion
Todays business climate is both dynamic and complex. Management faces changing requirements and increasing demands, as well as tight budgets and fast turnaround demands. Organizations are struggling to do more with less fewer resources, including less money, and, in many cases a reduced workforce.

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

Therefore, it is essential to optimize every aspect of business, particularly project management. Risk management have never been a choice for project management or any other types of management but it is always a must, we are all risk managers somehow, the rapid changes in the environmental condition (for both internal and internal) and the consequence change in the requirements and specification which reflected on the continuous shrinking of product life cycle PLC , which added extra uncertainty , instability and poor ability for appropriate forecasting and planning, being more subjective depending on qualitative and not quantitative techniques in decision making added more importance to a dynamic risk management. A risk management approach is applicable throughout the project life cycle, the earlier in the project life cycle the risks are recognized; the more realistic the project plan and expectation results will be. RM continues to add value all over the project life cycle. If there is a single key to making project risk management stick in your organization, it is to make it an integral part of all project phases and to treat it just as seriously or more than you do to project scope, budgeting, scheduling and resources location and allocation. The simplest means of building project risk management into your project is to ensure that the early steps, identification, analysis, prioritization and mapping, and risk resolution planning are a normal part of all the project phases, processes and activities. It clear that Project risk management delivers the following values: 1) Contributes to project success; 2) Recognizes uncertainty and provides forecasts of possible outcomes; 3) Produces better business outcomes through more informed decision making; 4) Is a positive influence on creative thinking and innovation; 5) Offers better control less overhead and less time wasted, greater focus on benefits; 6) Helps senior management to understand what is happening with the project and the challenges the project has to overcome. It is proved that Project risk management is an integral component of project management and represents the heart for all Project Management processes. Risk management is also a key component of project cost estimating and scheduling.

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab

References
ITRM Guideline CPM 110-01 , Date: January 23, 2006 Practice Standard Project Risk Management: 2009 Project management institute Product development best practice, October 2002, volume 9 Issue 10 Dealing with PRM successfully, special series on risk management: By Preston G.Smith and Guy M. Merritt,

Dr. Mohammed Farid Abdulghany Ahmed Fathalbab