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Approach to Project Risk Management

Project risk management is one of the most important disciplines of the project management process, and is an essential ingredient in all of the world’s leading methodologies for project and program management, such as PMBOK, Prince 2 Etc.

As opposed to operational risks, which exist throughout the life span of the organization, project risks have their own life cycle, starting with the onset of the project and concluding no later than with the completion of the project. After the end of the project, all project risks cease to exist [although some may become operational risks, which are then treated by processes for operational risk management].

Project risks are events or situations subject to probability, which in the event of their occurrence can influence the project’s ability to meet its goals. Naturally there is a need for a clear-cut definition of project goals in terms of schedule, cost/budget, and scope/quality. Therefore risk management must be integrated into the relevant parallel and tangential project management processes, i.e. schedule management, budget management, scope management, contract management and quality management.

Unlike the common tendency to focus separately on the engineering and management aspects of a project [the separation of which can frequently create an unbalanced approach to the project, its problems and constraints]; the starting point, according to SHAAR’s philosophy, is the necessary and inevitable combination of them. The management infrastructure of the project [the WBS chart, the Gantt chart, the budget structure, etc.] are fully supported by the engineering properties and by the technical needs of the project [the System Tree, Solution Architecture, main engineering components, etc.]. That is, in SHAAR’s opinion, the perspective through which it is essential to examine the risks that threaten the project’s objectives.

The main objectives of the risk management process are

  • Identifying threats to the project and pointing out their effects;

  • Increasing the chances of a project meeting its goals;

  • Reducing the probability of failure events occurring and the resulting negative impact on project objectives;

  • Reducing the severity of the impact on project objectives in the event of such an occurrence;

  • Providing decision-making support to the project, and focusing management attention where it’s most needed;

  • Assisting in decision-making on risk-sharing and distribution of contractual responsibility between the various parties involved in the project;

  • Assisting in assessing and setting of project budget contingencies and schedule buffers.

  • Assisting in identifying and assessing design alternatives, implementation options, procurement alternatives etc., and supporting the decision-making processes.

Project risk management is an ongoing and continuous process, carried out throughout the life cycle of the project — from initiation and design, through development and implementation, to testing, acceptance, delivery and commencement of ongoing operation. Risk management is carried out in conjunction with other management processes – schedule management, budget control, quality management, engineering management, etc. The various management disciplines combine with each other and are interdependent in such a way that their full integration ensures a greater chance of project success and of achieving the project objectives.

SHAAR is one of the most experienced and professional companies in Israel in everything pertaining to the establishment and leading of the various facets of the risk management process, particularly in high-tech and systems-intensive projects as well as mega-projects in the field of construction and civil-infrastructure.

The services offered by SHAAR in the context of risk management include:

  • Modifying the generic methodology and adapting it for the organization and type of projects, including the writing of policies, procedures and Risk Management Plans [RMP];

  • Leading risk surveys and risk workshops, including guiding discussions for identifying and mapping project risks and discussions of their analysis and evaluation;

  • Leading the process of managing, monitoring and controlling risks throughout the project life cycle, including mitigation and contingency plans;

  • Risk assessment through the qualitative method, the quantitative method or a combined method, including running Monte Carlo simulations for the calculation of the Expected Monetary Value [EMV] of the project risks and their impact on the budget, as well as on the project completion date;

  • Carrying out training and instruction in risk management for client staff; and more.

SHAAR also provides its clients with access to RMT – its computerized tool for risk management and for documentation of risks’ lifecycle.

After the risk capturing and assessment phases, the risk management processes should be carried out as often as is compatible with the unique features of the project and its specific status — duration, the remaining time to completion, organizational sensitivity, etc. In long term projects, the preferred frequency of risk assessment and control is monthly; while in shorter projects [or in projects nearing completion] – more frequent, i.e., weekly or bi-weekly monitoring is recommended.

Risk management is carried out by SHAAR in compliance with world-wide accepted best practices and with relevant international standards: [1] PMBOK, [2] ISO 21500 and [3] ISO 31000, [4] ITIG COP.

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