Concepts
I. UNDERSTANDING THE CONCEPT OF IMPACT ANALYSIS
Impact Analysis is a systematic approach to identify the possible consequences if a project encounters risks or changes. This analysis aids in understanding how project objectives might be affected by identified risks. By determining potential outcomes, project managers can mitigate these risks effectively or prepare contingency plans to manage them if they occur.
II. IMPORTANCE OF IMPACT ANALYSIS ON PROJECT OBJECTIVES
Performing an impact analysis is necessary for various reasons:
- Risk Identification: It assists in the identification and assessment of potential risks.
- Agilenesess: It enables the project to adapt to changes quickly and more efficiently, thus saving time and resources.
- Priority Setting: It helps prioritize the risks based on their impact on project objectives.
- Proactive Planning: It facilitates proactive rather than reactive planning to mitigate risks.
- Decision Making: It drives data-informed decision making, thus reducing the risk of project failure.
III. STEPS IN PERFORMING IMPACT ANALYSIS
- Identification of Changes or Risks: The process begins with recognizing potential risks or changes that might affect the project objectives.
- Analysing Potential Impact: Next, evaluate the potential impact of these risks on the project objectives.
- Exploring Alternatives: Look for possible alternatives or solutions to mitigate these identified risks.
- Assessing Resource Needs: Assess the resources needed to implement the alternatives.
- Documenting and Presenting Findings: Finally, document the probable outcomes and present them to stakeholders for decision-making.
Table
| Steps | Action |
|---|---|
| 1 | Identification of Changes or Risks |
| 2 | Analysing Potential Impact |
| 3 | Exploring Alternatives |
| 4 | Assessing Resource Needs |
| 5 | Documenting and Presenting Findings |
IV. EXAMPLE OF IMPACT ANALYSIS
Consider beginning a construction project. The identified risk is a potential delay in material delivery. The impact of this delay would alter the project schedule, likely leading to a later completion date, increased labor costs, and potential penalty charges for contract non-compliance.
In this case, alternatives could be securing a different material supplier, ordering materials earlier, or ensuring contractual allowances for such delays. Resources required might include increased budget allocation, additional labor, or legal advice for altering contracts. The final step involves presenting this analysis to stakeholders for appropriate decision-making.
V. USING IMPACT ANALYSIS TO PREPARE FOR THE PMI-RMP EXAM
Understanding how to perform an impact analysis is key in mastering the PMI-RMP Exam. In the exam, candidates can expect scenario-based questions where they need to determine the impacts of potential changes or risks on project objectives.
The ability to effectively conduct impact analysis boosts your credibility as a Risk Manager and gives you an upper hand in the PMI-RMP examination. Hence, it is beneficial to always integrate this process into your project management routine. Not only will it prepare you well for the examination, but it will also enhance your risk management skills, ultimately leading to more successful projects.
Answer the Questions in Comment Section
True or False: In risk management, an impact analysis should not be used when performing an assessment of project objectives.
- Answer: False
Explanation: An impact analysis is a vital component of risk management as it helps in understanding the potential implications of the risks on the project objectives.
Which among the following is not a part of an impact analysis on project objectives?
- a) Identifying potential effects
- b) Determining risk mitigation methods
- c) Estimating the probability of the risk
- d) Documenting the steps to achieve project success
- Answer: d) Documenting the steps to achieve project success
Explanation: Although important, documenting the steps to achieve project success rather pertains more to project proactivity than an impact analysis.
Which among the following information is utilized in an impact analysis?
- a) Cost estimates
- b) Project schedule
- c) Risk register
- d) All of the above
- Answer: d) All of the above
Explanation: An impact analysis typically involves review of cost estimates, schedules, and the entirety of the risk register in order to assess possible effects.
True or False: An impact analysis should only be performed once during the lifespan of a project.
- Answer: False
Explanation: An impact analysis should be conducted continuously throughout the course of a project to adapt to any changes that occur.
What is the main purpose of conducting impact analysis on project objectives?
- a) To determine where to use resources effectively
- b) To ensure the project is completed on time
- c) To monitor project progress
- d) To manage external stakeholders
- Answer: a) To determine where to use resources effectively
Explanation: Impact analysis helps in ascertaining where to best use resources by identifying high-risk areas that could potentially inhibit the achievement of objectives.
Performing an impact analysis on project objectives aids in:
- a) Identifying risk opportunities
- b) Predicting future performance
- c) Assessing potential risk impacts
- d) All of the above
- Answer: d) All of the above
Explanation: A comprehensive impact analysis identifies risk opportunities, predicts future performance, and assesses potential risk impacts, contributing to smart decision-making.
Which tool is not typically used during the impact analysis phase?
- a) Gantt Charts
- b) Pareto analysis
- c) Fishbone diagrams
- d) SWOT analysis
- Answer: d) SWOT analysis
Explanation: SWOT analysis is generally used in the strategic planning phase than during the actual impact analysis itself.
True or False: When performing an impact analysis, longer schedules are always associated with decreased risks.
- Answer: False
Explanation: Longer schedules can actually increase certain risks, such as the potential for scope changes or market conditions affecting the budget.
What does a high-impact risk signify in an impact analysis?
- a) The risk is easily manageable.
- b) The risk can drastically hinder the project’s objective.
- c) The risk is unlikely to occur.
- d) None of the above.
- Answer: b) The risk can drastically hinder the project’s objective.
Explanation: High-impact risks, if realized, can drastically affect the project’s ability to achieve its objectives.
True or False: Carrying out an impact analysis on project objectives is a one-time activity to just assess risk impacts.
- Answer: False
Explanation: Impact analysis is not a one-time activity but a continuous process of assessing risks and their impacts on the project objectives.
What forms the basis of the impact analysis?
- a) The final deliverable
- b) The risk register
- c) The project resources
- d) None of the above
- Answer: b) The risk register
Explanation: The first step for conducting an impact analysis is to review the risk register which contains all the identified risks and their probable impacts.
When is the impact analysis usually performed?
- a) After the risk identification
- b) After the project completion
- c) After the risk response planning
- d) After the risk monitoring
- Answer: a) After the risk identification
Explanation: The impact analysis is typically performed after the identification of risks so that the probable impact of these risks can be assessed and managed effectively.
Performing an impact analysis is crucial for understanding how risks can affect project objectives.
Thanks for the insightful post!
Could anyone share their experiences on how effective impact analysis was in their projects?
Great content! Very helpful for my upcoming PMI-RMP exam.
Impact analysis should also account for stakeholder interests to be more comprehensive.
How often should risk impact analysis be done during the project lifecycle?
This blog post was mediocre at best, lacked depth.
Don’t forget to involve the whole team during impact analysis for a broader perspective.