PRM 3D Model to Risk Management
MCLMG Training Institute
Project Proactive Risk Management:
An Effective, Robust 3-D Model for Project Risk Management®
by
Paul H. Lohnes, MBA, PMP and Cheryl A. Wilson, PMP, PMI-RMP
MCLMG, LLC Research Branch
May 22, 2013
Alexandria, VA, USA
May 22, 2013
Project Proactive Risk Management:
An Effective, Robust 3-D Model for Project Risk Management®
By Paul H. Lohnes, MBA, PMP and Cheryl A. Wilson, PMP, PMI-RMP
MCL Management Group, LLC PPPM Research Division
EXECUTIVE SUMMARY
As the continued poor showing of the project management and business analysis discipline results in the stagnant and unimpressive current project success rates, MCLMG’s Portfolio / Program / Project Management Research Division has designed, developed, and deployed a more effective and robust project risk management model that supersedes the current “industry practices” of the limited 2 dimensional risk model based on the unit-less assessment of project risk potentials. This current model evaluates project risk potentials in only two (2) dimensions of “severity” and “likelihood” assigning to each an integer value of 1 (low) to 5 (high) of each parameter where upon the risk assessment is made by simply multiplying these values to obtain a qualitative risk priority profile of a unit-less, non-rigorous plane of values ranging from 1 to 25 with the non-assignment of the values 7, 11, 13, 14, 17, 18, 19, 21, 22, 23, and 24 since these combinations are not valid products of two integer operands of 1 to 5.
In stark contrast, the MCLMG Proactive Risk Management (PRM) model describes each risk potential with a currency-denominated value from the product of: a probability of the risk potential’s chance of occurrence called its Risk Probability of Occurrence (RPO) with a range of values from 0-1, an currency-denominated value of its potential cost if it were to be realized (triggered) called its Risk Cost of Impact (RCI) with a
Project Proactive Risk Management:
An Effective, Robust 3-D Model for Project Risk Management®
by
Paul H. Lohnes, MBA, PMP and Cheryl A. Wilson, PMP, PMI-RMP
MCLMG, LLC Research Branch
May 22, 2013
Alexandria, VA, USA
May 22, 2013
Project Proactive Risk Management:
An Effective, Robust 3-D Model for Project Risk Management®
By Paul H. Lohnes, MBA, PMP and Cheryl A. Wilson, PMP, PMI-RMP
MCL Management Group, LLC PPPM Research Division
EXECUTIVE SUMMARY
As the continued poor showing of the project management and business analysis discipline results in the stagnant and unimpressive current project success rates, MCLMG’s Portfolio / Program / Project Management Research Division has designed, developed, and deployed a more effective and robust project risk management model that supersedes the current “industry practices” of the limited 2 dimensional risk model based on the unit-less assessment of project risk potentials. This current model evaluates project risk potentials in only two (2) dimensions of “severity” and “likelihood” assigning to each an integer value of 1 (low) to 5 (high) of each parameter where upon the risk assessment is made by simply multiplying these values to obtain a qualitative risk priority profile of a unit-less, non-rigorous plane of values ranging from 1 to 25 with the non-assignment of the values 7, 11, 13, 14, 17, 18, 19, 21, 22, 23, and 24 since these combinations are not valid products of two integer operands of 1 to 5.
In stark contrast, the MCLMG Proactive Risk Management (PRM) model describes each risk potential with a currency-denominated value from the product of: a probability of the risk potential’s chance of occurrence called its Risk Probability of Occurrence (RPO) with a range of values from 0-1, an currency-denominated value of its potential cost if it were to be realized (triggered) called its Risk Cost of Impact (RCI) with a
References: PMI. Project Management Body of Knowledge, 5th Edition, 2013.