Unformatted text preview: ll if any of them worth your
attention more than the other risks. Dr. Maged Ezzat Georgy How
How to Measure a Project Risk
Any project risk is defined/measured through its
“magnitude”.
The risk magnitude is depicted via:
◦ The probability of occurrence of this risk.
The
◦ The impact it would have, in measurable terms, if it
happens. Dr. Maged Ezzat Georgy Probability
Probability is simply the likelihood that a risk event
will
will occur.
Let’s say you’re planning the concrete pouring next
Thursday. Dr. Maged Ezzat Georgy Probability
Probability
Let us further assume that the weather forecasters
say Thursday has a 20 percent chance of rain.
Therefore, the probability it will rain while concrete
pouring is 20 percent. Dr. Maged Ezzat Georgy Impact
Risk impact is the consequences of the risk event on
you, if it actually happens.
In the rain case described before, this event can
result in:
◦ One day of delay, and
◦ $1000 of unused resources on Thursday. Dr. Maged Ezzat Georgy Information and the Project
Life Cycle
Life
As you progress in the project, the information Initiation I
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N available to you increases.
Closeout As the information increases, your ability to identify
and measure the risk improves. Dr. Maged Ezzat Georgy Information and the Project
Life Cycle
Life
With little information at the project start, the risk
magnitude is described in approximate, subjective
and qualitative terms.
For example, we can say:
◦ Probability is “moderate”.
◦ Impact is “significant”.
◦ The risk has “little” magnitude.
Dr. Maged Ezzat Georgy Information and the Project
Life Cycle
Life
At the later stages, and as the information increases,
the risk magnitude is described through a more
objective and quantitative terms.
For example, we can say:
◦ Probability is 35%.
◦ Impact on cost is $24,000. Dr. Maged Ezzat Georgy PMI’
PMI’s Practical Risk
Management Approach
Mana
Risk management is primarily about “creating and
implementing a risk plan”...
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