This PMP® Refresher Course is designed to help participants who are intending to appear for PMP® exam soon or who wants to know what they need to learn to be a PMP®. It will help them refresh all their learning in just 1 day. This one day class will focus on 360 degree review of The PMBOK® Guide - 5th Edition and clear any knowledge bottlenecks that could stand in the way of passing the exam.
1. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc.
Edureka is a Global Registered Education Provider (R.E.P ID : 4021) of Project Management Institute (PMI)®.
ID: 4021
PMP Refresher course
2. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 2
Know Your Instructor
Nishant Shukla, PMP, ITIL
23+ Years of industry experience across various industries like IT –
Application Development, Telecommunication, Back Office , BPO/KPO,
Banking (Credit/Debit Card domain)
11+ Years on Project/Program Management positions
7000+ Managers trained across industries
Over 11,000 hrs. of classroom training experience
600+ Management workshops conducted
Training conducted for clients like GMR, ABB, Wipro, Oracle, HP, Mphasis,
SAP, IBM, Cisco Systems, Unisys Global, Cinepolis, Satyam, Accenture, ITC
InfoTech, NIIT Technologies, Honda Motors, Logica to name few from list of
hundreds
3. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 3
Agenda
Introduction - PMI® & PMP®
Myths about PMP®
Introduction to Project and Project Management
Factors influencing Projects
Process and Project Management framework
3600 Overview of The PMBOK® Guide – 5th Edition
Understanding Critical Path
Introduction to Earned Value Management
Risk Management & Qualitative Risk Analysis
Q & A
4. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 4
Project Management Institute (PMI®) is a not-for-profit association
Established in 1969
Global organization Headquartered in Pennsylvania USA
Over 450,000 members worldwide (over 171 countries)
PMI® is actively engaged in advocacy for the profession, setting
professional standards, conducting research and providing access to a
wealth of information and resources
PMI® also promotes career and professional development and offers
certification, networking and community involvement opportunities
About PMI®
5. www.edureka.in/pmpSlide 5
PMI® offers the following credentials for Project Managers:
» Project Management Professional (PMP)®
» Certified Associate in Project Management (CAPM)®
» Program Management Professional (PgMP)®
» Portfolio Management Professional (PfMP)®
» PMI® Agile Certified Practitioner (PMI-ACP)®
» PMI® Scheduling Professional (PMI-SP)®
» PMI® Risk Management Professional (PMI-RMP)®
Eligibility criteria for each of these credentials are different
Certifications/Credentials from PMI®
PMP, CAPM, PgMP, PfMP, ACP, SP, RMP are registered marks of the Project Management Institute, Inc.
6. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 6
Computer based exam conducted in Prometric centers
200 multiple-choice questions – mixed randomly across process
groups to be answered in 4 Hrs.
Out of 200 questions, 175 are for final marking and remaining 25
are “pre-test” questions
There is no negative marking in the exam
The examination is developed by groups of individuals from around
the globe who hold the PMP® credential
After clearing the exam, you will receive the PMP® certificate by
mail within 2 months. Examination scores are confidential
PMP® Examination
Pattern
PMP® Examination Pattern
7. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 7
Myths about PMP® Exam
Aspirants need 35 PDUs to apply for the PMP® exam
» Contact hours are required to apply for the PMP® exam and PDUs are required to maintain the PMP®
credential once you clear the PMP® exam
» The minimum score needed to pass is determined by the overall difficultly of your individual exam
Passing score for PMP® exam is 61%
» There is no documented set marks or percentages to pass the PMP® exam
» From November 2005 onwards, PMI® stopped publishing the passing percentage and adopted psychometric
analysis to calculate the passing score hence this assumption is not valid anymore
You must memorize the Inputs, Tools & Techniques, and Outputs (ITTOs)
» There are more than 500 ITTOs in The PMBOK® Guide and to the key is to fully understand the concepts of
each process not the memorization of the ITTOs
» Most of the questions relate to how or why a specific ITTO is used in a process and memorization will be of
no use to you when answering those types of questions
8. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 8
Submit
Application
Schedule
Exam
Application
Formalities
1-3 Weeks
Attend the
PMP Exam
Prep
Training
Application
Approval
Continue
Study
2-3 Weeks
Continue Study /
Mock Test
2-3 Weeks
T – 1
Day
Relax!!!
Take the
Exam &
Clear it!!Ideal Time Gap
Between
Training and Exam
6 – 8 Weeks
PMP
Certification
Renewal
Renewal
Cycle
Every 3
Years
24 x 7 Assistance from
edureka!
Online
Virtual
Training by
edureka!
Application and audit
assistance from
edureka!
Personalized guidance
by SME from
edureka!
More than 1000 mock
questions by
edureka!
Assistance in
earning PDUs by
edureka!
Ideal Preparation Time
9. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 9
Introduction to Project
and
Project Management
10. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 10
“A project is a temporary endeavor undertaken to create a unique product service or result.”
Temporary Endeavor:
With a beginning and an end
Not an on-going effort
Unique Output
Progressive Elaboration The incremental design and refinement of
the initial concept toward the project plan
Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK ® Guide) - Fifth Edition, Project Management Institute, Inc., 2013, Page 3
Project
11. PMI, PMP and PMBOK are registered marks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 11
Project Management also
needs generic
management skills and
professional ethics
“Project Management is the application of knowledge, skills, tools and techniques to meet
the project requirements.”
Project
requirements
Project Management
12. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 12
Project Manager has to balance the competing factors
(included but not limited to) like Scope Schedule and Cost
along with Quality.
It is the project manager‘s duty to balance and achieve
key-competing factors.
Competing factors
» Scope
» Schedule (Time)
» Budget (Cost)
» Quality
» Resources
» Risk
Project Constraints
Scope
Cost
Quality
Risk
Resource Time
13. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 13
A product life cycle is the parent of projects
Product life cycle may start much before the project
Project vs. Product Life Cycle
Project development
Initiate >> plan >> execute >> close
Monitor and Control
Operations End of life
14. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 14
Project Life Cycle
The Project Life Cycle:
Every project has a life-cycle and a life-cycle is comprised of project phases.
The phases are well defined and the transition from one phase to another typically involves the transfer of some
sort of deliverable
Feasibility
Analysis
Design
Implementation
Project Lifecycle
15. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 15
PMP®– Project Management Context
Project Lifecycle
There are various project lifecycle phase for different kinds of business. For example:
IT Software
Development
Feasibility
Planning and Design
Production
Turnover and Startup
Discovery and
screening
Preclinical
development
Registration Workup
Post submission
activities
Requirements Gathering
Analysis
Design
Development
Testing
Implementation
PharmaceuticalsConstruction
16. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 16
Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK ® Guide) Fifth Edition, Project Management Institute, Inc., 2013, Page 41
There are 3 basic types of phase – to – phase relationships :
Project Phases
phase – to – phase relationships
Sequential relationship:
A phase can only start once the
previous phase is complete.
An Overlapping relationship:
A phase starts prior to completion of
the previous phase (Fast-tracking).
Overlapping phase may increase risk
and can result in rework.
An Iterative relationship:
Only one phase is planned at any
given time and the planning for
the next is carried out as work
progresses on the current phase
and deliverables.
17. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 17
Factors Influencing Projects
18. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 18
Projects are typically part of an organization that is larger than the project.
The maturity of the organization with respect to following elements can influence the project significantly.
Organizations may have a robust project based system that derive revenue primarily from performing projects for
others e.g. engineering firms, consultants and construction contractors.
Work ethics and
work hours
Shared values,
norms, beliefs,
and expectations
Organizational Cultures and Styles
Policies and
procedures
View of authority
relationships
Organizational
Structure
Organizational Systems:
Organizational Influences
19. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 19
Organizational Structure:
» The organizational structure sets the level of authority,
roles and responsibilities and the reporting structure
within the project
» Organizations are structured into one of six models, the
organizational structure of which will affect the project in
some aspect
» Project Manager’s authority varies based on the type of
organization structure
» Apart from five models in the adjacent diagram, sixth one
is Composite Organizational Structure
Organizational Communications:
» Important factor in project success in the face of
globalization
» E-mail, texting, instant messaging, social media, video
and web conference etc.
Organizational structure
Projectized
Strong matrix
Balanced matrix
Weak matrix
Functional
ProjectManager
FunctionalManager
Authority
Authority
Organizational Influences (Contd.)
20. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 20
Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK ® Guide) Fifth Edition, Project Management Institute, Inc.,
2013, Page 22
Organization
Structure
Project
Characteristic
Functional Matrix Projectized
Weak Matrix Balanced
Matrix
Strong Matrix
Project Manager’s
Authority
Little or None Limited Low to
Moderate
Moderate to
High
High to
Almost Total
Resource Availability Little or None Limited Low to
Moderate
Moderate to
High
High to
Almost Total
Who controls the project
budget
Functional
Manager
Functional
Manager
Mixed Project
Manager
Project
Manager
Project Manager’s Role Part – time Part – time Full – time Full – time Full – time
Project Management
Administrative Staff
Part – time Part – time Part– time Full– time Full– time
Organizational Influences (Contd.)
21. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 21
Organizational Process Assets are all the organization specific to and used by the performing organization such as
formal or informal plans, processes, policies, procedures, and knowledge bases
They may also include artifacts, practices, or knowledge from any or all of the organizations involved in the
project, which can be used to influence the success of the project
The organization process assets may be knowledge bases such as lessons learned and historical information, or it
may include completed schedules, risk data or Earned Value data
Organizational process assets (OPA) are input to most planning processes
OPA Categories
» Processes and Procedures
» Corporate Knowledge Base
Organizational Process Assets (OPA)
22. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 22
OPA Corporate
Knowledge
Base
Project files from
previous projects
Configuration
management
knowledge bases
Financial
databases
Historical information
and lessons learned
knowledge bases
Issues and defect
management
databases
Process
measurement
databases
OPA Corporate Knowledge Base
23. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 23
Enterprise Environment Factors (EEF)
These are conditions, not under the control of the project team that influence, constrain, or direct the project.
They are inputs to most planning processes and may have positive or negative influence on the project outcome.
They may include:
» Organization culture, structure, and governance;
» Geographic distribution of facilities and resources;
» Government or industry standards;
» Infrastructure;
» Existing human resources & personnel administration;
» Company work authorization;
» Market conditions;
» Stakeholder risk tolerance;
Political climate;
Organization’s established communications channels;
Commercial databases; and
Project management information systems.
24. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 24
Project Stakeholders
Project Stakeholders
Project Stakeholders are individuals and organizations
who are actively involved in the project, or whose
interests may be positively or negatively affected as a
result of project execution or successful project
completion.
25. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 25
Project Stakeholders
Key stakeholders in every project include:
PMO
Customer / User
Rotate Log Files
Program Managers
Sellers and business partners
Performing Organization / Project Team
Operations Management
Functional Management
Portfolio Managers
Project Manager
Sponsor
26. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 26
Processes
and
Project Management
Framework
27. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 27
PMBOK® Guide is a “distilled version” of Project Management Body of knowledge and it coexists with the
corresponding application area knowledge ,general management skills and interpersonal skills.
PMBOK ® Guide is published by PMI and inputs from practitioners and academics have been included
The Project Management
Framework
Introduction
Organizational Influence
and Project Life Cycle
The Project Management
Knowledge Areas
10 Distinctive Knowledge
Area
The standard for Project
Management of a Project
PM Process Groups
(5 process Groups)
Project Management
processes for a project
(47 processes)
The PMBOK® Guide – 5th Edition
PMBOK ® Guide is organized into 3 sections:
28. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 28
PMI® PMP – Project Management Processes
Process – It is a set of actions and activities to achieve a product, result or service.
Project Management is an interactive endeavor – an action or failure to take action, in one area will usually
affect other areas
Project Management Processes are
concerned with describing and
organizing the work of the project
Product oriented Processes are
concerned with specifying and
creating the project product.
Both processes overlap and interact throughout the project.
Project Management process generally
falls under 2 groups
29. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 29
There are 47 project management processes in the PMBOK® Guide 5th edition
These 47 processes are grouped under 5 processes groups i.e., Initiating, Planning, Executing, Monitoring,
Controlling and Closing
Each process receives Inputs and generates Outputs
INPUTS
Tools and Techniques
OUTPUTS
Process
Introduction – Process
30. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 30
Process Group Interaction
Enter Phase /
Start Project
Exit Phase /
End Project
Initiating
Processes
Closing
Processes
Planning
Processes
Executive
Processes
Monitoring and Controlling
Processes
31. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 31
Domain Current Distribution of
Questions
Revised Distribution of
Questions
Initiation 13% 13%
Planning 24% 24%
Execution 30% 31%
Monitoring & Controlling 25% 25%
Closing 8% 7%
PMP® Examination Blueprint
32. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 32
The project manager and project team can modify the processes to suit the specific project needs.
For example:
» Validate Scope and Quality Control can be merged
» Create WBS and Define Activities can be merged
» Qualitative and Quantitative Risk Analysis can be merged
Process Tailoring
33. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 33
There are 10 Knowledge Areas covered in PMBOK® Guide 5th edition. These 10 Knowledge Areas are:
1. Integration project management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
10. Project Stakeholders Management
Project Management Knowledge Areas
34. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 34
Overview of The PMBOK® Guide – 5th
Edition
35. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 35
Plan Do Check
ActChange
Close
Deming Cycle and PM Processes
36. Slide 36
http://www.edureka.co/pmp
Direct &
Manage
Project Work
Control Scope
Control Schedule
Control Cost
Control Quality
Control
Communications
Control Risk
Control
Procurements
Control
Stakeholders
Deliverable
Monitor &
Control Project
Work
WPI
(Work
Performance
Information)
WP
Reports/
Project
Dashboards
The Logical Sequence: High level
Develop
Project Charter
Develop PM
Plan
Project
Charter
Project
Plan
WPD
(Work
Performance
Data)
Close Project
7 Days
200$
- 2 Days
- 25$
Develop Subsidiary Project
Management Plans
Change
Management Plan
Requirement
Management Plan
Configuration
Management Plan
Scope
Management Plan
Cost
Management Plan
Human Resource
Plan
Communication
Management Plan
Risk Management
Plan
Procurement
Management Plan
Process
Improvement
Plan
Quality
Management Plan
Scope Baseline
Schedule
Baseline
Cost Baseline
Integrated
Change Control
Process
Change
Request
Approved
Change Request
Project
Progress
Update
37. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 37
Direct &
Manage project
Work
WPD
Deliverable
Control Quality
Control Scope
Validate Scope Close Project
Monitor &Control
P W
Verified
or
Validated
Deliverable
Accepted
Deliverable
WPI
Control Processes – Scope & Quality
Integrated
Change Control
Updates to PM
Plan
38. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 38
Understanding Critical Path
39. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 39
Critical Path Method
Defines sequence of activities that represents the longest path through a project, which determines the
shortest possible project duration.
Provides amount of scheduling flexibility on the logical network paths within the schedule model.
A project can have more than one Critical Path but they will have the same duration.
The critical path method consists of three distinct operations:
» Calculate Forward pass (ES, EF)
» Calculate Backward pass (LF, LS)
» Calculate Float
40. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 40
Calculating Critical Path – Forward & Backward Pass
Start Finish
Task A
6 Days
ES EF
LS LF
Task D
7 days
ES EF
LS LF
Task B
5 Days
ES EF
LS
LF
Task C
8 Days
ES EF
LS LF
Task E
9 Days
ES EF
LS LF
Task F
5 Days
ES EF
LS LF
61
72
2013
2114
2622
2622
128
128
71
71
2113
2113
1 1
0
0
0
0
Forward Pass
Backward Pass
EF = ES + Duration - 1
LS = LF - Duration + 1
41. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 41
Calculating Critical Path - Float
Float: Amount of time by which an activity can be delayed
Types of Float
» Total Float:
Amount of time by which an activity can be delayed without affecting total project duration or project finish date.
How to Calculate: LS – ES or LF - EF
» Free Float:
Amount of time by which an activity can be delayed without affecting the successor activity.
How to Calculate: ES Successor – EF Predecessor - 1
42. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 42
Introduction to Earned Value
Management
43. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 43
Earned Value Management (EVM)
EVM is the process measuring the performance of project work against what was planned to identify variances,
opportunities to improve the project or just check the project’s health.
It is a system of mathematical formulas that compares work performed against work planned, and measures the
actual cost of the work the project has performed.
EVM is an important part of cost control, since it allows a project manager to predict future variances from the
expenses to date within the project
Project’s health Mathematical
formulas
Predict future
variances
Expenses
Earned Value Management (EVM)
44. www.edureka.in/pmpSlide 44
Earned Value Management
Acronym Term Definition
PV Planned Value The approved Cost Baseline for the work package
EV Earned Value The budgeted value of the completed work packages at the specified
point.
AC Actual Cost The actual cost incurred during the execution of work packages upto a
specified point in time.
Acronym Term Definition
Budgeted Cost of Work Scheduled BCWS PV
Budgeted Cost of Work Performed BCWP EV
Actual Cost of Work Performed ACWP AC
Measuring Earned Value Management involves measuring –primary measures
45. www.edureka.in/pmpSlide 45
Earned Value Management
Name Formula Interpretation
Cost Variance (CV) EV – AC - is over budget and + is under budget
Schedule Variance (SV) EV – PV - is behind schedule and + is ahead of schedule
Cost Performance Index
(CPI) EV / AC
Indicates the efficiency of the project in utilizing the cost budget.
If CPI > 1, productivity is higher than expected, favorable performance.
If CPI < 1, productivity is less than expected, poor performance.
Schedule Performance
Index (SPI) EV / PV
Indicates the efficiency of the project in using the scheduled resources.
If SPI > 1, project is ahead of schedule, good performance.
If SPI < 1, project is behind schedule, poor performance.
Earned Value Management involves measuring the following derived measures
46. www.edureka.in/pmpSlide 46
Earned Value Analysis
Name Formula Interpretation
Estimate To Complete
(ETC) based on atypical
variances
BAC – EV Represents the cost of work required to complete remaining project
tasks when the current variances are not expected to continue.
Estimate To Complete
(ETC)
ETC = (BAC –
EV) / CPI
Represents the cost of work required to complete remaining project
tasks when the current variances are expected to continue.
Estimate at Completion
(EAC) –Flawed
AC + ETC Used when original estimates has been fundamentally flawed
Estimate at Completion
(EAC) – using remaining
budget. Atypical
AC + BAC - EV Represents the projected total final cost of work when completed -
when the initial assumptions are no longer valid due to changed
circumstances.
Estimate at Completion
(EAC) – using CPI -
Typical
BAC/CPI Represents the projected total final cost of work when completed
when the current variances are considered typical variances.
Estimate at Completion
(EAC) –
(Need to hit a firm
completion date)
AC+((BAC-
EV)/(cumulativ
e CPI *
cumulative
SPI))
When current variance are thought typical of the future, it assumes
poor cost performance and a need to hit a firm completion date
Variance At Completion
(VAC)
BAC - EAC Shows the positive or negative variance at the end of the project.
47. www.edureka.in/pmpSlide 47
To Complete Performance Index
TCPI is the CPI that needs to be achieved for the rest of the project value to be EARNED(Work Remaining) / Funds
remaining:
TCPI based on BAC
BAC – EV / (BAC – AC)
TCPI based on new EAC
BAC– EV/ (EAC – AC)
http://pmstudycircle.com/2012/05/schedule-performance-index-spi-and-cost-performance-index-cpi/
48. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 48
Overview of
Project Risk Management
49. www.edureka.in/pmpSlide 49
What is Risk?
Project Management Institute, A Guide to the Project Management Body of Knowledge
(PMBOK ® Guide) - Fifth Edition, Project Management Institute, Inc., 2013, Page 309
“Project Risk Management includes the processes of conducting risk management planning,
identification, analysis, response planning, and controlling risk on a project. The objectives of project
risk management are to increase the likelihood and impact of positive events, and decrease the
likelihood and impact of negative events in the project.”
www.edureka.in/pmpSlide 6
http://blog.clearrisk.com/category/best-of-risk-management-twitter-feed/
50. www.edureka.in/pmpSlide 50
Risk vs. Issue
Risk Issue
Risk is an uncertain event or event that might happen
in future Issue is an event that has already occurred
Once risk is identified, its impact should be analyzed
and the response plan should be prepared
Once the impact of Issue is analyzed, the same should
be resolved or escalated
www.edureka.in/pmpSlide 7
51. www.edureka.in/pmpSlide 51
Qualitative Risk Analysis - Probability
Qualitative risk analysis — Probability and impact matrix
Probability
1-Low 2-Low/Medium 3-Medium 4-Medium/High 5-High
Impact
5-High Low (5) Medium (10) High (15) High (20) High (25)
4-Medium/High Low (4) Medium (8) Medium (12) High (16) High (20)
3-Medium Low (3) Medium (6) Medium (9) Medium (12) High (15)
2-Low/Medium Low (2) Low (4) Medium (6) Medium (8) Medium (10)
1-Low Low (1) Low (2) Low (3) Low (4) Low (5)
Score Severity
1-5 Low
6-12 Medium
13-25 High
Organization determines which combinations are ‘Low’, ‘Moderate’ and ‘High’, defining
them in the Risk Management Plan
One overall severity rating for each risk:
Risk score = Risk Probability x Risk Impact
There are two main dimensions to risks:
Probability — How likely they are to occur
Impact — Their impact if realized
52. www.edureka.in/pmpSlide 52
Qualitative Risk Analysis - Impact
Defined Conditions for Impact Scales of Risk on Major Project Objectives
(Examples are shown for negative impacts only)
Project
objective
Very low/0.05 Low/0.10 Moderate/0.20 High/0.40 Very High/0.80
Cost Insignificant cost
increase
<10% cost increase 10-20% cost
increase
20-40% cost
increase
>40% cost
increase
Time Insignificant time
increase
<5% time increase 5-10% time
increase
10-20% time
increase
>20% time
increase
Scope Scope decrease barely
noticeable
Minor areas of
scope affected
Major areas of
scope affected
Scope reduction
unacceptable to
sponsor
Project end item is
effectively useless
Quality Quality degradation
barely noticeable
Only very
demanding
applications are
affected
Quality reduction
requires sponsor
approval
Quality reduction
unacceptable to
sponsor
Project end item is
effectively useless
This table presents examples of risk impact definations for four different project objectives. They should be tailored in the Risk
Management Planning Process to the individual project and to the organizational’s risk thresholds. Impact definitions can be
developed for opportunities in a similar way.
53. PMI, PMP and PMBOK are registered trademarks of the Project Management Institute, Inc. www.edureka.in/pmpSlide 53
And That’s All
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