Introduction to
Project Management
Managing Project Risk
Lecture b
This material (Comp19_Unit7b) was developed by Johns Hopkins University, funded by the Department of Health and Human
Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC000013.
Managing Project Risk Learning
Objectives—Lecture b
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Assess project risks.
Plan project responses.
Prepare and maintain a risk register.
Develop and execute a risk management plan.
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Work Breakdown Structure (WBS)
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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WBS: Activity Lists
• Identify risks by highlighting areas of uncertainty
– Reliability of vendors
– Experience and capacity of vendors
– Established use of resources
– Changing market forces
– Maturity of resources
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Risk Register
Health IT Workforce Curriculum
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Introduction to Project Management
Managing Project Risk
Lecture b
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Excerpt from a Risk Register
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Introduction to Project Management
Managing Project Risk
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How to Analyze Identified Risks
QUALITATIVE ANALYSIS
• High-level subjective approach to risk analysis
• Prioritizes each risk for further analysis by assessing and combining
probability of occurrence and impact
• Typical categories are high, medium, and low (H, M, L) or a scoring
system (e.g., 1-5)
QUANTITATIVE ANALYSIS
• Following qualitative analysis each risk has a probability and impact
assigned to it
• Numerical values are assigned to the probability and impact of each
potential risk event
• Make better judgments with precise numerical data
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Simple Qualitative Analysis
Health IT Workforce Curriculum
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Introduction to Project Management
Managing Project Risk
Lecture b
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Approach to Quantitative
Analysis
• Assign values for the probabilities of risks occurring and the impacts
if they occur.
- Values may be based on historical data, expert judgment, industry
averages, and so on
- Impacts may be in different units, such as number of days of late
delivery of system or costs of additional staff, but are often all converted
to equivalent dollar amounts.
• Be cautious of making decisions when there is high uncertainty in
the probability and impact data.
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Risk Response Strategies
Strategies for positive risks (opportunities)
• Share
• Exploit
• Enhance
• Accept
Strategies for negative risks (threats)
• Avoid
• Transfer
• Mitigate
• Accept
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
10
Strategies for Positive Risks
Four Strategies for Positive Risks
(Opportunities)
• Risk Share—partner with others to take advantage of an
opportunity with you for the benefit of the project
• Risk Exploit—do everything you can to take advantage or
ensure a positive risk (opportunity) on the project is realized
• Risk Enhance—making plans to increase the likelihood of the
positive risk event happening
• Risk Acceptance—don’t actively pursue opportunities or
make plans to deal with the risk but take advantage if the risk
happens; small or low priority risks are typically accepted
Health IT Workforce Curriculum
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Introduction to Project Management
Managing Project Risk
Lecture b
11
Strategies for Negative Risks
Four Strategies to Deal with Negative Risks (Threats)
• Risk Avoidance—project team changes the project management
plan to eliminate the risk or protect the project objectives from its
impact
• Risk Acceptance—project team doesn’t change the project
management plan in reaction to a risk; small or low priority risks are
typically accepted
• Risk Transfer—shift the impact and responsibility for the response
of a risk to a third party; buying insurance to avoid losses and
contracting are forms of risk transference
• Risk Mitigation—project team spends extra time or funds in an
attempt to reduce the probability of risk occurrence or reduce the
impact to an acceptable level
Health IT Workforce Curriculum
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Introduction to Project Management
Managing Project Risk
Lecture b
12
Monitor & Control Risks Process
Purpose of the Monitor & Control Risks Process
• Implement risk response plans, track identified risks, identify new
risks, and evaluate the effectiveness of the risk response actions
How to Monitor & Control Risks
• Conduct periodic staff meetings to evaluate actual work
performance results with planned results in the project management
plan
• Consider keeping a “Top Ten Risk” list
Updating Project Documents
• Project documents must be updated to reflect the outcomes of
implementing risk responses, outcomes of risk reassessments and
audits, and change requests for preventive and corrective actions
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
13
High-Level Tips for High-Risk
Projects
Build flexibility into your plans and budget:
• Choose a life-cycle model that is adaptive and iterative
so you can revise plans and activities during the project
• Include financial reserves into your project budget—
dealing with risk-reduction later will cost time and money!
Keep contingency plans always in mind for any
activities that may run into obstacles – ask yourself
“What if?” questions, e.g.,
• What if this vendor does not come through for us?
• What if our top systems people leave the project?
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Managing Project Risk
Summary—Lecture b
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Risk management is an ongoing iterative activity throughout the life of
the project.
Goal is to minimize or reduce threats to an acceptable level, as well as
take steps to realize opportunities
Develop a risk management plan and follow it to effectively manage
project risks.
Take a proactive stance in managing risks. It generally costs less and
takes less time to prevent negative events from happening than taking
corrective action after an event happens.
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Managing Project Risk
References—Lecture b
References
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Health Information and Management System Society. (2010). Chicago, IL.. Available from: www.himss.org
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Houston S, Bove LA. (2010) Project Management for Healthcare Informatics. New York: Springer Science +
Business Media, LLC.
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Kerzner H. (2009) Project Management: a Systems Approach to Planning, Scheduling, and Controlling. 10th ed.
Hoboken, NJ.:Wiley.
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Project Management Institute, A Guide to the Project Management Body of Knowledge. 4th ed (2008).Newtown
Square, PA: PMI.
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Scwalbe K. (2009) Information technology project management (with Microsoft Project 2007 CD-ROM). 6th ed.;
Boston: Cenage Learning.
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Stackpole C. (2009). A Project Manager’s Book of Forms: A Companion to the PMBOK Guide. Hoboken,
N.J.:Wiley;
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Wysocki, RK . (2009) Effective project management: traditional, agile, extreme. 5th Edition. New York: Wiley;
2009.
Tables, Charts, and Figures
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Table 7.2 An example of a risk register. Courtesy of: Johns Hopkins School of Nursing Staff.
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Table 7.3 Simple qualitative analysis. Courtesy of Johns Hopkins School of Nursing Staff.
Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Project Management
Managing Project Risk
Lecture b
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Managing Project Risk
References—Lecture b
Image
Slide 3: Work Breakdown Structure. Image courtesy Theron Feist.
Health IT Workforce Curriculum
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Introduction to Project Management
Managing Project Risk
Lecture b
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