Risk Prioritization with Failure Mode and Effect Analysis
One of the difficulties students have in our PMP® courses is relating their experience to the terminology used by the Project Management Institute. Experienced project managers will have encountered most of the concepts detailed in the Guide to the Project Management Body of Knowledge (PMBOK® Guide), but they are unlikely to be familiar with the names used.
A good example of this is found in Project Risk Management. On the PMP® course, one of the project management processes you will be introduced to is Perform Qualitative Risk Analysis. This is just a fancy way of saying that your risks should be prioritized in terms of likelihood and impact. You do not need PMP® certification to realise that the most likely risks or the ones that can blow the project out of the water are the ones that you need to focus on and develop mitigating strategies for. However, many organizations do not practice risk management, so this concept, while intuitive, might be new to you.
Having your PMP® certificate in project management should equip you for interview situations as well, but you now have the problem of relating your PMBOK® Guide knowledge to actual practice. In this example, your potential employer might ask if you have ever used FMEA. Thanks to your PMP® training, there is nothing in Failure Mode and Effect Analysis (FMEA) that should worry you, but the unfamiliar term might throw you. So it is a good idea, if you are in the job market, to be aware of FMEA and how it is very similar to what you, as a PMP®, know as Perform Qualitative Risk Analysis.
FMEA was developed in the 1950’s for military applications. The idea was to analyse all possible causes of failure in military systems. As with risk analysis, FMEA begins with identifying all the failure modes – how failures occur – and then rating them in terms of severity (impact), probability of occurrence (likelihood) and probability of detection. Examples of failure modes could be dirt getting into a sensitive mechanism, calibrations being knocked out during transportation, jamming after prolonged use due to heat build-up, etc. In essence, these are risks to the successful operation of a device and, like all risks, we need to take steps to avoid, transfer or mitigate them.
Just like the Identify Risks process from your PMP® training, FMEA involves going through a risk identification process – see our previous article for some hints on how to do this. But, having a list of known risks can be overwhelming if that list is long. So we need to do some sort of Pareto analysis. With risks, or failure modes, we need to give our attention to those that are most likely to occur and/or will cause great distress if they do happen. FMEA adds another factor into the mix – probability of detection. This is an interesting viewpoint, because it might lead us to revise our processes to make the risk (or failure mode) more detectable.
All three prioritization criteria are rated on a scale of 1 to 10. So if a risk is very likely (almost certain) to occur, it is given a 10 rating, while something that is extremely unlikely to happen would be a 1. Similarly, an extremely hazardous event would get a 10 and something with no impact would be a 1. Detection, however, is rated with risks that are unlikely to be detected getting a 10 and easily detected risks meriting a 1.
These three numbers are multiplied together to yield a Risk Priority Number (RPN). The risks are then listed from highest to lowest and risk contingency plans are developed for those with the highest RPNs. As we know from our PMP® training, we need to take steps to reduce the probability and/or impact of a risk happening. With FMEA, we also need to improve our detection methods. For instance, the facility to turn on debug traces in a running software system might be added to highlight operational problems.
In short, there is nothing a PMP® need fear from FMEA – it is based on well understood Project Management Institute principles and adds the useful measure of detection to the mix.
For more information on Project Risk Management and project management in general, you might consider one of our PMP® exam preparation courses, which are now being delivered online, using a virtual classroom,. Details are found on our training page or by contacting us directly.
By Velopi Seamus Collins