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From page 18... ... Project Risk Management: Step-by-Step Process P A R T 2 Chapter 3. Project Risk Management Planning ......................................................................... Read the entire page →
From page 19... ... 21 C H A P T E R 3 Airport projects can range from routine, straightforward maintenance projects to highly complex, multifaceted capital projects valued in the millions of dollars. However, regardless of their type or size, all projects would benefit from some level of risk management. Read the entire page →
From page 20... ... 22 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects The answers to these questions will help define the level and nature of risk tolerance within the airport at a given point in time. This in turn will establish a foundation for subsequent discussions on what is and is not an appropriate level of risk for the project and how to manage this risk accordingly. Read the entire page →
From page 21... ... Project Risk Management Planning 23 Table 3.2. Typical characteristics of low-, medium-, and high-risk projects. Read the entire page →
From page 22... ... 24 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects project (and by extension, which methods and tools included in this guidebook would be most beneficial in helping the team implement the chosen approach) Read the entire page →
From page 23... ... Project Risk Management Planning 25 Table 3.3. How much risk management to apply. Read the entire page →
From page 24... ... 26 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Table 3.4. Typical project risk management roles and responsibilities. Read the entire page →
From page 25... ... Project Risk Management Planning 27 risk identification or analysis) Read the entire page →
From page 26... ... 28 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Table 3.5. Project risk management planning roles and responsibilities. Read the entire page →
From page 27... ... Project Risk Management Planning 29 3.4 Outputs Risk management planning should confirm or establish: • The purpose and objective for performing project risk management, • The risk threshold for the project, • The role and responsibilities of the project team with regard to project risk management activities, • The need for any outside technical assistance, • The timeline for performing risk management activities, • The depth of analysis required (e.g., qualitative versus quantitative risk analysis) , • The approach and tools to be used to assess and manage project risks, and • Risk reporting and documentation requirements. Read the entire page →
From page 28... ... 30 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects understanding of this tolerance or appetite for risk to ensure that the appropriate management strategies are incorporated into the risk management plan to maintain risks at acceptable levels. • Achieve a Balance Between Cost (i.e., Level of Effort) Read the entire page →
From page 29... ... Project Risk Management Planning 31 Exhibit 3.1. A Closer Look: How Organizations Can Scale Project Risk Management To streamline the risk planning step and provide a consistent framework for all project teams to follow, some organizations have chosen to standardize their project risk management practices according to project size, complexity, or some other metric. Read the entire page →
From page 30... ... 32 C H A P T E R 4 What can affect our plans for this project? This question captures the essence of risk identification. Read the entire page →
From page 31... ... Project Risk Identification 33 risks should represent a balance between project needs and the available resources and skills of the project team. 4.1.2 Timing Project risk identification should begin as soon as project management planning has defined a sufficient structure for identifying risks. Read the entire page →
From page 32... ... 34 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects 4.2 Inputs A key to successful risk identification is taking the time and resources to collect realistic and high-quality data about the project and the potential risks it may face. To inform the risk identification process, key inputs regarding project assumptions and constraints could include (to the extent available at the time of the risk identification) Read the entire page →
From page 33... ... Project Risk Identification 35 Technical External Organizational Commercial R isk F ac to rs Scope definition Requirements Design Quality Safety Security Complexity Interfaces Site conditions Customer Political Public relations Market conditions Weather Environmental Property acquisition Permitting Regulatory changes Funds availability Resources Dependencies Financial capacity Revenue impacts Contractual terms and conditions Suppliers and vendors Procurement process Contractors Air service Table 4.2. Potential project risk categories. Read the entire page →
From page 34... ... 36 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Expert Consensus. This method, also known as the Delphi technique, is used to obtain the judgment of a panel of experts on a complex issue or topic such as project risk. Read the entire page →
From page 35... ... Project Risk Identification 37 this problem? " (The "five" in the name comes from the empirical observation that five iterations will generally resolve the problem.) Read the entire page →
From page 36... ... 38 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects constraints driving the project. Knowledge of the project context can help the project team focus on specific or unique sources of risks that may affect the project. Read the entire page →
From page 37... ... Project Risk Identification 39 risks. Likewise, risks should not be excluded from the list on the basis that subsequent field investigations or design efforts will eliminate the potential event. Read the entire page →
From page 38... ... 40 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects session in which project team members and independent subject matter experts are solicited for information and concerns. Table 4.4 suggests how the tools and techniques discussed in this chapter can be tailored based on the perceived risk level of the project. Read the entire page →
From page 39... ... Project Risk Identification 41 Case Study: Taxiway Reconstruction – Project Risk Identification Background of Airport The airport was managing multiple construction projects at the same time using a combination of internal and contract staff. The airport operates two runways and receives funding based on medium-hub status. Read the entire page →
From page 40... ... 42 The goal of the project risk analysis step, as discussed in this chapter, is to characterize and prioritize the previously identified risks by determining: • How likely is the risk or opportunity? • How big is the risk or opportunity (e.g., impact) Read the entire page →
From page 41... ... Project Risk Analysis 43 gaining input from experts, it may make sense to continue beyond the mere identification of risks to the probability of them occurring, their consequences, and, possibly, ways to respond to them. These latter actions are more formally part of the risk analysis and risk response planning steps but often begin during risk identification. Read the entire page →
From page 42... ... 44 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects exclude any built-in conservatism (e.g., cost or schedule contingencies) intended to cover uncertainty. Read the entire page →
From page 43... ... Project Risk Analysis 45 To estimate probabilities and impacts, project teams may find it beneficial to review historical data from past projects. More often than not, availability of historical data is limited. Read the entire page →
From page 44... ... 46 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Although most project teams can quickly reach consensus on one of these choices, finer granularity is often needed to prioritize risk. For this reason, three ranges, as shown in Figure 5.1, or five ranges, as shown in Table 5.3, are more commonly used. Read the entire page →
From page 45... ... Project Risk Analysis 47 • Its impact of occurring, using the impact ranking scale established for the project (which using Figure 5.2, would range from 1 to 5) Read the entire page →
From page 46... ... 48 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Case Study: Office Build-Out The TSA recently mandated a change to the passenger screening process. In order to accommodate this mandate, a small-hub airport needed to perform an internal build-out to reconstruct the physical space where staff are located in order to create the required space. Read the entire page →
From page 47... ... Project Risk Analysis 49 5.3.2 Quantitative Risk Analysis Project teams often have difficulty accurately predicting the ultimate cost and schedule of a project. This is particularly true early in the project development phase, when information on project conditions is limited, yet decision makers are seeking answers to key questions, such as: • Which project alternative is best? Read the entire page →
From page 48... ... 50 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Traditional Risk Based Inputs and outputs are single values. Inputs and outputs are probability distributions. Read the entire page →
From page 49... ... Project Risk Analysis 51 • The project is highly complex or critical, or • Given project conditions and constraints, there is little flexibility or tolerance for cost or schedule overruns. The general steps involved with probabilistic modeling are described in the following to provide an indication of both the power of this technique and the level of effort involved. Read the entire page →
From page 50... ... 52 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Other common tools used to analyze risks include failure mode and effects analysis, risk bow tie, and decision analysis. These tools are described in the following. Read the entire page →
From page 51... ... Project Risk Analysis 53 5.5 Best Practices The risk analysis effort should generally conform to the following principles and best practices: • Collect High-Quality Input Data and Recognize Bias. To ensure useful output is generated from the risk analysis step, it is important to start with accurate and unbiased data. Read the entire page →
From page 52... ... 54 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Table 5.6 discusses how the techniques in this chapter can be tailored based on the perceived level of risk facing the project. See the following excerpt from the case study on taxiway reconstruction for a discussion of project risk analysis. Read the entire page →
From page 53... ... 55 C H A P T E R 6 Once risks are identified and evaluated as described in Chapters 4 and 5, respectively, the following question remains: What is the best approach for managing this risk (or exploiting this opportunity) Read the entire page →
From page 54... ... 56 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects 6.1.2 Timing Risk response planning follows risk analysis, but like the other steps in the risk management process, it is iterative in nature since many of the project characteristics that could affect response strategies (e.g., scope, resources, internal and external environments) change over time. Read the entire page →
From page 55... ... Project Risk Response Planning 57 The primary options available for responding to risks include the following: • Accept. Risk acceptance involves adopting the risk, either without further action or in conjunction with establishing a contingency plan to be implemented if the risk occurs. Read the entire page →
From page 56... ... 58 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects To make the most efficient use of resources, it is important to tailor the risk response strategies to the nature and magnitude of the risks defined in the risk analysis. A simple way for project teams to begin to think about risk response is displayed in the matrix shown in Figure 6.1. Read the entire page →
From page 57... ... Project Risk Response Planning 59 Table 6.2. Possible risk responses for general airport risk categories. Read the entire page →
From page 58... ... 60 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects 6.4 Outputs Once the alternatives have been analyzed, the selected response actions should be documented either by expanding the existing risk register or preparing a stand-alone risk response plan. The following information should be recorded (if not already included in the risk register) Read the entire page →
From page 59... ... Project Risk Response Planning 61 Simple or Small-Scale Projects Large, Critical, or Complex Projects Conduct an informal team meeting to brainstorm possible response strategies Conduct a structured risk management workshop with internal and/or external subject matter experts, as necessary Complete the response plan's appropriate project document, such as the risk register or project plan Perform cost–benefit analysis to determine the optimal response strategies Consider establishing risk-based cost or schedule contingencies Document the response plan in the risk register Table 6.3. Scaling risk response planning. Read the entire page →
From page 60... ... 62 C H A P T E R 7 Project risk monitoring entails those actions needed to respond to these questions: "How are things going? " "Do any of the steps in the project management process need to be revisited? Read the entire page →
From page 61... ... Project Risk Monitoring and Control 63 The responsibility for project monitoring is typically defined in the risk management plan. Control activities include input from the risk owner, project team members, and subject matter experts from design, construction, maintenance, operations, security, the FAA, the TSA, airlines, environmental groups, and other affected functional areas and business partners. Read the entire page →
From page 62... ... 64 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Performance, Variance, and Trend Analysis. This analysis is used to monitor project performance against the schedule, budget, or technical standards defined in the project objectives or risk response plan. Read the entire page →
From page 63... ... Project Risk Monitoring and Control 65 that have already occurred and require resolution. Risk control should include maintenance of risk documentation and capturing the environment and history when risks become issues. Read the entire page →
From page 64... ... 66 Guidebook for Successfully Assessing and Managing Risks for Airport Capital and Maintenance Projects Case Study: Taxiway Reconstruction – Risk Monitoring and Control Returning to the case study first introduced in Chapter 4, the following discussion focuses on how the project team applied the techniques discussed in this chapter to monitor the identified risks. The complete case study is presented in Appendix A Read the entire page →

From page 18...

... Project Risk Management: Step-by-Step Process P A R T 2 Chapter 3. Project Risk Management Planning .........................................................................