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Have you been told that risk management add cost?
Network:114946



In your practice have you been told that doing risk management add cost to the project?

What was your response?

Did it clear the argument?
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Network:253



Definitely any activities for risk management should be associated with cost and time.
Network:126243



It does add cost on the short run but might save the whole project from drowing on thr long run. I would call it an investment, not cost although it is a cost.
Network:114946



I agree that activities need to be budgeted for. But would it increase the overall project cost?
Network:126243



Maybe - It depends on the circumstances. It is a case by case scenario and differs from one project to another.
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1 reply by Vincent Guerard
Mar 12, 2017 3:30 PM
Vincent Guerard
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Case by case in the sense that in some project risk management contribute to cost reduction more then on others.
Network:622



If the risks and risk responses are well-defined, it should be relatively easy to defend the value of risk management. Better yet, you can total the cost of the hours spent to perform risk management and the cost of implementing the risk responses to obtain an actual cost of risk management. It's likely a lot less than most people imagine.
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1 reply by Vincent Guerard
Mar 12, 2017 3:46 PM
Vincent Guerard
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Once the process is accepted, cost can be identify easily, and eventually cost saved.

What if people have yet to agree and is perceived as a pure cost, how have you convince people of the plus value of risk management ?
Network:114946



Mar 12, 2017 1:07 PM
Replying to Rami Kaibni
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Maybe - It depends on the circumstances. It is a case by case scenario and differs from one project to another.
Case by case in the sense that in some project risk management contribute to cost reduction more then on others.
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1 reply by Rami Kaibni
Mar 12, 2017 9:21 PM
Rami Kaibni
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We normally measure the final effect of the risk management plan at the end of the project and determine its added value to the project being positive or negative.
Network:114946



Mar 12, 2017 1:09 PM
Replying to Eric Simms
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If the risks and risk responses are well-defined, it should be relatively easy to defend the value of risk management. Better yet, you can total the cost of the hours spent to perform risk management and the cost of implementing the risk responses to obtain an actual cost of risk management. It's likely a lot less than most people imagine.
Once the process is accepted, cost can be identify easily, and eventually cost saved.

What if people have yet to agree and is perceived as a pure cost, how have you convince people of the plus value of risk management ?
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1 reply by Eric Simms
Mar 13, 2017 12:00 PM
Eric Simms
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I’ve demonstrated the value of risk management by showing people concrete examples they understand. Here’s an example for the IT field:

Task: Purchase 50 HP 800078-S01 PROLIANT DL380 G9 servers (total cost = $400,000 USD)
Risk: The servers might not meet the needs of all internal customers in our specialized environment, and customers will not be able to perform their critical tasks.
Risk Mitigation Strategy: Purchase 2 servers, add them to our environment, and let customers perform intensive tests on them for two weeks. If customers verify the servers will meet their needs, purchase the remaining 48 servers.
Risk Cost: $16,000 USD, and the creation of a new ‘Server Testing’ task with a 2 week duration.
Possible Cost Without Risk Management: $400,0000 USD wasted on servers that don’t meet customers’ needs, widespread delays across the organization as a result of customers not being able to perform their work (resulting in millions of dollars in lost labor and opportunities), an estimated 6 additional weeks needed to find servers that will meet customers’ needs, a 25% surcharge added to cost of new servers to cover expedited processing and shipping, very irate customers.

I then ask risk management opponents if, should they choose not to implement risk management, they are willing to assume personal responsibility for the possible costs should the risk occur. No one has ever said 'Yes'.
Network:126243



Mar 12, 2017 3:30 PM
Replying to Vincent Guerard
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Case by case in the sense that in some project risk management contribute to cost reduction more then on others.
We normally measure the final effect of the risk management plan at the end of the project and determine its added value to the project being positive or negative.
Network:114946



Rami, yes we confirm the final impact of risk management at the end of the project. Some element are identify early and are act upon early, the impact can sometimes be mesure before the end of the project!
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1 reply by Rami Kaibni
Mar 12, 2017 10:10 PM
Rami Kaibni
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Yes of course, the impact of some items can be measured as you go during the project life cyclecbut the overall and finalcimpact can be measured upon project closure.
Network:126243



Mar 12, 2017 9:59 PM
Replying to Vincent Guerard
...
Rami, yes we confirm the final impact of risk management at the end of the project. Some element are identify early and are act upon early, the impact can sometimes be mesure before the end of the project!
Yes of course, the impact of some items can be measured as you go during the project life cyclecbut the overall and finalcimpact can be measured upon project closure.
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