A Guide to Project Management

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Unformatted text preview: dinal or cardinal, can be developed using definitions agreed upon by the organization. These definitions improve the quality of the data and make the process more repeatable. Figure 11-2 is an example of evaluating risk impacts by project objective. It illustrates its use for either ordinal or cardinal approach. These scaled descriptors of relative impact should be prepared by the organization before the project begins. Figure 11-3 is a Probability-Impact (P-I) matrix. It illustrates the simple multiplication of the scale values assigned to estimates of probability and impact, a common way to combine these two dimensions, to determine whether a risk is considered low, moderate, or high. This figure presents a non-linear scale as an example of aversion to high-impact risks, but linear scales are often used. Alternatively, the P-I matrix can be developed using ordinal scales. The organization must determine which combinations of probability and impact result in a risk's being classified as high risk (red condition), moderate risk (yellow condition), and low risk (green condition) for either approach. The risk score helps put the risk into a category that will guide risk response actions. .3 Project assumptions testing. Identified assumptions must be tested against two criteria: assumption stability and the consequences on the project if the assumption is false. Alternative assumptions that may be true should be identified and their consequences on the project objectives tested in the qualitative risk-analysis process. .4 Data precision ranking. Qualitative risk analysis requires accurate and unbiased data if it is to be helpful to project management. Data precision ranking is a technique to evaluate the degree to which the data about risks is useful for risk management. It involves examining: Extent of understanding of the risk. Data available about the risk. Quality of the data. Reliability and integrity of the data. A Guide to the A Guide to the Project Project Management Management Body of Body of KnowledgeE L KnowledgeE PL MP AM SA S A Guide to the Project Management Body of Knowledge (PMBOK Guide) 2000 Edition 2000 Project Management Institute, Four Campus Boulevard, Newtown Square, PA 19073-3299 USA NAVIGATION LINKS ACROYMNS LIST ACRONYMS LIST 135 ACROYMNS LIST Chapter 11--Project Risk Management Figure 112 | 11.4 Evaluating Impact of a Risk on Major Project Objectives (ordinal scale or cardinal, non-linear scale) Project Objective Cost Very Low .05 Insignificant Cost Increase Insignificant Schedule Slippage Low .1 <5% Cost Increase Schedule Slippage <5% Moderate .2 510% Cost Increase Overall Project Slippage 510% High .4 1020% Cost Increase Overall Project Slippage 1020% Very High .8 >20% Cost Increase Overall Project Schedule Slips >20% Project End Item Is Effectively Useless Project End Item Is Effectively Unusable Schedule Scope Scope Decrease Barely Noticeable Minor Areas of Scope Are Affected Major Areas of Scope Are Affected Sc...
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