A comprehensive overview of project risk management, providing guidance on implementing and improving project risk management systems in organizations
This book provides a comprehensive overview of project risk management. Besides offering an easy-to-follow, yet systematic approach to project risk management, it also introduces topics which have an important bearing on how risks are managed but which are generally not found in other books, including risk knowledge management, cultural risk-shaping, project complexity, political risks, and strategic risk management. Many new concepts about risk management are introduced. Diagrams and tables, together with project examples and case studies, illustrate the authors precepts and ideas.
Each chapter inManaging Project Risks begins with an introduction to its topic and ends with a summary. The book starts by providing an understanding and overview of risk and continues with coverage of projects and project stakeholders. Ensuing chapters look at project risk management processes, contexts and risk drivers, identification, assessment and evaluation, response and treatment options, and risk monitoring and control. One chapter focuses entirely on risk knowledge management. Others explore the cultural shaping of risk, political risk in projects, computer applications, and more. The book finishes by examining the current state and potential future of project risk management.
In essence, this book:
Effectively communicates a conceptual and philosophical understanding of riskEstablishes the nature of projects and the stakeholders involved in themPresents a systematic and logically progressive approach to the processes of project risk managementDemonstrates how to recognize the drivers of project risks and the factors which shape themEmphasizes the importance of capturing and exploiting project risk knowledgeProvides guidance about implementing and building (or improving) project risk management systems in organizations
Managing Project Risks will benefit practitioners and students of project management across a wide range of industries and professions.
List of Tables xv
List of Figures xvii
Preface xix
Acknowledgements xxiii
Glossary xxv
1 Introduction 1
1.1 Introduction 1
1.2 The Project Perspective 1
1.3 The Project Stakeholder Perspective 2
1.4 Overview of Contents 3
1.5 Limitations Caveat 5
2 An Overview of Risk 7
2.1 Introduction 7
2.2 Risk Definitions 7
2.3 Threat and Opportunity 9
2.4 Risk and Uncertainty 11
2.5 The Dynamic Nature of Risk 16
2.6 Psychology and Perceptions of Risk 17
2.7 Risk Awareness 18
2.8 Classifying Risk 19
2.9 Risk Communication 28
2.10 Summary 28
References 29
3 Projects and Project Stakeholders 31
3.1 Introduction 31
3.2 The Nature of Projects 31
3.3 Project Objectives 32
3.4 Project Phases 39
3.5 The Composition of Projects 41
3.6 Processes of Project Implementation 43
3.7 IT Project Example 44
3.8 Organisational Structures for Projects 46
3.9 Project Stakeholder Relationships 47
3.10 Stakeholder Organisational Structures 55
3.11 Modes of Organisational Management 60
3.12 Project Stakeholder Decision Making 61
3.13 Risky Projects 65
3.14 Summary 67
References 68
4 Project Risk Management Systems 69
4.1 Introduction 69
4.2 Risk Management 70
4.3 Risk Management Systems 72
4.4 Risk Management Standards and Guides 73
4.5 A Cycle of Systematic Project Risk Management 75
4.6 Project Stages and Risk Management Workshops 79
4.7 A Project Risk Register Template 86
4.8 Summary 88
References 88
5 Project Risk Contexts and Drivers 91
5.1 Introduction 91
5.2 The Contextualising Process 92
5.3 Internal Contexts as Risk Drivers 93
5.4 External Contexts as Risk Drivers 94
5.5 Using Contextual Information 100
5.6 Summary 101
Reference 101
6 Approach to Project Risk Identification 103
6.1 Introduction 103
6.2 Approach to Risk Identification 104
6.3 Workshop Timing 105
6.4 Types of Risk Identification Techniques 110
6.5 Summary 116
Reference 117
7 Project Risk Identification Tools 119
7.1 Introduction 119
7.2 ActivityRelated Tools 120
7.3 Analytical Tools 128
7.4 Associated Representative Tools 137
7.5 Matrix Tools 149
7.6 Simulation and Visualisation Tools 149
7.7 Speculation Tools 153
7.8 Structural and Management Tools 155
7.9 Risk Identification Statements 156
7.10 Summary 158
References 160
8 Project Risk Analysis and Evaluation 161
8.1 Introduction 161
8.2 Qualitative Analysis 163
8.3 Assessing Likelihood 164
8.4 Assessing Impacts 167
8.5 Evaluating Risk Severity 168
8.6 Quantitative Analysis 172
8.7 Risk Mapping 179
8.8 Summary 181
References 182
9 Risk Response and Treatment Options 183
9.1 Introduction 183
9.2 Risk Attitudes and Appetites 184
9.3 Existing Risk Controls 187
9.4 Risk Response Options 188
9.5 Risk Treatment Options 194
9.6 Risk Mitigation Principles 195
9.7 Strategic Use of ALARP (As Low as Reasonably Practical) 197
9.8 Reassessment 198
9.9 Recording Decisions 198
9.10 Summary 198
References 199
10 Risk Monitoring and Control 201
10.1 Introduction 201
10.2 Assigning Responsibility 202
10.3 Monitoring Procedures 204
10.4 Control Measures 207
10.5 Reporting Processes 209
10.6 Dealing with New Risks 210
10.7 Disaster Planning and Recovery 211
10.8 Capturing Project Risk Knowledge 212
10.9 Summary 213
References 213
11 Project Risk Knowledge Management 215
11.1 Introduction 215
11.2 Knowledge Definitions and Types 216
11.3 Knowledge Transformation 217
11.4 Types and Forms of Knowledge 218
11.5 Organisational Culture and Knowledge Management 219
11.6 The Knowledge Creation Cycle 220
11.7 Additional Issues of Organisational Culture 226
11.8 KMS Alignment and Information Redundancy 226
11.9 Tools and Techniques for Eliciting Risk Knowledge 227
11.10 Developing Organisational Risk Wisdom 233
11.11 Project and Organisational Risk Register Architecture 233
11.12 Challenges for Implementing Risk Knowledge Management Systems 237
11.13 Communication and Risk Knowledge Management 240
11.14 Summary 242
References 243
12 Cultural Shaping of Risk 245
12.1 Introduction 245
12.2 Culture in Society 246
12.3 Organisational Cultures 247
12.4 External Cultures as Project Risk Shapers 253
12.5 Organisational Cultures of Other Project Stakeholders 254
12.6 Applying Cultural Shaping in Project Risk Management 255
12.7 Summary 259
Reference 260
13 Project Complexity and Risk 261
13.1 Introduction 261
13.2 The Concept of Complexity 261
13.3 Relative Complexity 268
13.4 Uncertainty and Project Complexity 270
13.5 Identifying and Mapping Complexity 272
13.6 Influence of Complexity on Risk Management 273
13.7 Complexity and Megaprojects 273
13.8 Summary 276
References 276
14 Political Risk 277
14.1 Introduction 277
14.2 Political Spheres 279
14.3 Dimensions of Political Risk Factors 280
14.4 Examples of Political Risks 281
14.5 Political Stakeholders 284
14.6 Managing Political Risks 284
14.7 Inhouse Political Risks 288
14.8 More Extreme Political Threat Risks 288
14.9 Summary 290
Reference 291
15 Opportunity Risk Management 293
15.1 Introduction 293
15.2 Concept of Opportunity Risk 294
15.3 Opportunity Risk in Projects 295
15.4 Examples of Opportunity Risks 296
15.5 Managing Opportunity Risks 298
15.6 Summary 306
Reference 307
16 Strategic Risk Management 309
16.1 Introduction 309
16.2 Strategic Issues for Project Risk Management 310
16.3 PRMS Process Strategies 321
16.4 Summary 325
References 326
17 Planning, Building, and Maturing a Project Risk Management System 327
17.1 Introduction 327
17.2 PRMS Objectives 328
17.3 Planning and Designing the PRMS 329
17.4 Risk Management Maturity 333
17.5 Building the PRMS 339
17.6 PRMS Performance Review and Improvement Cycle 343
17.7 Summary 348
References 349
18 Computer Applications 351
18.1 Introduction 351
18.2 Project Risk Management System (PRMS) Software Applications 352
18.3 Other Information Technologies and Tools 359
18.4 Summary 360
19 Communicating Risk 363
19.1 Introduction 363
19.2 Communication Theory and Models 364
19.3 Components in the Communication Process 366
19.4 Communicating Risk in the PRMS Cycle 370
19.5 Communicating Project Risk Beyond the Project Stakeholder Organisations 372
19.6 Evaluating Risk Communication 374
19.7 Summary 374
References 375
20 Conclusions 377
20.1 Introduction 377
20.2 Current State of Project Risk Management 378
20.3 Future Project Risk Management 381
20.4 Checking Your Reading Satisfaction 383
20.5 Closing Remarks 391
Case Study A: PublicPrivate Partnership (PPP) Correctional Facilities Project 393
Case Study B: Rail Improvement Project 403
Case Study C: PM Consultant and a Government AidFunded Pacific Rim Project 409
Case Study D: HighCapacity Metropolitan Train Mockup Project 415
Case Study E: HotRod Car Project 417
Case Study F: Aquatic Theme Park Project 421
Index 425
