Professional Documents
Culture Documents
Sources of Risks
Although project risks are interrelated and interdependent, most risks
spring from a definite origin.
The customary origins for project risks are the following:
• Performance, scope, quality, or technology issues
• Environment, safety and health concerns
• Scope, cost, and schedule uncertainty
• Political concerns
Qualitative Risk Analysis – Basics (4)
Foundations of Risks
• Risks can be classified as either internal or external.
• Internal risks are those that arise within the scope and control of the
project team.
• Most internal risks can be referenced to a specific project document such
as cost estimate or a schedule.
• External risks are generally imposed on the project from establishments
beyond the limits of the project.
• Interactions with citizens groups or regulators are typical external risks.
• Funding constraints and restrictions are other common external risks.
• External risks tend to refer to items that are inherently unpredictable but
generally foreseeable.
Risk Identification Classification
RISK
IDENTIFICATION
(PMI - Adapted from Project an Risk Management: A Guide to Managing Project Risks, Wideman 1992)
Incremental and Discrete Risks
Walewsky (2006)
ASSESSMENT GUIDE
Level Likelihood RISK ASSESSMENT
E M M H H H
A Remote High (Red)
D L M M H H
Likelihood
B Unlikely Unacceptable. Major disruption
C L L M M H
C Likely likely. Different approach required.
B L L L M M Priority management attention
D Highly Likely required
A L L L L M
E Near Certainty
a b c d e Moderate (Yellow)
Consequence RISK
Some disruption. Different approach
may be required. Additional
management attention may be
Level Schedule and/or Cost
needed.
a Minimal or no impact Minimal or no impact
Low (Green)
b Additional resources Less than 5%
required; able to meet Minimum impact. Minimum oversight
c Minor slip in key milestones; 5-7% needed to ensure risk remains low.
not able to meet need date
d Major slip in key milestone or 7-10%
critical path impacted
e Can’t achieve key team or More than 10%
major program milestone
Example: Interchange Project Risk Assessment
VH VH
Unexpected Landowners
H X
Probability
geotechnical H X unwilling to
Probability
issues at to sell at M
bridge piers
M
US 555-SH 111
L junction
L
VL VL
VL L M H VH VL L M H VH
Impact
Impact
Probability/Impact Matrix
Impact/Criticality
Probability/ 1 2 3 4 5
Likelihood Insignificant Minor Moderate Major Catastrophic
E-Almost 5 10 15 20 25
Certain
D-Likely 4 8 12 16 20
C-Possible 3 6 9 12 15
B-Unlikely 2 4 6 8 10
A-Rare 1 2 3 4 5
Inputs to Qualitative Risk Analysis
Caltrans (2007)
Evaluating Impact of an Opportunity on Major Project Objectives
Caltrans (2007)
Outputs from Qualitative Risk Analysis
• The goal of risk assessment is not to eliminate all risk from the
project.
• Rather, the goal is to recognize the significant risk challenges to
the project and to initiate an appropriate management response
to their management and mitigation.