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Project Risk Management: Essential Methods for Project Teams and Decision Makers

Book Description

An easy to implement, practical, and proven risk management methodology for project managers and decision makers

Drawing from the author's work with several major and mega capital projects for Royal Dutch Shell, TransCanada Pipelines, TransAlta, Access Pipeline, MEG Energy, and SNC-Lavalin, Project Risk Management: Essential Methods for Project Teams and Decision Makers reveals how to implement a consistent application of risk methods, including probabilistic methods. It is based on proven training materials, models, and tools developed by the author to make risk management plans accessible and easily implemented.

  • Written by an experienced risk management professional

  • Reveals essential risk management methods for project teams and decision makers

  • Packed with training materials, models, and tools for project management professionals

Risk Management has been identified as one of the nine content areas for Project Management Professional (PMP) certification. Yet, it remains an area that can get bogged down in the real world of project management. Practical and clearly written, Project Risk Management: Essential Methods for Project Teams and Decision Makers equips project managers and decision makers with a practical understanding of the basics of risk management as they apply to project management.

Table of Contents

  1. Cover
  2. Epigraph
  3. Series
  4. Title Page
  5. Copyright Page
  6. Dedication
  7. Foreword
  8. Preface
  9. Acknowledgments
  10. Part One: Fundamental Uncertainty of a Project Outcome
    1. Chapter One: Nature of Project Uncertainties
      1. PHASES OF PROJECT DEVELOPMENT AND PROJECT OBJECTIVES
      2. QUEST FOR PREDICTABILITY OF PROJECT OUTCOME
      3. SOURCES AND TYPES OF DEVIATIONS FROM PROJECT OBJECTIVES
      4. KEY OBJECTS OF RISK (OR UNCERTAINTY) MANAGEMENT: DO WE REALLY KNOW WHAT WE TRY TO MANAGE?
      5. UNCERTAINTY EXPOSURE CHANGERS
      6. CONCLUSION
      7. NOTES
    2. Chapter Two: Main Components of a Risk Management System
      1. RISK MANAGEMENT PLAN
      2. ORGANIZATIONAL FRAMEWORK
      3. RISK MANAGEMENT PROCESS
      4. RISK MANAGEMENT TOOLS
      5. CONCLUSION
      6. NOTES
    3. Chapter Three: Adequacy of Methods to Assess Project Uncertainties
      1. REVIEW OF DETERMINISTIC QUALITATIVE (SCORING) METHODS
      2. REVIEW OF DETERMINISTIC QUANTITATIVE METHODS
      3. REVIEW OF PROBABILISTIC QUALITATIVE METHODS
      4. REVIEW OF PROBABILISTIC QUANTITATIVE METHODS
      5. CONCLUSION
      6. NOTES
  11. Part Two: Deterministic Methods
    1. Chapter Four: Uncertainty Identification
      1. WHEN RISK MANAGEMENT BECOMES BORING
      2. THREE DIMENSIONS OF RISK MANAGEMENT AND UNCERTAINTY IDENTIFICATION
      3. RISK IDENTIFICATION WORKSHOPS
      4. SOURCES OF UNCERTAINTIES AND RISK BREAKDOWN STRUCTURE
      5. BOWTIE DIAGRAMS FOR UNCERTAINTY IDENTIFICATION
      6. THREE-PART UNCERTAINTY NAMING
      7. ROLE OF BIAS IN UNCERTAINTY IDENTIFICATION
      8. ROOM FOR UNKNOWN UNKNOWNS
      9. CONCLUSION
      10. NOTES
    2. Chapter Five: Risk Assessment and Addressing
      1. DEVELOPING A RISK ASSESSMENT MATRIX
      2. USING A RISK ASSESSMENT MATRIX FOR ASSESSMENT AS-IS
      3. FIVE ADDRESSING STRATEGIES
      4. ASSESSMENT AFTER ADDRESSING
      5. PROJECT EXECUTION THROUGH RISK ADDRESSING (PETRA)
      6. ROLE OF BIAS IN UNCERTAINTY ASSESSMENT
      7. CONCLUSION
      8. NOTES
    3. Chapter Six: Response Implementation and Monitoring
      1. MERGING RISK MANAGEMENT WITH TEAM WORK PLANS
      2. MONITOR AND APPRAISE
      3. WHEN UNCERTAINTIES SHOULD BE CLOSED
      4. WHEN SHOULD RESIDUAL UNCERTAINTIES BE ACCEPTED?
      5. CONCLUSION
      6. NOTE
    4. Chapter Seven: Risk Management Governance and Organizational Context
      1. RISK MANAGEMENT DELIVERABLES FOR DECISION GATES
      2. OWNERSHIP OF UNCERTAINTIES AND ADDRESSING ACTIONS
      3. MANAGEMENT OF SUPERCRITICAL RISKS
      4. RISK REVIEWS AND REPORTING
      5. BIAS AND ORGANIZATIONAL CONTEXT
      6. CONCLUSION
      7. NOTES
    5. Chapter Eight: Risk Management Tools
      1. THREE DIMENSIONS OF RISK MANAGEMENT AND STRUCTURE OF THE UNCERTAINTY REPOSITORY
      2. RISK DATABASE SOFTWARE PACKAGES
      3. DETAILED DESIGN OF A RISK REGISTER TEMPLATE IN MS EXCEL
      4. COMMERCIAL TOOLS FOR PROBABILISTIC RISK ANALYSES
      5. CONCLUSION
      6. NOTES
    6. Chapter Nine: Risk-Based Selection of Engineering Design Options
      1. CRITERIA FOR ENGINEERING DESIGN OPTION SELECTION
      2. SCORING RISK METHOD FOR ENGINEERING DESIGN OPTION SELECTION
      3. DECISION TREE FOR ENGINEERING DESIGN OPTION SELECTION (CONTROLLED OPTIONS)
      4. CONCLUSION
      5. NOTE
    7. Chapter Ten: Addressing Uncertainties through Procurement
      1. SOURCES OF PROCUREMENT RISKS
      2. QUANTITATIVE BID EVALUATION
      3. PACKAGE RISK MANAGEMENT POST-AWARD
      4. CONCLUSION
      5. NOTES
    8. Chapter Eleven: Cost Escalation Modeling
      1. OVERVIEW OF THE COST ESCALATION APPROACH
      2. EXAMPLE OF COST ESCALATION MODELING
      3. SELECTING THE RIGHT TIME TO PURCHASE
      4. CONCLUSION
      5. NOTES
  12. Part Three: Probabilistic Monte Carlo Methods
    1. Chapter Twelve: Applications of Monte Carlo Methods in Project Risk Management
      1. FEATURES, VALUE, AND POWER OF MONTE CARLO METHODS
      2. INTEGRATION OF DETERMINISTIC AND PROBABILISTIC ASSESSMENT METHODS
      3. UNCERTAINTY OBJECTS INFLUENCING OUTCOME OF PROBABILISTIC ANALYSES
      4. ORIGIN AND NATURE OF UNCERTAINTIES
      5. ROLE OF CORRELATIONS IN COST AND SCHEDULE RISK ANALYSES
      6. PROJECT COST RESERVE
      7. PROJECT SCHEDULE RESERVE
      8. ANATOMY OF INPUT DISTRIBUTIONS
      9. PROBABILISTIC BRANCHING
      10. MERGE BIAS AS AN ADDITIONAL REASON WHY PROJECTS ARE OFTEN LATE
      11. INTEGRATED COST AND SCHEDULE RISK ANALYSIS
      12. INCLUDING UNKNOWN-UNKNOWN ALLOWANCE IN PROBABILISTIC MODELS
      13. CONCLUSION
      14. NOTES
    2. Chapter Thirteen: Preparations for Probabilistic Analysis
      1. TYPICAL WORKFLOWS OF PROBABILISTIC COST AND SCHEDULE ANALYSES
      2. PLANNING MONTE CARLO ANALYSIS
      3. BASELINES AND DEVELOPMENT OF PROXIES
      4. WHY USING PROXIES IS THE RIGHT METHOD
      5. MAPPING OF UNCERTAIN EVENTS
      6. BUILDING AND RUNNING MONTE CARLO MODELS
      7. CONCLUSION
      8. NOTES
    3. Chapter Fourteen: Using Outputs of Monte Carlo Analyses in Decision Making
      1. ANATOMY OF OUTPUT DISTRIBUTIONS
      2. OVERALL PROJECT UNCERTAINTY AND CONFIDENCE LEVELS OF BASELINES
      3. PROJECT RESERVE CRITERIA
      4. UNCERTAINTY OF COST OUTCOME AND CLASSES OF BASE ESTIMATES
      5. COST RESERVE DRAWDOWN
      6. SENSITIVITY ANALYSIS
      7. USING WHAT-IF SCENARIOS FOR ADVANCED SENSITIVITY ANALYSIS
      8. ARE WE READY FOR CONSTRUCTION, LOGISTICS, OR TURNAROUND WINDOWS?
      9. VALIDATING RESULTS AND CLOSING PROBABILISTIC ANALYSIS
      10. CONCLUSION
      11. NOTES
  13. Part Four: Risk Management Case Study: Project Curiosity
    1. Chapter Fifteen: Putting Together the Project Curiosity Case Study
      1. SCOPE OF THE CASE STUDY
      2. PROJECT CURIOSITY BASELINES
      3. PROJECT RISK MANAGEMENT SYSTEM ADOPTED BY PROJECT CURIOSITY
      4. OVERVIEW OF PROJECT UNCERTAINTY EXPOSURE OF PROJECT CURIOSITY
      5. TEMPLATES FOR PROBABILISTIC COST AND SCHEDULE ANALYSES
      6. BUILDING AND RUNNING PROJECT PROBABILISTIC COST AND SCHEDULE MODELS
      7. THREE WHAT-IF SCENARIOS
      8. CONCLUSION
      9. NOTES
    2. Chapter Sixteen: Decision Making
      1. KEY POINTS OF THE PROBABILISTIC ANALYSIS REPORT
      2. DECISION GATE REVIEW BOARD FINDINGS AND RECOMMENDATIONS
      3. CONCLUSION
      4. NOTE
  14. About the Author
  15. Index