Page 138 - Global Project Management Handbook

RISK IDENTIFICATION AND ASSESSMENT 6-7

a high level of interest in the IPRA tool, (2) check the thoroughness of the tool, and (3)
provide an excellent opportunity to observe the personal interaction of participants
when using the tool. In the concluding discussion session at the forum, participants
made it clear that the IPRA tool should provide separate assessment scales for likeli-
hood of occurrence and relative impact for each element.

CONSISTENCY TEST

In order to verify its completeness and to assess the relationship to actual perfor-
mance, the IPRA tool was used on 25 recently completed and ongoing projects repre-
senting greater than US$4.6 billion in project value. Project performance data were
collected on 16 of these 25 completed test projects in order to identify the relationship
between risk and project performance. More than a third of these projects reported that
at least one risk not identified at contract formation occurred and had a significant
impact on project performance. These issues are identified in Table 6.4.
The respondents also were asked to identify the unforeseen severe and extreme risks
that existed at the contract-formation phase of their projects, to estimate the impacts of
those issues on the project’s ultimate performance, and to describe the mitigation steps
taken. A selected subsample of these unforeseen issues is given in Table 6.5.
The IPRA tool also was used on nine ongoing projects to observe its effectiveness
in helping project teams assess international risks. On seven of these projects, the
authors facilitated an IPRA assessment session with project team members. In each
case, the IPRA tool gave the project team a comprehensive mechanism to identify and
assess project risks and to determine which risks had the highest relative importance at
the time of the assessment.
The IPRA results from the nine ongoing projects demonstrate the tool’s ability to
assist in proactively identifying issues that can have a significant impact on project
performance. It also can assist in the identification and preclusion of issues not typi-
cally considered at contract formation. The results to date show that early and consis-
tent application of the IPRA tool is an effective risk management approach.
Detailed risk status reports were generated from the full IPRA assessments of the
ongoing projects used in the sample. These assessment sessions took from one to four
hours each and proved that the tool was an effective mechanism for identifying and

evaluating a wide spectrum of risks on real international projects whether used by a
team or an individual project participant. In each case, the IPRA tool gave project
participants a viable platform for discussing project-specific issues and helped to

TABLE 6.4 Frequency of IPRA Elements Identified during Testing Having a Significant
Project Impact Not Addressed at the Time of Contract Formation (N = 16)

IPRA Risk Elements Frequency of Occurrence (Percent)
III.A1. Scope development process 33
III.A2. Technology 33
III.D8. Schedule 27
I.B3. Estimate uncertainty 20
II.C1. Traditions and business practices 20
III.D10. Safety during construction 20
III.E1. Trained workforce 20