Monitoring & Controlling Project Risks

MGMT 4019
Intro to PM & Risk Management
Class 12
 Learning Objectives

Before this class ends, we will achieve the following;

1. Recall the processes associated with controlling and
monitoring project risk

2. Recall the components of a Risk Log

3. Develop Risk Log entries for a sample project

 Monitoring and Controlling Project Risks

Monitoring and Controlling Risks:

▪ Monitoring and Controlling project risks includes the processes of
monitoring identified risks and identifying new risks throughout the
project as well as implementing risk response plans for risks that do
occur
▪ The project manager and risk owners are responsible for monitoring
project risks
▪ PM and team must assess, on an ongoing basis, the likelihood that
identified risks may occur
…continued
 Monitoring and Controlling Project Risks

Monitoring and Controlling Risks:

▪ Any risks that have the potential to impact project objectives should
be brought to the attention of the project sponsor and other
appropriate stakeholders
▪ The project manager must begin to monitor and control project risk
as soon as the Project Implementation phase is launched (following
the Project Planning phase)
 Monitoring and Controlling Project Risks

The PM is also responsible for:

▪ Creating and updating the Risk Log (as discussed in this class) to
ensure that identified risks, and their probability of occurrence, are
as up to date as possible

▪ Ensuring that the project’s Risk Contingency Reserve is sufficient to

absorb the impact of the costs associated with ‘known’ risks, should
they occur
 Controlling Project Risks

▪ Risk Log
▪ A Risk Log (also called a Risk Register) contains a summary of all
identified project risks as well as their current status
▪ The Risk Log is updated throughout the project and is used by the
project manager to continually monitor project risks

Risk Log (last updated yyyy-mm-dd)

Risk ID Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
Score Constraint Occurred
 Controlling Project Risks

▪ The information contained in a Risk Log varies between

organizations. However, in general, Risk Logs contain
information related to project risks which is entered
when new risks are identified or when the risk occurs
 Controlling Project Risks

The following is information that is entered in the Risk Log during the Project
Planning Phase or Project Implementation Phase when new risks are identified (for
known unknowns):
▪ Risk ID – all risks are individually identified (e.g. R-1, R-2, R-3, etc.). Initially “known risks” are
entered during the project planning phase and are updated and added to during the project
implementation phase
▪ Description – a brief description of the risk
▪ Risk Priority Score - project managers focus on the risks with the highest impact and/or
probability of occurring
▪ Owner – the person ultimately responsible for monitoring the risk and responding, should the
risk occur (usually the PM or member of the project team)
▪ WBS # – the number of the work package(s) related to identified risks
▪ Response strategy – brief description of risk response strategy to be implemented
▪ Estimated impact on triple constraint– a brief description of the impact that the risk will likely
have on the project’s cost, schedule, scope/quality should it occur
 Controlling Project Risks

▪ Risk Log
▪ Where does the risk ‘priority’ score comes from?

Risk Log (last updated yyyy-mm-dd)

Risk ID Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
Score Constraint Occurred
 Where does the risk ‘priority come from?

The Risk Priority Score is taken from the Risk Priority Matrix
that we studied in Class 2

Risk Priority Matrix

Risk Priority Score

Risk Probability Impact
(P x I)
Snow storm 1 3 3

The risk priority

score is transferred
to the Risk Log
 Controlling Project Risks

The following is information entered into the Risk Log when risks
occur:

– Date of occurrence – if risk occurs, indicate the date of occurrence

– Status – indicate that the risk has occurred and describe the response
strategy being implemented. if the risk occurs describe the impact that the
risk had on the project’s cost, schedule, scope/quality
 Risk Ownership

▪ Risk Ownership
▪ The risk owner is the person ultimately responsible for monitoring the
possibility of the risk occurring and responding to the risk, should it occur
▪ The risk owner is normally selected on the basis of their expertise and/or
level of involvement in implementing the task(s) associated with the risk.
▪ However, if a risk has a high probability of occurring or high impact if it
does, ensure that the PM or member of the project team is responsible for
managing the risk (as opposed to an SME or outside supplier or contractor)
 Risks and Work Packages

Risks and Work Packages:

▪ When a risk is identified, it is useful to identify the related Work Package(s) in the
WBS

▪ Tying the risk to a Work Package makes it simple to identify the owner and the
timeframe when the risk might occur

▪ It is not required that every risk be associated with a Work Package

▪ If a risk is not tied to any specific Work Package, it is a risk that can impact the
project at any time
 Risks and Work Packages

▪ In the “Special dinner at home” WBS (below) there are three work
packages with two “known risks” identified in red
▪ Risk responses must be identified for all risks that are entered into a risk
log. Therefore, these are known, residual risks (which may or may not
occur)

Special dinner
at home
WP 1
Known risk:
Recent car problems
have not been Eat Dinner
Buy groceries Cook dinner
repaired (Fred and
(Fred) (Ellen)
Ellen)
WP 1.1 WP 1.2 WP 1.3

Known Risk: Oven has been

experiencing problems and
may not work properly
 Risks and Work Packages- Example

Let’s assume the following related to the “Special Dinner at Home” project:

– The risk of car problems (R1) on the way to the store was considered a
moderate risk (i.e. risk priority score of 3). The identified risk response
strategy was to transfer the risk by calling CAA. The cost of a new battery, if
required, is estimated at $200. It is estimated that this will add 2 hours to
the trip.

– Here’s how to enter this information in the risk log during the planning
phase…
 Special Dinner at Home – Risk Log

Here is an example of how to enter the ‘car problem’ risk in the Risk Log during the planning phase

Special Dinner at Home - Risk Log

Risk Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
ID Score Constraint Occurred

R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = estimated at
on way to grocery $200 for new battery
store to be replaced by
CAA
Schedule = estimated
2 hour delay
 Risks and Work Packages- Example

Let’s assume the following related to the “Special Dinner at Home” project:

– That the car battery fails on the drive to the store. Fred calls CAA and they are
able to actually replace the battery at a cost of $150 and the work took 1.5
hours

– This takes place on Nov 12th

– Here’s how to enter this information in the risk log once the risk occurs (i.e.
during project implementation)…
 Special Dinner at Home – Risk Log

Here is an example of how to enter the ‘car problem’ risk in the Risk Log after the risk occurs
(Note that the impact on the triple constraint was updated to reflect what actually happened)

Special Dinner at Home - Risk Log

Risk Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
ID Score Constraint Occurred

R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = estimated at 12-Nov Risk Occurred:
on way to grocery $200 for new battery Cost = $150 for new
store to be replaced by battery replaced by
CAA CAA
Schedule = Schedule = 1.5 hour
estimated 2 hour delay
delay
 Special Dinner at Home – Risk Log

How might you enter the information into Risk Log related to
risk (R2) that the oven may not work? Assume that the risk
priority score for this risk is 6 (Moderate)….
 Debrief - Special Dinner at Home – Risk Log

Here’s how you might enter the information for R2 (oven breaks down) during the planning phase:

Special Dinner at Home - Risk Log

Risk Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
ID Score Constraint Occurred

R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = $200 for new 12-Nov Risk Occurred:
on way to grocery battery if by CAA Cost = $150 for new
store Schedule = 2 hour battery replaced by
delay CAA
Schedule = 1.5 hour
delay
R-2 6

Try completing R-2 based on the information you already know from the risk description
on the previous slides. Leave ‘Date Occurred’ and ‘Status’ columns blank for now.

Complete this exercise before proceeding to the next slide

 Debrief - Special Dinner at Home – Risk Log

Here’s how you might enter the information for R2 (oven breaks down) during the planning phase:

Special Dinner at Home - Risk Log

Risk Description Risk Priority Owner WBS # Response strategy Impact on Triple Date Status
ID Score Constraint Occurred

R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = $200 for new 12-Nov Risk Occurred:
on way to grocery battery if by CAA Cost = $150 for new
store Schedule = 2 hour battery replaced by
delay CAA
Schedule = 1.5 hour
delay
R-2 Oven doesn’t work 6 Ellen 1.2 Mitigate: Cook dinner in Meal will not taste
microwave as good (reduced
quality)
 Debrief - Special Dinner at Home – Risk Log

Let’s assume the oven broke down, also on Nov 12th and the microwave
ruined the meal. Ellen ends up ordering a pizza for $25 which takes an
hour to deliver. How would you update the risk log to reflect this
information?
 Debrief - Special Dinner at Home – Risk Log

Here’s how to update the R2 risk once the risk occurs:

Special Dinner at Home - Risk Log
Risk Description Risk Owner WBS # Response strategy Impact on Triple Date Status
ID Priority Constraint Occurred
Score
R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = $200 for 12-Nov Risk Occurred:
on way to new battery if by Cost = $200 for
grocery store CAA new battery
Schedule = 2 replaced by CAA
hour delay Schedule = 2 hour
delay
R-2 Oven doesn’t 6 Ellen 1.2 Mitigate: Cook dinner in Meal will not
work microwave taste as good
(reduced quality)

Complete the ‘Date Occurred’ and ‘Status’ columns for R-2 based on
the information from the previous slide.

Complete this exercise before proceeding to the next slide

 Debrief - Special Dinner at Home – Risk Log

Here’s how to update the R2 risk once the risk occurs:

Special Dinner at Home - Risk Log
Risk Description Risk Owner WBS # Response strategy Impact on Triple Date Status
ID Priority Constraint Occurred
Score
R-1 Car problems on 3 Fred 1.1 Transfer: call CAA Cost = $200 for 12-Nov Risk Occurred:
on way to new battery if by Cost = $200 for
grocery store CAA new battery
Schedule = 2 replaced by CAA
hour delay Schedule = 2 hour
delay
R-2 Oven doesn’t 6 Ellen 1.2 Mitigate: Cook dinner in Meal will not 12-Nov Risk Occurred
work microwave taste as good Microwave oven
(reduced quality) ruined the dinner.
Ordered pizza:
Cost = $25 for
 Continuous Risk Management

Risks must be identified and managed continuously throughout project

implementation:
▪ Monitor known risks with a Risk Log

▪ Check for new risks at status meetings

▪ Repeat major risk identification at pre-planned milestone meetings

▪ When new risks are identified, prepare response plans and check whether there are
sufficient funds in risk contingency reserves

▪ Remove risks that are not expected to materialize from the Risk Log and adjust
contingency reserves, as appropriate
 Next Class

Next class: Final Exam

The final exam for the MGMT4019 course will a focus on classes
8-12 which deal with risk management (but not entirely).

The exam is 25 multiple choice questions worth one mark each for
a total of 25% of the final course grade.

You will have 90mins to complete the final exam. It will be located
under “Assessments”.

YOU ARE REQUIRED TO ATTEND IN PERSON AND CANNOT

COMPLETE THE TEST REMOTELY. RESPONDUS LOCKDOWN
BROWSER WILL ALSO BE IN EFFECT DURING THE EXAM.