Implementing a professional risk management process in managing capital projects is becoming one of the most critical processes that need to be formally implemented. One of the key deliverables of project risk management is the risk register which details all identified risks with their likelihood to occur and their impact if they occur, actions that can treat those risks, and the revised likelihood and impact if those treatment actions are implemented.
Using Project Management Information Systems (PMIS) like PMWeb, organizations can implement different approaches for managing, monitoring, evaluating, and reporting project risks. The difference between those approaches would be the level of control that the organization wants to have on managing project risks. The first approach would be to use the PMWeb risk analysis where risks need to be populated in the risk register. The second approach is to use the PMWeb custom form builder to create a risk register checklist where there will be a predefined list of tables to group all risk categories and possible risks within each category. The PMWeb user needs to provide the pre-mitigation likelihood and impact of each risk, selected risk response action, and post-mitigation likelihood and impact of the same risk. Of course, additional details can be also added if needed.
Nevertheless, for organizations who are keen on implementing a comprehensive risk management process, PMWeb custom form builder will be used to create the risk form for which the complete details of every risk will be added to the form. The Risk Identification and Assessment form approach will incorporate the best practices and functions needed to have a comprehensive risk register checklist created from identifying and assessing individual risks. Accordingly, the Risk Identification and Assessment form will have four sections, the first of which is to capture the project name, record ID, record date, and workflow status. The second section will be for risk identification for which all fields excluding risk description, cause, and effect will be selected from pre-defined lists of values to ensure consistency as well as expedite the risk identification process. PMWeb will have a predefined list of values for risk category, risk type, risk nature, WBS level, project schedule activity which will be imported from Primavera P6 or MS Project, Company owning the risk, risk owner, risk initiator, and risk action by. Of course, there is no limit on the additional fields that can be added for example whether the risk has an impact on cost and/or schedule.
The third section will include the score values for the pre-mitigation and post-mitigation likelihood and impact values which will be based on a scale of 5. The section will include an explanation of the core values of “1” to “5” for the likelihood of the risk to occur and impact or consequences if the risk occurs. The section also details the risk score or level for pre-mitigation and post-mitigation likelihood and consequences risk assessment value. The pre-mitigation and post-mitigation risk score or level values will be automatically calculated in the form.
The last section will be the Risk Mitigation Actions where all possible actions that can treat negative risks or threats or improve positive risks or opportunities will be listed. For each identified risk mitigation action, the user will select the relevant risk response action type which includes avoiding, mitigating, transferring, and accepting options for threats and pursuing, enhancing, sharing, and ignoring options for opportunities. For all mitigation actions, the project team member needs to provide the estimated cost for implementing the action and to confirm if this action was selected or not.
The attachment tab will be used to attach all supportive documents which will be usually uploaded and stored in the PMWeb document management repository under their designated folder. In addition, links to relevant PMWeb records will be added.
A workflow will be assigned to the Risk Identification and Assessment form to ensure that responsibility for identifying, assessing, and responding to project risks is mapped. The workflow will identify all needed steps, the duration for each step, responsibility for each step, actions that can be taken for each step, and the sequence for performing those steps. The workflow steps will be aligned with the permissions set in the Risk Identification and Assessment form to ensure that designated project team members are providing the information that they need to provide. PMWeb also allows adding conditions to the workflow steps to incorporate the approval authority levels.
The advantage of managing risks at this granular level is that the risk management process can be associated with the specific transaction or record of other related project management processes. For example, the risk management process needs to be linked with the issue management process which is the process that is implemented to respond to known risks that were already identified and captured in the risk management process but have occurred. In addition, the PMWeb potential change module, sometimes also known as a trend or Early Warning Notification (EWN), is used to identify the impact that has resulted from unknown risks that were not captured in the risk management process but have occurred. Both the issue and the potential change order, trend, or Early Warning Notification, processes need to be linked with the change order process to capture the adjustment to the project’s cost and schedule resulting from the impact of the issue resolution or trend occurrence.
The data generated from implementing the Risk Identification and Assessment process will become the basis for creating the project risk register and risk dashboard to provide the organization with a real-time single version of the true solution to monitor, evaluate, analyze and report on risks at a project, program, portfolio as well as enterprise level. The dashboard will enable drilling down to the risk register which will further enable drilling down to the Risk Identification and Assessment form for the selected risk in the risk register.
In addition, another risk register report that includes the project schedule activity associated with each risk, as well as other risk analysis details that are needed to run a Monte Carlo simulation analysis, can be designed in the desired format. This risk register report will be saved in MS Excel file format to enable importing the risk data into the Monte Carlo Simulation software like Safran for example. This will enable Safran to run the Monte Carlo simulation to determine the probability of achieving the project’s milestone dates and approved budget.
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value over the US $5 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.
Bassam is a frequent speaker on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 35 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 250 articles on project management and information systems featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP), and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.