QUALITY MANAGEMENT &

RISK MANAGEMENT
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Risk and Opportunity
Item RISK Opportunity note
What might go What might be improved?
Question wrong?
Diff.
A potential problem or A potential enhancement or
Type threat that could affect positive impact that could Diff.
the program's improve the program's
the program's ability impact that could improve
to meet its the program's ability to meet
Effect performance, cost, its performance, cost, Same
schedule, financial, schedule, financial, or other
or other objectives objectives
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Risk & Opportunity Mgt. Basics
What are the possible threats to our success?
What are the chances they will be realized, and what
will they do to us if realized?
Which are priorities and require action?
What are the actions?
Do we need funded tasks?
Are the actions working?
what do we do if they’re not work?
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The Road construction company
RISK:
They are inexperienced in mountainous road
construction and have only a relative expertise in
managing explosives, which surely will be used
extensively.
OPPORTUNITIES:
The Company considers that this job will give them
much needed background to compete in other
projects of this nature in the future.
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Risk / Opportunity Management Process
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Risk Management Plan Requirements:
A detailed description of the activities and
interventions designed to identify, characteristics,
prevent or minimize risks.
Who? What? When? Why? How?
Identification how?
• Program Documentation
• Expert Interviews and Reviews
• Brainstorming
• Anyone, anytime
• Taxonomies, Checklists, Common risk lists, Lessons learned
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Where can we find risk?
• Potential Risk Areas
Technical, quality or performance pressures
Uncertain requirements
Ability to meet program requirements
Security risks
Reliance on unproven or complex technology
Unprecedented efforts -history unavailable
Inadequate resource availability (infrastructure and people)
Subcontractor / supplier history poor or unknown
Infeasible or immature design
Inadequate communication
External risks :customer, shifting legal
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•Opportunity Identification
Where can we find opportunity?
• Potential Opportunity Areas
 Use of COTS (Commercial Off The Shelf)
 Supplier competition
 Test by similarity and analysis
 Automation
 Lean manufacturing
 Question non-value added requirements
 Use of commercial parts
 Agile development
• Ask -what can we do to save time and money?
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Risk Assessment
• Each Risk or Opportunity is analyzed and
assessed:
 - What is the Probability that it will happen?
 - What is the Impact if it does happen?
•Qualitative Assessment –determines initial rating and
priorities
• Quantitative Assessment –finalizes priorities, provides
cost and schedule information
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Handling Risk
•Address root causes from the context information
•Action plan •Records steps in small increments
•Estimate time, resources and cost to complete plan
•Estimate the decrease in risk probability and impact not
probability of accomplishing step
Monitor and Report • Purpose
 – Communicate . . .To management, customer, program team
 – Status . . . Plans and actions to ensure risks and
opportunities are being addressed
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Steps for Implementing Risk Management
The implementation of RM involves the following stages:
1. Data gathering about the project and initial conditions.
2. Planning project development:
This involves determining tasks for the development of project, their sequence, and
preparation of project budget & schedule.
3. Threat identification:
These are hazards, menaces, or dangers that can affect the project.
3. Threat identification.
These are hazards, menaces, or dangers that can affect the project.
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Steps for Implementing Risk Management
4. Risk assessment and analysis.
This deals with the probability of threat occurrence and the impact/s they can cause.
Multiplication of probability by impact yields a risk value.
5. Execution and remediation.
This refers to establishing remediation measures when executing the project.
6. Sensitivity analysis.
This deals with determining the influence on the outcome of certain parameter
variations.
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Steps for Implementing Risk Management
7. Updating, Monitoring and Control.
This relates to project updating in comparing progress against forecasted advances, costs
and quality, and the analysis of potential measures .
8. Project closing.
This deals with finishing the project in accordance with contractual terms and
conditions, and to the owner’s satisfaction.
9. Reporting.
This consists of writing a technical report or memory about the whole project to
be handed over to the owner.