Page 137 - Global Project Management Handbook

6-6 STATE OF THE ART OF GLOBAL PROJECT MANAGEMENT

TABLE 6.2 Relative Impact Definitions
A Negligible consequence that routine procedure would be sufficient to deal with the
consequences.
B Minor consequence that would threaten an element of the project. Normal control and
monitoring measures are sufficient.
C Moderate consequence would necessitate significant adjustment to the project. Requires
identification and control of all contributing factors by monitoring conditions and
reassessment at project milestones.
D Significant consequence that would threaten goals and objectives; requires close management.
Could substantially delay the project schedule or significantly affect technical performance or
costs, and requires a plan to handle.
E Extreme consequence would stop achievement of project or organizational goals and
objectives. Most likely to occur and prevent achievement of objectives, causing
unacceptable cost overruns, schedule slippage, or project failure.

Likelihood of occurrence values also were developed by dividing the probability
that the identified risk will occur into the following five designations (with numerical
range from 1 to 5): 1 = very low (<10 percent), 2 = low (10 to less than 35 percent), 3 =
medium (35 to less than 65 percent), 4 = high (65 to less than 90 percent), and 5 =
very high (90 percent or greater). These designations are based on the research team’s
review and assessment of the literature and industry practices for determining and
assigning risk probabilities. Table 6.3 gives the probability division for the likelihood
of occurrence used in the IPRA tool.
As a supplement to the workshops, the October 2002 CII Emerging Markets Forum
in Baltimore, MD, provided an opportunity for 29 industry representatives to test the
mechanics of using the IPRA tool and element descriptions on a case study of a
cement production facility located in Bulgaria. Forum participants were asked to
assess and comment on the theory, structure, and usefulness of the research team’s
work. Introducing the IPRA tool to forum participants and having them participate in
this case-study evaluation proved valuable. The case-study issues and expectations of
forum participants were well defined during an introduction to the IPRA tool. This
exploration of the group’s mind-set, combined with a subsequent interactive group dis-

cussion on assessing the project risks and then reporting the results, helped to (1) create

TABLE 6.3 Division for Likelihood of Occurrence in the IPRA
Occurrence Probability
NA = not applicable to this project. Zero
1 = very low chance of occurrence, rare, and occurs only (<10% chance)
in exceptional circumstances.
2 = low chance and unlikely to occur in most circumstances. (10% chance of occurrence <35%)
3 = medium chance and possible to occur in most (35% chance of occurrence <65%)
circumstances.
4 = high chance of happening and will probably occur (65% chance of occurrence <90%)
in most circumstances.
5 = very high chance of occurrence and almost (90% or greater chance of occurrence)
certain and expected in most circumstances.