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ENGR 3360U Winter 2014

Unit 10-3
Qualitative Assessment of Risk
Dr. J. Michael Bennett, P. Eng., PMP,
UOIT,
Version 2014-I-01

Unit 10 Project Risk Management

Change Record
2014-I-01 Initial Creation

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2014-I-01

Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

10.3 Qualitative Risk Analysis


10.3.1 Inputs
.1 EEP
.2 OPA
.3 Project Scope Statement
.4 Risk Management Plan
10.3.2 Tools and Techniques
.1 Risk Probability & Impact Assessment
.2 Probability & Impact Matrix
.3 Risk Data Quality
.4 Risk Categorization
.5 Risk Urgency Assessment
10.3.3 Output
.1 Risk Register Updates
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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Purpose of Qualitative RA
Focuses on ranking in non-numeric terms
Want to focus on high-priority risks especially
Risk has 3 dimensions
Probability of occurrence
Impact of eventuated risk
Timing of the risk

Is rapid, cheap, foundational


Indicates the need for expansion in quant section

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

.1 Risk Probability & Impact Assessment


Severity = Likelihood*Impact
Ranking very important

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

3.1 Risk Estimation


Also called Risk Attribute Evaluation
Try to rate:
Likelihood of risks reality
Consequences of risks effects
Severity = Likelihood x Consequence

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Likelihood
What is the chance that it might happen?
Impossible
Unlikely
Likely
Guaranteed to happen

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Risk Consequences
Nature of risk
What are the problems associated with this risk
happening?
Scope of risk
how serious is it AND how much of the project
will be harmed (or how many customers?)
Timing of risk
when and how long will the effects be felt?
Assign a rating
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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Evaluating Risks
Air Force example
Binary level
Ternary level
Probability

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Binary Level
There are 4 possibilities (impactprobability)
1 yes-yes (high)
2 yes-no (moderate)
3 no-yes (moderate)
4 no-no (low)

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Ternary Level
9 levels
h-h, h-m, m-h (high)
h-l, m-m, l-h (moderate)
m-l, l-m, l-l (low)

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Air Force Categorization


Impact

catastrophic
critical
marginal
negligible

Probability

10-12

frequent
probable
improbable
impossible

2014-I-01

Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

.2 Probability & Impact Matrix


Can also use a stoplight chart as follows
Permits us to rank risks or put them in a
common risk basket

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

Impact Scales for 4 Project Objectives


PMBOK pg 245

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Project
Objective

Very Low
(0.05)

Low
(0.10)

Cost

Insignificant
cost
increase

<10% cost
increase

Time

Insignificant
<05% time
time
increase
increase

05-10% time
increase

10-20%
time
increase

>20% time
increase

Scope

Insignificant Minor areas


scope
of scope
decrease
affected

Major areas
of scope
affected

SH wont
accept
scope
reduction

Product
useless

Quality

Only very
Insignificant
demanding
quality
application
decrease
s affected

SH must
approve
quality
reduction

SH wont
accept
quality
reduction

Product
useless

2014-I-01

Moderate
(0.20)

High
(0.40)

10-20% cost 20-40% cost


increase
increase

Dr. J.M. Bennett, P.Eng., PMP

Very High
(0.80)
>40% cost
increase

ENGR 3360

Unit 10 Project Risk Management

Probability- Impact Matrix


Prob

THREATS

PMBOK page 252

OPPORTUNITIES

0.9 0.05 0.09 0.18 0.36 0.72 0.72 0.36 0.18 0.09 0.05
0.7 0.04 0.07 0.14 0.28 0.56 0.56 0.28 0.14 0.07 0.04
0.5 0.03 0.05 0.10 0.20 0.40 0.40 0.20 0.10 0.05 0.03
0.3 0.02 0.03 0.06 0.12 0.24 0.24 0.12 0.06 0.03 0.02
0.1 0.01 0.01 0.02 0.04 0.08 0.08 0.04 0.02 0.01 0.01
0.05 0.10 0.20 0.40 0.80 0.80 0.40 0.20 0.10 0.05
Impact
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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

International Nuclear Event Scale


L#

Name

Criteria

Examples

0
1
2
3
4

Below scale
no safety significance
Anomaly overexposure of publican
likely lots
Incident
insig release of R
Atucha Argentina
Serious " very small RoR
Vandellos E, 1989
Acc without
minor RoR
St. Laurent F, 1980
sig offsite RoR
Sig plant dam, death
5 Acc with " limited RoR TMI 1979, Japan 2K
6 Serious A sig RoR
7 Major Acc major RoR, Widespread
Chernobyl
health, envir effects
RoR= Release of Radiation sig=significant
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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

.3 Risk Data Quality


An non-numeric assessment of the quality
of the data
Tries to qualitatively estimate
Degree of understanding of the risk
Accuracy of the risk data
Quality of the risk data
Reliability of the risk data
Integrity of the risk data
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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

.4 Risk Categorization
Grouping makes it much more cost-effective

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

.5 Risk Urgency Assessment


Need to assess the risk timing
A risk that has eventuated is no longer a
risk; its a FACT

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

Unit 10 Project Risk Management

10.3.3 Qual Risk Analysis Outputs


Risk Registry: Updates
Priority ranking of risks
Risks grouped by category
Risks requiring near-term response
Risks requiring more analysis/response
Watch lists of low priority risks
Trends in qualitative risk analysis results

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Dr. J.M. Bennett, P.Eng., PMP

ENGR 3360

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