Building Risk Tolerance

Glen is Vice President Program Planning and Controls, Niwot Ridge LLC.

  Governance   ProjectsAtWork  

Technical and programmatic disruptions in project plans don’t have to negatively impact cost, performance or schedule metrics. But traditional approaches to planning are not an adequate defense. In the third and final article in this risk management series, the author outlines the six steps for building a risk-tolerant schedule.

The first two articles in this risk management series — “Risk/Opportunity” and “Managing Schedule Risk” — discussed the importance of planning risk management tasks and managing different types of uncertainty in the project schedule. 

This final article presents a method for incorporating schedule risk management in a visible manner that provides governance of the project’s technical and programmatic performance. This method is based on three core concepts shared by all risk-tolerant plans: 
(1.) Measures of progress must be quantitative rather than qualitative, 
(2.) Normal and foreseen risk handling must be explicitly visible in the plan,  and 
(3.) Unforeseen risks must be acknowledged and actions taken when they occur.

Risk Tolerance means that disruptions in the technical or programmatic plans can be tolerated in a way that does not negatively impact cost, performance, or schedule (C-P-S metrics) of the plan.

A Risk Management Structure
The figure below …

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