KKCS emphasizes proactive planning by identifying potential risks to a project and developing response actions. The development of a risks register is performed in various ways, including qualitative ranking and quantitative simulation methods. Risk identification involves determining which risks might affect the project and documenting their characteristics. Risk identification is an ongoing process and should be performed throughout the project. Early and continual identification of risks and mitigation strategies are critical to the success of the risk management processes. Risk response strategies are identified for the risks that have been found in the risk assessment to have the most significant impacts on the project. Monitoring and control activities are conducted to increase the probability of successfully implementing the identified risk response strategies.
The cost risk analysis links the project risks identified in the Risk Register to the cost risks in the cost risk model. The results from the cost risk analysis are then used to form the project contingency management plan to proactively manage the project with these potential risks in mind. This type of cost risk analysis focuses on the identification and simulation of detailed, elemental events. It focuses the resulting project variance around those details. This approach to the cost risk analysis method is called a “top-down” analysis methodology. The FTA developed this methodology, which combines the estimated cost impact of substantial risks, as reflected in the Risk Register, with the actual cost increase experience of comparable projects nationwide. The schedule risk modeling is performed using the Risk Register to enter potential risk events and estimates of the probability activity duration impact into the project schedule. Once uncertainty and risk event impact estimates have been entered for all tasks within a project, the risk modeling software performs a high number of project simulations using “Monte Carlo” sampling of the estimates to select random task duration for every run-through of the simulation. These simulations generate a range of outcomes that can be used to predict project duration with statistical confidence. Schedule risk analysis uses risk inputs to determine a range of project finish dates with more confidence and reliability.
Responding to Risks
Risk Response is the process of developing strategic options and actions to enhance opportunities and reduce threats to the project’s objectives. The KKCS risk team facilitates the workshop, reviews the results from the baseline risk assessment, and identifies the appropriate response strategies to address the critical risk factors. Developing these strategies requires coordination between the risk team and the functional specialists on the project team to clearly define the options considered. The risk team should identify a risk response strategy that includes the costs and impacts for each identified risk. The goal of the risk response is to reduce the overall impacts of the risk on the project objectives.
Risk management includes the processes concerned with conducting risk management planning, identification, analysis, responses, and monitoring and control on a project. Project risk management aims to increase the probability and impact of positive events and decrease the likelihood and impact of adverse events on the project.
Feedback from this step may be entered into the risk analysis model to update the estimated range of project cost and schedule outcomes. Updates to the risk analysis model also serve to track the effectiveness of risk management efforts. The outcomes from the risk management process can be used for additional project decision support, such as financial planning or risk allocation.