Monitoring Risk Response Actions for Effective Project Risk Management
Abstract
Complex projects typically involve high-consequence, project-specific risks that require detailed analysis
and for which risk response actions (RRAs) need to be developed and implemented. The risk picture is
dynamic. The sources and consequences of risks evolve and change over the project lifecycle; thus, it is
necessary to constantly monitor risk. RRAs that do not keep pace with the changing project situation are
a major cause of risk management failures. This paper extends traditional cost risk analysis from a purely
macroscopic perspective by evaluating and tracking project-specific risks and RRAs at the microscopic
level. The key elements of the method are (i) develop risk scenarios, (ii) model them using generalized
decision trees, and (iii) quantify the risks using Monte Carlo simulation. For each risk the probability and
cost values are conditional on the specific RRA and the preceding outcomes. The use of fractional factorial
design provides a subset of all possible RRA combinations for efficiently determining the preferred total
project RRA solution. Risk curves are generated to provide the necessary information to analyze, track,
and manage the performance of the selected RRAs over time. Project managers and team leaders can use
this information to dynamically manage the RRAs to keep pace with the changing project situation, thereby
increasing the probability of project success in a cost-effective manner. The approach is detailed using a
realistic but simplified case of a project examined first with one and then expanded to three technical
risks.
Description
The article of record as published may be found at http://dx.doi.org/10.1002/sys.20154
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.Collections
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