Project Management

The Risk in Risk Management

Tom R. Westcott, PMP

Topics: Estimating, Risk Management, Work Breakdown Structures (WBS), ProjectsAtWork

Too many project managers negate the value of risk management by separating their risk tools and processes from the rest of the project. Here is a practical approach for building realistic risk plans and budgets, integrating them into your project plan, and reducing the probability that management will slash it.

When I started managing projects, I did what I had seen my project managers do. I sat with the team and identified project risks with sticky notes on the wall. We grouped like risks together; we estimated the probability and impacts — sometimes with high, medium or low; other times with real numbers. We took the most critical risks and developed strategies to deal with these risks. I entered this into our risk log, an Excel spreadsheet template provided by the company.
 
Armed with this very non-quantitative spreadsheet, my MS Project plan (which had nothing to do with risk) and another spreadsheet that contained the project budget where we just threw in a percentage markup on the project costs for risk contingency, I marched into my manager’s office. The manager asked me what the end date of the project was, but never looked at the project plan Gantt chart. She never asked to see the risk log spreadsheet. Instead, she focused on the project budget numbers intently and said, “You put way too much contingency in here. Knock it down to 5 …

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