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Analysis of external and internal risks in project early phase

Authors: Alquier A.M. Cagno E. Caron F. Leopoulos V. Ridao M.A.

Abstract
During the early “conceptual” phase of a project life-cycle – considering for instance a competitive bidding process when a request for bidding has been received by an engineering & contracting company and the decision to bid has been made – the main objective of the proposal manager is to achieve an effective trade-off between the bid competitive value on the side of the client expectations and the project baseline in term of time/ cost / performance constraints on the side of the utilisation of the internal resources. Since project final performance depends primarily on risk analysis and management, a “risk driven approach” to Project Management appears to be necessary, particularly during the project early phase when only scarce information is available and contractual obligations are to be taken. In this context, both “internal” risk (e.g. probability of cost overrun) and “external” risk (e.g. probability of winning) must be taken into account. The paper presents the PRIMA (Project RIsk Management - IST-1999-10193) research project aiming at implementing such a “risk driven approach” to Project Management through the development of a Risk Management Corporate Memory and a Decision Support System allowing for collecting, storing, sharing, using company knowledge both in terms of data records and experts knowledge in order to improve the company capability of project risk analysis and management.

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Introduction

The most critical phase in the project life cycle is the conceptual phase or bidding process, since only scarce information is available and nevertheless the project baseline has to be determined, baseline that more or less becomes a constraint for the project in terms of time and cost and product…...

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