The Pmbok Guide notes that the probability and impact matrix values are usually set by the organization and are part of the organizational process assets

Now let's look at an example. You have identified a risk event that could impact project costs, and your experts believe costs could increase by as much as 9 percent. According to the risk impact rating matrix in Table 6.2, this risk carries a medium impact, with a value of 0.40. Hold on to that number because you're going to plug it into the probability impact matrix—along with the probability value—to determine an overall risk value next.

You'll remember from the discussion previously that probability values should be assigned numbers from 0.0 to 1.0. In this example, the team has determined that there is a 0.2 probability of this risk event occurring. The risk impact scale shows a medium or 0.4 impact should the event occur.

Now, to determine whether the combination of the probability and impact of this risk is high, medium, or low, you'll need to check the probability impact matrix. Table 6.3 shows a sample probability and impact matrix.

TABLE 6.3 Sample Probability and Impact Matrix

Impact Values*

TABLE 6.3 Sample Probability and Impact Matrix

Impact Values*

Probability

Low-Low.05

Low .20

Medium .40

High .60

High-high .80

.8

.04

.16

.32

.48

.64

.6

.03

.12

.24

.36

.48

.4

.02

.08

.16

.24

.32

.2

.01

.04

.08

.12

.16

*No formatting = low assignment or green condition; bold = medium assignment or yellow condition; bold italic = high assignment or red condition.

*No formatting = low assignment or green condition; bold = medium assignment or yellow condition; bold italic = high assignment or red condition.

First look at the probability column. Your risk event has a probability of .2. Now follow that row across until you find the column that shows the impact score of .40 (it's the Medium column). According to your probability and impact matrix values, this risk carries an overall score of .08 and falls in the low threshold, so this risk is assigned a low (or green condition) value.

The values assigned to the risks determine how Plan Risk Responses is carried out for the risks later during the risk-planning processes. Obviously, risks with high probability and high impact are going to need further analysis and formal responses. Remember that the values for this matrix (and the probability and impact scales discussed earlier) are determined prior to the start of this process and documented in the risk management plan. Also keep in mind that probability and impact do not have to be assigned the same values as I've done here. You might use 0.8, 0.6, 0.4, and 0.2 for probability, for example, and assign .05, 0.1, .03, 0.5, and 0.7 for impact scales.

Real World Scenario screen scrapers, inc.

Screen Scrapers is a software-manufacturing company that produces a software product that looks at your mainframe screens, commonly called green screens, and converts them to browser-based screens. The browser-based screens look like any other Windows-compatible screens with buttons, scroll bars, and drop-down lists.

Screen Scrapers devised this product for companies that use mainframe programs to update and store data because many of the entry-level workers beginning their careers today are not familiar with green screens. They're cumbersome and difficult to learn, and no consistency exists from screen to screen or from program to program. An F5 key in one program might mean go back one page, while an F5 key in another program might mean clear the screen. New users are easily confused, make a lot of mistakes, and have to write tablets full of notes on how to navigate all the screens.

Your company has purchased the Screen Scraper product and has appointed you the project manager over the installation. This project consists of a lot of issues to address, and you've made great headway. You're now at the Identify Risks and Perform Qualitative Risk Analysis stage. You decide to use the Delphi technique to assist you in identifying risk and assigning probability and impact rankings. Some experts are available in your company to serve on the Delphi panel, as well as some folks in industry organizations you belong to outside the company.

You assemble the group, set up a summary of the project, and send it out via email, requesting responses to your questions about risk. After the first pass, you compile the list of risks as follows (this list is an example and isn't exhaustive because your list will be project specific):

■ Vendor viability (will the software company stay in business?)

■ Vendor responsiveness with problems after implementation

■ Software compatibility risks with existing systems

■ Hardware compatibility risk

■ Connection to the mainframe risk

■ Training IT staff members to maintain the product

You send this list back to the Delphi members and ask them to assign a probability of 0.0 to 1.0 and an impact of high-high, high, medium, low, or low-low to each risk. The Delphi members assign probability and impact based on a probability scale and an impact scale designed by the risk management team. The values of the impact scale are as follows:

The results are compiled to determine the following probability and impact values:

■ Vendor viability = .6 probability, high impact

■ Vendor responsiveness = .4 probability, medium impact

■ Software compatibility = .4 probability, medium impact

■ Hardware compatibility = .6 probability, high-high impact

■ Mainframe connection = .2 probability, high-high impact

■ Training = .2 probability, low-low impact

The probability and impact matrix you used to assign the overall risk scores were derived from the probability and impact matrix shown in the following table.

Based on the probability and impact matrix thresholds, the project risks are assigned the following overall probabilities:

■ Vendor viability = high

■ Vendor responsiveness = medium

■ Software compatibility = medium

■ Hardware compatibility = high

■ Mainframe connection = medium

TA BLE: PI Matrix for Screen Scrapers, Inc.

Probability

Impact Scores*.05

.20

.40

.60

.80

.8

.04

.16

.32

.48

.64

.6

.03

.12

.24

.36

.48

.4

.02

.08

.16

.24

.32

.2

.01

.04

.08

.12

.16

*No formatting = low assignment or green condition; bold = medium assignment or yellow condition; bold italic = high assignment or red condition.

*No formatting = low assignment or green condition; bold = medium assignment or yellow condition; bold italic = high assignment or red condition.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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