PMI RMP – TOOLS AND TECHNIQUES –ADVANCED part 4
- PROBABILITY AND IMPACT MATRIX
Hi and welcome to a new tool and technique the Pi matrix or the probability and impact matrix. As it is a matrix it can be a visual representation of data. So it’s considered as a data representation technique. It’s used only in one process during the planning process group and the risk management knowledge area perform qualitative risk analysis process it’s also called the subjective risk analysis process. Now what’s the general definition of the probability and impact matrix? It’s a grid that maps the likelihood of an event occurring and if it does occur, its impact on project objectives. So this grid will link will map between the likelihood of an event which is the probability and if it does occur it’s impact on the project objectives.
It must have an impact on at least one of the project objectives which is the impact. So this grid will map between the probability and the impact of any identified risk. It is used during the performed qualitative risk analysis or the subjective risk analysis to help prioritize project risks based on the combination of the probability and impact. This is the purpose of having the probability and impact matrix technique. We will prioritize the project risk if you refer back to the performing qualitative risk analysis process. One of the risk register updates as an output of this process will be a list of prioritized risk. So how we are going to receive such a list? From performing the probability and impact matrix.
When assessing probability you are assessing the likelihood of an event occurring. You are not assessing the likelihood of the event causing an impact, only the likelihood of it occurring. When you assess impact you are assuming the event will occur and if it does, looking at the impact on one or more objectives the paragraph is very clear. We need to assess the likelihood or the probability of this risk occurring. In case it does occur, what will be the impact on the project cost, on the project quality, on the project schedule and so on. If it is an identified risk it shall have an impact to at least one of the project objectives.
Now for smaller or less critical projects or less complex projects, a probability and impact matrix can assess an impact on any objective. For example it can assess an impact to the quality, cost, schedule or stakeholder satisfaction. While for a complex or large or critical project you may want to have a separate probability and impact matrix for each objective you will have the Pi matrix for the schedule, the Pi matrix for the scope, the Pi matrix for the quality, the Pi matrix for the cost and so on. Now the probability and the impact matrix show in front of you. Now for example for the probabilities we will have ray unlikely, moderate likely, very likely and for the impact almost the same.
So all risks that fall in the red zone will be the highest priority risks rest that falls into the orange color zone will be medium rest and the ones in the green will be the low priority rests that are usually recorded in the watch list for further monitoring during the monitor risks process. So here is an example of the Pi matrix. Now, what are the steps you need to follow in order to perform the probability and impact matrix? First of all, you will have that risk register, the risk register which was an output of the identified risk process and it’s also the primary input to the qualitative risk analysis process. So you need to begin with the risk register. As the risk register contains all the identified risk events associated with the project, then you need to perform some important meetings.
You need to meet with the project team members, subject matter experts or others with an understanding of the risk events. You might also consider any historical data from similar projects and the associated risk documentation. So from where we are going to assess the identified risks from meeting the subject matter experts, the project team members, or from getting historical data within the organization from similar projects during these meetings. You need to use the expertise of those present within the meetings along with the data you got from previous similar projects to determine the likelihood of each event occurring. So by performing this step you will have the percentage, the probability, the likelihood of each event occurring.
Use the expertise of those present along with data from previous projects to determine the impact on any project objective if the event does occur. As I mentioned earlier, this project objective might be the schedule, the cost, the scope. But if you are managing a large complex project or a critical project for your organization, you need to perform the Pi matrix for each objective. The third step will be the Risk Management plan has established definitions of probability and impact. You need to use the information in the risk Management plan to rate the risk according to definitions in the risk management plan, if you refer back to the plan risk management process as a part of the risk management knowledge area.
When I explained the components of the risk Management Plan, there was one section about the probability and impact definition. It’s a part of the risk Management plan, for example, how you are going to use these definitions if a risk is considered 40% likely to occur. So the probability of this risk is 40%. And the risk Management plan shows a definition of medium probability. It’s between 40 and 60%. You would indicate that the risk has a medium probability. This is what’s mentioned in the probability definitions within the risk Management plan. An error with a probability that falls in between the 40 and 60 person will have a medium probability it’s the impact to the schedule would be a nine day slip on the critical path.
And the risk management plan indicates that a slip between one and two weeks, between seven and 14 days on the critical path is a high impact, then you would rate the impact as high. This is how you are going to make use of the probability and impact definitions which are part of the risk management plan. If the risk management plan does not already have a grid in place, it means the probability and impact definitions that reflects the probability and impact outcomes you need to create one. But as per the PmP exam, this probability and impact definitions should be created within the plan risk management process as a part of the planning process group and the risk management knowledge area.
After that, you are going to map the individual risks into the probability and the impact matrix. You need to place each risk into the Pi matrix based on the combination of this risk between the probability definition and the impact definition. Now, once your Pi matrix is completed, it’s very simple for you to prioritize the risks based on the color zone. The low priority risks will be recorded in the watch list for further monitoring. While high priority risks may require an immediate response plan, this is all for the Pi matrix tool and technique. Thank you so much. We’ll see you in the next lecture.
- PROMPT LISTS
Hi and welcome to a new tool and technique the prompt lists. It’s not a data analysis technique or a data gathering or a data representation. It’s even not an estimation technique. It falls into the other techniques category. It’s also used in one project management process out with the 49 processes it’s used on only in the identify risks process as a part of the risk management knowledge area and the planning process group. What’s the general definition of the prompt list? A prompt list is a predetermined list of risk categories that might give rise to individual project risks and that could also act as sources of overall product risk.
So the prompt list it’s a predetermined list either in your company’s organizational process asset in the market doing some simple research on the internet, you can find some famous prompt lists. It’s a predetermined list showing high levels categories. Once using these lists, you can find a new individual project risk for your project, or you can find a source of overall project risk that you did not thought about earlier. The prompt list can be used as a framework to aid the project team an idea generation when using risk identification techniques, it’s very useful in idea generation, but I recommend to use the prompt list at the end of your efforts in the risk identification, you might forget few important risk categories.
The prompt list usage will give you a rise to these individual project risks. A prompt list identify high level categories of risks. They are used to help ensure that all areas are considered when identifying project event risks and overall project risks. So the purpose of using the prompt list to make sure that all areas of Fresk categories were considered a prompt list is not exhausted. Rather, it’s used to help focus attention on different categories of risk so that the risk identification is robust and thorough. Different industries and proficient should have different prompt lists make sense? For example, an aerospace firm would not have the same types of risks as an environmental cleanup organization.
The following generic list can be further decomposed into subcategories that are appropriate for your project to make it more rough. It does not make sense for the aerospace industry and the environmental cleanup industry to both use the same prompts and risk identification. Some of these categories are more applicable to the overall project risks such as volatility, ambiguity and uncertainty. Other categories are more applicable to event risks such as team resources, stakeholders, schedule, and budget. Some common strategic frameworks are more suitable for identifying sources of overall project trust. The most commonly used prompt list is the pistol.
P stands for political, E for economics Is for social, T for technological, L for legal, and E for environmental, TCOP t for technical, E for environmental, C for commercial, E for operational, and P for political. And we have the spectrum s for social, P for political, E for economic, C for competitive, T for technology, R for regulatory, U for uncertainty, and M for the market. Here is an example of the pistol prompt list which can be used in the risk identification efforts lists. Take a look on the P, for example, that stands for the political. We have the government policy, we have the political stability, the corruption, the tax policy, the labor law and the trade restriction.
We have, for example, the social like, the population growth rate, the age distribution in the market, career attitudes, safety emphasis, cultural barriers and so on. For the year. We have the weather, the environmental, the climate, the environmental policies, climate change pressures from the NGOs and so on. Here is one of the most commonly used prompt lists. Now, what are the steps you need to follow while using the prompt list and risk identification? If your organization has its own prompt list, start with it. If not, you can use the list above and tailor it to the needs of your project and organization.
Ask meeting attendees to review the risk prior to the meeting so they are familiar with the risk categories mentioned in the prompt list. Ask attendees if there are any additional categories they think should be added to the list is then the categories shown in the prompt list. Review each item on the prompt list and ask what are the risk events or conditions that could occur in the area of, for example, political or environmental. At the end of the meeting, update the prompt list with any revisions that have occurred as a result of this meeting and return this prompt list in the organizational process. Assets for future projects used. This is all for the prompt list. Thanks so much, I’ll see you at the next lecture.