Purchase Solution

Project Managment Risk: describe risk preferences and utility curves

Not what you're looking for?

Ask Custom Question

PROBLEM: What is the meaning of risk in project management? Describe the different risk preferences and utility curves of exhibited by project managers. Describe steps in typical risk management process. Explain what options are open to project managers to handle risk.

Purchase this Solution

Solution Summary

The 2200 word solution presents a comprehensive response to each and all the questions about risk in project management.

Solution Preview

MEANING OF RISK IN PROJECT MANAGMENT

Protecting the value of a project involves dealing with the uncertainty that will be associated with its delivery. The role of Project Management is to assist in turning uncertain events and efforts into certain outcomes and promises. If this is the case, then the primary process associated with project management should be that of risk management. How other processes, such as scope, schedule, and spending management support risk management is therefore critical for successful project management and for maximizing the value of our project-based efforts. One of the more recently introduced project management methodologies has at its core a focus on the management of uncertainty and risk.

Critical Chain-based project management has received considerable attention in the Project Management community Most of this attention has been focused on the areas of schedule development and management. But the details of the scheduling methodology -- the critical chain versus the critical path, just-in-time starts replacing as-soon-as-possible starts, the eschewing of task due dates and use of buffers of time to protect the project's promise and monitor its progress -- are only means to an end. Or rather, ends -- speed and reliability of project performance unencumbered by conflicting pressures and behaviors. And reliability of project promises is as much a result of a methodology's ability to support effective risk management, as it is a result of effective planning and scheduling.

STEPS IN RISK MANAGEMENT
Identify and evaluate potential risks
Obtain agreement to action plans to contain risks
Take the actions and monitor the results
Promptly resolve any issues arising from risks that happen.

Recognition of uncertainty and its associated risk are at the core of the initial stages of developing Critical Chain schedules. The emphasis on dependencies in the usual approach to developing a project network for a Critical Chain schedule helps to avoid risks of missing interactions of different parts of the project. The use of 2-point estimates to assess and address the early view of schedule risk associated with task uncertainty sets the tone up front for the appreciation of risk in the real world. In addition to task uncertainty, iteration uncertainty (a topic not written of much to date in the Critical Chain literature) can also be taken into account in the sizing of Feeding and Project Buffers. These resulting buffers themselves become a highly visible and direct assessment of the schedule risk associated with the project as a whole.

Critical Chain-based project management is more than just Critical Chain Scheduling and Buffer Management. The genesis of Critical Chain in the Theory of Constraints (TOC) has yielded a holistic view of project management that provides effective risk-focused approaches not only to scheduling and control, but also to initial scoping and planning, effective resource behaviors, and minimizing cross-project impacts. These key aspects of the methodology have a range of implications for the support of basic risk management processes and outcomes, including identification and assessment of risks, response development -- bit it avoidance, mitigation, or acceptance, and guidance for response control (Pritchard, 1997).

No matter how good a project schedule is or how well resources perform in the execution of tasks in that schedule, if critical dependencies associated with the project are not included in the description of the effort, they represent considerable risk to delivering project value.

OPTIONS OPEN TO THE PROJECT ...

Purchase this Solution


Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.