A project faces many constraints to meet its targetted objectives. PM often overlook the importance of planning for contingencies associated with these constraints which consequently pose an adverse impact on the project budget. The sum of all contingencies and other risks affecting the project need to be factored in the overall budget. The project management plan that is to be signed off will include the final budget incorporating these risks that will be required for the duration of the project.
Q1. What will be the maximum percentage of risk against the project budget that will make this a viable project?
Q2. What are those risks that contributed to the risk identified in Q1 above? Saving Changes...
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
PM's shpuld not overlook contingencies so I would little bit disagree about the question being "Often Overlook" ... At least I hope they do not overlook those important facts.
As for how much a project can absorb and what are those risks, it al depends on the type and nature lf the project so in my humble opinion, you can have a specific general answer. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Projects are created to put strategy on action. Then it is a matter of strategy. I was on project where exposure does not matter because the intention was be the first on the market. Saving Changes...
Philippe SchulerSenior Instructor/Lecturer in Project/Program/Account PMO Management| Independant ConsultantLes Choux, France
No general answer in my opinion. It dépends of the nature of the project and its strategy. The Senior Management has to set the appropriate criteria and then it is up to the PM and the budget team to integrate the right reserve for managing risks into the global project budget. The PM will have then to manage the risk exposure according to the management criteria. As a personal experience I had to take over a troubled project where the risk reserve had raised to around 80% of the budget because of a poor risk management. I got from my senior management a first objective to clean the situation and to come back to the amount planned at the end of the project sale phase meaning 20% of the global budget for risk management. This is only a specific example not a general one. Saving Changes...
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