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Question: In developing your Risk Breakdown Structure (RBS), what is your logic for decomposing your hierarchy? How do you use your RBS?

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Eric Harter Estimating & Risk Management Team Manager| Siemens Energy - Field Service North America Oviedo, Fl, United States
RBS: “A hierarchically organized depiction of the identified project risks arranged by risk category and subcategory that identifies the various areas and causes of potential risks.” 2009 PS for PRM.

Discussion: Many RBS seem to be a mixture of causes, effects, WBS elements, and areas that seem inconsistent in their logic and it often seems that the most important use is to create easily named risk categories such as Quality, Stakeholders, Big Hairy Activity #42, or Technology. If we are not consistent in our logical approach to developing the RBS, we can introduce gaps or overlaps in our hierarchy that will challenge us later when we try and use it.

For example: ‘Quality’ is almost always somewhere on an RBS. However, it is almost always some sort of effect, perhaps caused by issues with defining standards, communications, quality of materials, etc. However, each one of those potential causes is perhaps its own category or risks, so how do you know whether to make it a quality of materials risk?

Even more important is that the RBS isn’t just a categorization tool as implied by the PMI definition. A well-developed RBS is a powerful tool in identifying risks, analyzing related risks, and developing response plans to address risky areas in a project.

Thank you!
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Eric Harter Estimating & Risk Management Team Manager| Siemens Energy - Field Service North America Oviedo, Fl, United States
May 21, 2018 12:54 PM
Replying to Eric Harter
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Kiron, I concur that MECE (Mutually Exclusive – Collectively Exhaustive) is a fundamental principle for a hierarchical decomposition. It sounds like you use the RBS to organize identified risks, starting with threats and opportunities, and then look for gaps and overlaps? Do you use something else in your initial identification efforts?
Thanks!
Kiron, that is a good list for identifying risks, but what do you use to develop your RBS? Are your projects sufficiently standardized to use an RBS template? Or perhaps do you develop an RBS for each project?
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Kiron Bondale Retired | Mentor| Retired Welland, Ontario, Canada
Eric -

I've seen three variants out there with the clients I've worked with:

1. Standard RBS across an enterprise or divisional portfolio.

2. RBS's created per project

3. No RBS

If I had to rank them based on frequency of observation, it'd be 3, 1, 2...

Kiron
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Visswanathan KKN Senior Project Manager Hyderabad, India
The RBS provides a structure to identification of risks. In my opinion, the RBS should be a generic common structure followed in an organization across the projects in a particular DOMAIN.
The level of break down and number of sub-categories in each level should be practical to manage and should be generic to some extent to allow flexibility and stimulate thinking of team to identify the risks in that category of the project.

The purpose of RBS is to provide structure while identifying risks, group the identified risks, mitigation plans and other risk data for further analysis or for documenting in the lessons learnt database.

In your example of Quality, I think Quality should not be made as a separate category; because quality is part of all the activities. As an example, "Project Management" can be a category and the "Quality of estimates" can be a sub-category. I hope this helps..
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