Project Risk Management

Peter Rapin Subject Matter Expect; Project Delivery| Independent Consultant Ontario, Canada

This is not really a new topic. We have addressed Risk Management many times in this forum and there have been some good discussions.

The purpose of a Risk Management Plan is to reduce the probability of a risk to the project (or enhancing a possible benefit) and mitigating the impact of that risk (or maximizing the benefit) should it occur.

I have two question I would like to hear discussion on. If you identify a significant risk but 1) have no influence on its probability of occurrence, and 2) have no means of mitigating its impact, do you track it in the Risk Register? If not, what do you do with it?

Posted: Sep 27, 2022 8:12 PM

Sort By:

< 1 2 >

Peter Rapin Subject Matter Expect; Project Delivery| Independent Consultant Ontario, Canada

Oct 06, 2022 10:15 AM

Replying to Stéphane Parent

...

Project risk management is not simply about reducing the impact or likelihood of project risks from happening. It is also about responding appropriately to triggered risks. That means identifying contingency and fallback actions/reserves.

Your mitigation actions and reserve should be part of your baseline schedule and budget. Contingency and fallback actions/reserves are usually added to the schedule once the risk is triggered.

Stephane, I don't disagree however budgets and delivery timeframes are typically set with the Business Case with contingencies based on percentages (Class E cost estimate with a 25% contingency) - the risk allowance being buried in there somewhere. When preparing a follow up Project Plan with Risk Management component I like to quantify the risk allowance based on what we predict may be appropriate at that time. If the risk allowance exceeds the available contingency, you attempt to mitigate further or request additional funding (or both). If there remains contingency after the risk allowance is subtracted the balance is returned or specifically designated so it doesn't disappear. Time contingency can be handled the same way.

The efforts (cost) to mitigate probability and pre-emptive efforts to reduce possible impact (before the risk is triggered) should be included in base cost and schedule. That effort is expended whether the risk is triggered or not. The residual impact of the risk once triggered comes from the risk allowance.

I think I'm saying the same thing as you just had to work it through in my own mind.

There is a school of thought that suggests the estimate contingency (usually expressed as a percentage) should be kept separate from the risk allowance. I believe that the estimate contingency, whether an estimating error or scope adjustment allowance, is actually a risk and should be seen and identified as such. It prevents people from seeing contingency as a "slush" fund or an encouragement to scope creep.

Posted: Oct 6, 2022 3:33 PM

Latha Thamma reddi Sr Product and Portfolio Management (Automation Innovation)| DXC Technology Mckinney, Tx, United States

Nice Article to read, even many acritical published on this same topic.

Posted: Apr 5, 2023 4:57 PM

Latha Thamma reddi Sr Product and Portfolio Management (Automation Innovation)| DXC Technology Mckinney, Tx, United States

Very Nice question and replies, Thanks for sharing

Posted: Apr 12, 2023 3:34 PM

Latha Thamma reddi Sr Product and Portfolio Management (Automation Innovation)| DXC Technology Mckinney, Tx, United States

Sep 28, 2022 11:51 AM

Replying to Rami Kaibni

...

Peter

Being a significant risk, or even if not, once identified, you need to include it in the risk register and track it. Ideally, you need to formulate a risk response but in this instance, since you have no mitigation means, you need to make sure that it’s impact is accounted for in your contingency reserve and in your schedule.

RK

strongly agree

Posted: Apr 12, 2023 3:34 PM

< 1 2 >

Please login or join to reply

Project Risk Management

Sponsors

Vendor Events

Guessing is not a strategy: How to build decision velocity with AI and real-time data

Newsletters