Book Excerpt from "I Want To Be A RMP" - Understanding Qualitative Risk Analysis

This article is an excerpt from the Book - I Want To Be A RMP. 
It is from Chapter – 7: Qualitative Risk Analysis. 

For the partial index of the book, refer: Book Index - I Want To Be A RMP.

********* 

Understanding Qualitative Risk Analysis

We have now the list of risks in a register. May be hundreds of them. Can you manage so many risks in a day or a few days? How about a week? It will be difficult to do so. Hence, we have to prioritize them. 

As I say, aspects of project management mimics real life. For example, I am writing now this book on my laptop. Let us see what can be the possible risks. The laptop may crash. The word crunching software may get corrupted. The roof over my head may even collapse. Or even I may have a heart-attack while writing. Well, now you may be laughing! But, are these not risks, too? But why don’t we consider these risks? Because they have low chances (or low probability) of occurring. However, if it occurs, then it will have a big consequence (or high impact). 

Let me look at another aspect – risks can have high chance of occurring, but can have a low impact. Say, there is a power cut in my locality – which happens during heavy raining. If that happens, which looks likely (as it is raining heavily at the time of writing), then I won’t be able to complete this chapter on risk management. But, I can start writing later in the day and complete by end of tonight. So, here the likelihood is high (or high probability), but if it happens, then the impact is low. And, hence I need not act on it. 

Where are we going with all of these? I am looking at the “probability” (or “P” value of the risk”) and “impact” (or “I” value of the risk) when prioritizing on the risks. Do note that “P” value and “I” value are the terms used by me for easier understanding. 

We already know this:
Risk Score = Probability * Impact (OR)
                      = “P” value * “I” value

Obviously, higher the score (with high probability and high impact), higher will be the priority of the risks. 

The probability scale can be numeric (1, 2, 5 etc.) or textual (high, low, medium) or color coded (red, amber, green) or a combination of them. Similarly, the impact scale. And finally, when the Risk Score is calculated, it can also be numeric or textual or color coded or a combination of them. 

So, are we going to act on all the risks with high scores? No. We will act on the risks if it crosses the “Risk Threshold” (or Risk Appetite level). Below the risk threshold or within our tolerance range, we won’t act on the risks. However, if the score crosses the threshold, we have to analyze them qualitatively. 

This is what precisely happens in “Perform Qualitative Risk Analysis” (or simply “Perform QLRA”, as I put it). In this chapter, we will discuss on it in-depth.  

7.1. ‘Perform Qualitative Risk Analysis’ Process – What Happens?

As per PMBOK Guide 5th Edition, “Perform Qualitative Risk Analysis is the process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.”

So, we prioritize primarily on probability and impact values. There are other factors as well on prioritization such as Risk Urgency (or Proximity), Risk Manageability, which are discussed in this chapter. 

Obviously, we will be needing the “Risk Management Plan” (RMP), which will tell us about the “P” scale and “I” scale, the PI matrix (to determine the risk score) etc. Hence, the RMP acts as input to “Perform QLRA” process. And the updated risk register is the output of this process. But PMBOK Guide mentions it as “Project Document Updates”.

The overall flow diagram for this process – “Perform QLRA” - is shown below. 

After the Risk Register is created, it acts as input to all subsequent processes in risk management – Perform QLRA, Perform QTRA, Plan Risk Responses and Control Risks. Also, the Risk Register gets updated in all of these subsequent processes. 

Post qualitative risk analysis, we may go for the second analysis in the subsequent process, where next prioritization happens based on quantitative values. The process is “Perform Quantitative Risk Analysis” (or “Perform QTRA” for short). But moving to this process, i.e., to QTRA – is optional. Why? Because it is time consuming as it involves a lot of modelling, simulation, mathematical calculation and also expensive because we may have to take the help of specialized software. 

For small projects, QLRA may be sufficient, but for large, complex projects, QTRA may be needed. That decision will be taken from the beginning – in “Plan Risk Management” process and document in “Methodology” section of “Risk Management Plan”. 

Either way, i.e., whether you choose to go to QTRA from QLRA or not, we have to plan for risk responses. For all the prioritized risks, response has to be there. That as we know happens in “Plan Risk Responses” process. This is outlined in the below diagram. The dotted line is for optionality of moving into “Perform QTRA”. 

*********

This section on Qualitative Risk Analysis is further explained in the book with: 

• ‘Perform Qualitative Risk Analysis’ Process - Why do it?
• Critical Success Factors for “Perform QLRA” Process   

It is further followed by detailed explanation on various aspects of Qualitative Risk Analysis as outlined in the Book Index.

Other Excerpts from Book:

• Book Excerpt Book Excerpt from "I Want To Be A RMP" - Probability Distribution in Risk Management

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PMP Protein: Types of Organizational Structures

By Sathish Babu, PMP

The execution of a project is about team work, coordination and collaboration among resources. But the availability of resources, the control of project budget or how your team works, depends on the type of organization you are in. As a Project Manager, it is very important that you understand how your organization is structured because it will impact your project’s execution.  It also helps when you look for a new role in your organization or the next time you need a new job. How does it help? Let’s take the following scenario to understand it, 

Scenario: You have offers from two organizations. Your role in one of the organization is that of a project coordinator while in the other organization your role is that of a project expediter. However, there are distinctions between these two roles. Which of the following statement is true?
A. There is really no difference between the two.
B. Project Expediter has no authority and cannot take decisions. Project co-ordinator has some authority and decision making authority.
C. Project co-ordinator has no authority and cannot take decisions. Project Expediter has some authority and decision making authority.
D. Project expediters are found in projectized organizations and Project co-ordinators are found in Functional organizations.
Answer: B
Reason: A project expediter has no authority or decision making ability. A project co-ordinator has some amount of authority and some amount of decision making ability. So, the correct answer is Option B.

Types of Organizational Structures
The PMBOK® Guide 5th edition sorts organization structure into the following four categories:
1. Functional Organization
2. Matrix Organization: – This can be further classified into: 
    1. Weak Matrix
    2. Balanced matrix
    3. Strong Matrix
3. Projectized Organization
4. Composite Organization

Below shows a simple diagram to remember the organizational structures.

Now that we know how organizational structures are categorized, let’s take a closer look at each one of them to see what makes them unique.

1. Functional Organization
Below are the key points.

• In this type of organization, Functional Manager has full power and authority level. 
• Project related decisions need to be clarified and cleared with functional managers.
• Project budget, schedules and resource allocation are managed by functional managers.
• PM role does not exist or part time (possibly act as a Project Expediter).
• The coordination for projects is done among the functional managers.
• The teams are in departments and directly report to functional or department managers.
• Each department in a functional organization will do its project work independently of other departments. If any information is needed from another department, request is sent by the head of the department which is implementing the project to the head of the department from whom the information is needed.

Below shows a simple diagram to remember the functional organization. The co-ordination for project work is highlighted with dotted blue lines. 

2. Matrix Organization

This type of organization lying somewhere between the functional organizational structure and the projectized organizational structure depending on what type of matrix structure is being run. They can be classified as follows.

2.1 Weak Matrix

Below are the key points. 

• In this type of organization, functional manager still has full power and authority level.
• Project budget, schedules and resource allocation are managed by functional managers.
• Project Manager has some authority level and they act as a Project Expeditor or Project Coordinator.
• The coordination for projects is done among team members from each department.

Below shows a simple diagram to remember the Weak Matrix organization.

Project Expeditor has no power and they act primarily as a staff assistant and communications coordinator. They are not responsible for the success or failure of the project and they just keep everybody informed of its progress.

Project Coordinator has some authority, some power to make decisions and reports to a higher-level manager.

2.2 Balanced Matrix

Below are the key points for this type of organization. 

• In this type of organization, project manager shared authority with functional managers.
• Teams will report to a project manager and a functional manager equally.
• The coordination for projects is done by project manager and reports to the functional manager.
• The project budget and schedules are managed by project manager and resources are still managed by functional manager.

Below shows a simple diagram to remember the Balanced Matrix organization.

2.3 Strong Matrix

Below are the key points.

• In this type of organization, project manager has more authority than functional manager. But the team still reports to both managers.
• PM role is full time and FM role is part time and only specific to functional work.
• Project budget, schedules and resources are managed by project manager.
• Project managers are in a department named PMO (Project Management Office) which can be managed by a highly experienced and senior project manager.
• The project coordination is done by project managers from PMO department.

Below shows a simple diagram to remember the Strong Matrix organization,

2.4 Projectized Organization

Below are the key points,

• In this type of organization, the entire company is organized by projects and project manager has control of the project.
• Project constraints and resources are managed by project manager.
• The project coordination is done by project manager.
• Teams are organized by projects. When a project is over, the team is released and move on to another project.
• The project manager is responsible for the success or failure of the project.

Below shows a simple diagram to remember the Projectized organization.

Exercises 

Test yourself! The questions in the PMP® exam are mostly situational, many are ambiguous and very wordy, and some even seem like they have two or more right answers. Be prepared for the following types of questions so you will not waste time or be caught off guard when you are taking the exam.

Scenario 1:

You head the engineering department in your company. Lately you have observed that certain deliveries are missing the schedule. On closer scrutiny, you observe this to be occurring with a specific team member. You decide to discuss it out with the team member. Initially the team member is reluctant to discuss but finally opens and indicates that the cause of the delays is often different instructions coming in from you as well as the project manager. She indicates that at such times she is confused related to whose instructions to follow - thereby causing delays. 

Question: What kind of an Organizational structure is this most likely to be?

A.    Functional

B.    Projectized

C.    Weak Matrix

D.    Balanced Matrix

Answer: D

Reason: Here the team member is being expected to follow instructions from both the Project Manager and the Functional Manager. This is never the case in a Functional or Projectized organization where the lines of authority are clearly defined. A weak matrix organization is more like a Functional Organization where the project manager has almost no authority. The scenario explained above is typical of a balanced matrix organization where power resides equally distributed between the functional and project manager. Here the correct answer is Option D - Balanced Matrix.

Scenario 2: 

Your friend who works as a project manager in a pharmaceutical company meets you over dinner. You see a drastic change in his temperament as compared to when you last met him. He seems dejected and complains that in his present organization - as a project manager - he has almost no authority and hardly any decision-making ability.

Question: What kind of an organizational structure does your friend work in?

A.    Product organization

B.    Functional Organizational Structure

C.    Strong Matrix Organizational Structure

D.    Projectized Organizational Structure

Answer: B

Reason: Your friend works in a Functional Organizational Structure. In such an organizational structure, all the power and authority resides with the Functional Manager. Such organizations are hierarchical in nature - where each employee has one clear superior. People are grouped by specialties (Functional) - Example - Mechanical, Accounts, Marketing etc. These departments work independently of each other. So, the correct answer is option B - Functional Organization.

Scenario 3:

You and your team have worked hard and are about to successfully deliver the project. The customer is also happy with the deliverables and overall everyone is happy with how the project was delivered. You have written up the performance reviews of everyone in the project team. As a Project Manager in your current organization you know that the team will get disbanded and in the next project you may not get the same team members who so successfully delivered the current project.

Question: What kind of Organization Structure does this represent?

A.    Weak Matrix

B.    Balanced Matrix

C.    Projectized

D.    Functional

Answer: C

Reason: This represents a Projectized Organization structure. In a Projectized organization, teams are disbanded at the end of the project. In a Functional organization teams report to the Functional manager and are never disbanded. They continue in their own departments and continue to report to the Functional Manager. A weak matrix organization is very similar to a Functional Organization and role of Project Manager is limited. In a balanced matrix organization, the staff reports to a Project manager and a Functional Manager - in the question above there is no mention of a functional manager - so Balanced Matrix is also not the correct option. Hence the answer is Projectized - Option C.

References: 

1. “2.1.3 Organizational Structures” from PMBOK Guide 5th Edition.

2. “Chapter – 2: Organizational Influence and Project Life Cycles” from Book “I Want To Be A PMP” by Satya Narayan Dash.

3. “2. Organizations, constraints, and projects” from Head First PMP 3rd Edition.

4. “2. Project Management Framework” from Rita Mulcahy’s PMP Exam Prep 8th edition.

Written by Sathish Babu:

Sathish Babu is working for Kodiak Networks as a Project Manager and having 11+ years of experience in Product, Project Management and Service Delivery in Telecom domain.

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Book For PMI-ACP Exam Prep: "I Want To Be An ACP"

[NEW Book: I Want To Be An ACP - 2nd Edition  (Link)] 

I am delighted to announce the public availability of the book for Project Management Institute's (PMI®) Agile Certified Practitioner (ACP®) certification examination.

"I WANT TO BE AN ACP - The plain and simple way to be a PMI-ACP"

This book consolidates my learning, while training, coaching and mentoring fellow professionals on various Agile courses such as Agile PMP, PMI-ACP, Agile Development with JIRA etc. The inspiration to write this book came from the free questions that I’ve made available on this blog, which has helped many professionals pass the PMI-ACP exam. Below are a few comments by successful ACPs. 

"Thanks !!!  I passed the test. The test was similar to the practice test, a lot of situational questions.", Angela Crew, PMI-ACP, Bell South, United States

"Satya, Thank you for your help at the last moment for self agile realization. I cleared test :)", Deepak Manchanda, PMI-ACP, Canada

During their preparation and after passing the exam, many call from different corners of the world. Though most of them don’t reside in my time-zone, I take their calls whenever possible to help them with their preparation, to learn from their exam experiences - which book or material they referred, and what could have helped them in a better way. 

The key learning from almost all of them was this: there is not any proper book available which truly covers the contents mentioned in the Examination Content Outline (ECO). This book, hence, incorporates the feedback of successful PMI-ACPs. 

Thank You to all of you who helped me writing this book. 

This book has been internally published since April of this year. Many professionals, including many successful PMPs, have since purchased this book. This post is a formal announcement of the book going fully public.

Key Features of This Book: "I Want To Be An ACP"

• In-line with the ECO for PMI-ACP and PMI-ACP Exam 2015 Changes. 
• The book references all PMI recommended books (total 12) from the ACP examination perspective.
• 100s of tips are shared throughout the book, which will help you to know, understand and focus where questions are tricky.
• Over 400 practice questions (mostly context and scenarios based), including 3 full length PMI-ACP Exam Question Sets.
• Many real life and practical examples, including usage of practical tools such as Atlassian JIRA.
• Simplified content and languages with lots of figures for visualization and understanding. 

Overall Content of the Book: "I Want To Be An ACP"

• Number of Chapters: 10
• Number of Pages: ~550
• Number of Questions: 400+
• Full Length Questions: 3 
• Each question set has 120 questions
• Each question set is accompanied with detailed answer set

A number of practice questions, excluding the ones from full length questions, are available at the end of every chapter.

To know the breakdown content of the book, please check the below index (partial one). The detailed index is part of the book. 

Index of the Book 
The partial index of the book is shown below (Embedded PDF) You can scroll or open in larger screen by clicking the arrow on right in the embedded frame, to see the content.

If you are want to buy or have any queries on  this book, please send a mail to managementyogi@gmail.com. 



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• From "Chapter 2: Agile Principles and Mindset": Four Values of The Agile Manifesto

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PMP Success Story: Right Coaching, Practice and Interest Will Help To Pass The Exam

By Govinda raj P, PMP

First to start with my prep work before attending the coaching class.  We all know PMP® is for little or more experienced guys in Project Management domain, so to start we need to go through some YouTube Videos, there are lot many available. I went through few random videos. How much ever might be your experience, it is always better that we go through videos to get our thought process stream lined and then take up the coaching. 

Another plus point is you will be prepared and at least will have idea what to expect from the crash course training and you can clear you doubts and also get a better understanding and you will get interest to sit through class.

PMP Coaching Experience

Satya was our coach throughout our training and is very knowledgeable and knows exactly what to cover and when to cover. Best part, he understands who is the audience and tailors the approach accordingly. In fact, he did mention that by last day of training you can remember all the 47 process areas in a flow. It was hard for me to believe at that time because I am not that fast learner. But for surprise: I did remember all knowledge areas, and the processes with the flow on the last day of coaching. That was a big surprise for me.

We went through course materials. Satya gave lots of tips and tricks to remember and we resolved many questions. In toto, it was very good experience for me. Please do take make a note of all tips which Satya give in class. It will be very helpful later. 

Towards the end you will have a mock test and based on scores Satya will tell you how long you need study. For me, verdict was to study for 6 months to clear the PMP. Might sound prophetic, but it exactly took 6 months for me to clear - perhaps it is his experience that tells us how long we need to complete.

Own Study

I started with PMBOK® guide. First, to read it was a very dry subject and it took a very long time for me complete. Somehow, I completed reading. But it took more than a month for me to complete with all my work-related commitments. My experience after reading PMBOK for the first time was this: I didn’t remember anything, which many of you will go through.

I got lots of suggestion from many that you need to read that book, this book but I would suggest, pick a good book which makes you feel better. I just read one book. 

Then started few mock tests but scores were not promising and I had lost hope and interest. So, stopped reading any book and 2 weeks lost touch due to work related commitments. By end of 2 weeks nothing I remembered, thought this is not going to happen. I always say to my friends "Until mad dog is behind you, you won’t run faster". So, I scheduled the exam for 4th July.

From that day, my actual preparation started. And this was the time I actually understand the PMP better and started correlating. After completing the book, I started reading PMBOK, an I fell in love with PMBOK novel (yes novel, it was that interesting, I'm the same guy who told that PMBOK is very dry). 

After completing reading PMBOK, I started taking full time mock test this time I was scoring 75%+ but that not enough. Almost every day I started taking 1 full mock test. My scoring started increasing. Full length mock test is absolutely needed. Without that I don't think anyone would have passed PMP, because its concretes your understanding. I had taken close 15 full time mock exams from different sources where ever possible.

Couple of days before the exam, I had almost 12 hours of sleep. You need that kind of rest for you mind to process the information and I spend most on taking quick mock tests on mobile and one day before the exam, I went the PMBOK guide at high level. 

PMP Exam Experience

I stay near to Prometric Center, so I left home 30mins prior. But people coming from far don't underestimate Bangalore traffic for me it was walk able distance. I reached 10mins for 8:30 AM. I remember Satya’s words: “If you have understood the concepts well, you don't need to have last minute preparation.” 

Finished all formalities and entered the exam all and first 15mins is session for you get familiar with screen, you can’t write anything during that time.

The PMP Exam

After completing 15 minutes initial session, I started the exam. Its took exactly 12mins for me to pen down my 47 knowledge groups and formulas, which I learned during the class. 

Next, I started going through the questions. First 5 questions were bouncers. I was like – “WOW did I make mistake of taking it earlier?” Then just took 10 secs break and cleared my thoughts and marked the question for review and proceeded. My suggestion is - if you are not sure about the answer mark the one which you feel correct in that way you have at least 25% chance that it can be correct.

I was expecting a lot of mathematical questions, but I got only 4 to 5, which were simple. I have heard from many they got 20 to 30 numerical. Read the question carefully and options very carefully. Do not jump into the conclusion, just a NOT or EXCEPT at the end of question will change the entire meaning of the question.

I finished 200 questions with 20mins left. I had taken 10mins break in between. I had a chance to review questions which I had marked for review and I clicked finish 30 seconds before. Trust me - the entire 4 hours was not long enough for the time you get the results out.

The coordinator from Prometric center told me to click next, yes, next yes. I was doing and he told I have passed the exam! I was in mixed feeling and really could not believe it. I asked the person at the centre – “Did I really pass?” He said – “Yes Sir! You cleared your PMP” and told me wait outside and he will get me the print out.

After coming out, I was still in shock mode and was thinking: Did the guy say I passed or failed?! I was eagerly waiting for print out to see that I have pass my PMP exam. That time was still more worse than the time I waited for exam results to pop up. Finally, I got the print out which said Examination pass, I verified my name and had a huge sigh of relief.
    
Suggestions for PMP Aspirants

Dos:

• Always remember PMP exam is for the experienced; fluke won’t work for 200 questions.
• Prepare well and you should feel confidence that you can take exam.
• Don't lose hope when you score less. 
• Always have a study plan. 
• Create a study group and discuss among yourself.
• Keep away negative thinker and negative thoughts.
• Read some good books along with PMBOK (Like Satya's book, or any other you feel alright). Only PMBOK will not help to clear exam.
• Take as many mock tests.
• Download some PMP apps try in your free time.
• Review you answers and mistakes that you made.

 Don’ts:

• Don't over study. 
• Don't strain and study. Take proper rest.
• Do not rush for exam. 

Conclusion

• Pay attention in Satya’s coaching class. 
• Prepare well. 
• Learn from your mistakes and don't repeat. 
• Don't take more than 6 months from preparation to exam.

Brief Profile:
I am Govinda raj P. I’ve close to 13 years of experience and currently Project's Delivery Manager with IBM, India.

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