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Have you been told that risk management add cost?
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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Yes, it adds. I can think of ramp up's as one such risk that adds cost.
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1 reply by Vincent Guerard
Jul 17, 2017 5:24 PM
Vincent Guerard
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You mean the risk add cost, but what about risk management it self? Is it there to limit cost increase?
Yes i have been told that many times, however i confronted the challenge and shared the detailed response what affect it would have if saving some pennies initially may result in millions of dollars of loss if executed without risk mitigations
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1 reply by Vincent Guerard
Jul 17, 2017 5:25 PM
Vincent Guerard
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Thanks yes risk management is less costly then crisis management
Mar 15, 2017 12:01 AM
Replying to Anupam
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Yes, it adds. I can think of ramp up's as one such risk that adds cost.
You mean the risk add cost, but what about risk management it self? Is it there to limit cost increase?
Mar 15, 2017 5:53 AM
Replying to Mudassar Khan
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Yes i have been told that many times, however i confronted the challenge and shared the detailed response what affect it would have if saving some pennies initially may result in millions of dollars of loss if executed without risk mitigations
Thanks yes risk management is less costly then crisis management
Mar 13, 2017 5:37 PM
Replying to Aaron Porter
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I've been told that risk management adds both cost and time, but not as an argument to not follow risk management practices.

As has been stated in other answers, risk management does add cost, because your time has value, but if all it does is add cost then someone is doing something wrong.

Not only should risk management help you prevent unplanned cost, it can also help you identify opportunities (positive risk) to reduce cost.
Aaron, you make a great point here. There is a cost to risk assessment and alleviation (If that course is possible), There is also a cost to risk avoidance, but I would argue that risk costs can be offset by cost avoidance as well.

One of the reasons we used Functional Economic Analysis as a tool in the Defense Department was its ability to separate out costs, cost avoidance, and cost savings by applying reasonable alternatives in project decision-making. That gave us a more balanced approach to understanding true costs over the live of a project. Doing the cost analysis up front (adjusted over the life of the project) shows the expected saving occasioned by appropriate risk analysis in reduced future costs.
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1 reply by Vincent Guerard
Jul 17, 2017 9:39 PM
Vincent Guerard
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John, Thanks for this input.
Risk management should in the end save cost, but doing it generate some cost that should be outweighed by cost saving.
I think it is very true that in practice it is considered that the risk management is associated with the costs of the project, in many occasions when managing the risks in the stage of initiation and planning these generate increases in the budget of the project, which makes them very determinant to generate a real final budget.
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1 reply by Vincent Guerard
Jul 17, 2017 9:44 PM
Vincent Guerard
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Edwin thanks,
Risk management add a cost your right. When perform at the early stage initiation and planning it let you choose options from a large array of posibilties, so to take the one the more advantageous to project. Doing so make the project better perform and justify cost of risk management
Jul 17, 2017 5:34 PM
Replying to John Tieso
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Aaron, you make a great point here. There is a cost to risk assessment and alleviation (If that course is possible), There is also a cost to risk avoidance, but I would argue that risk costs can be offset by cost avoidance as well.

One of the reasons we used Functional Economic Analysis as a tool in the Defense Department was its ability to separate out costs, cost avoidance, and cost savings by applying reasonable alternatives in project decision-making. That gave us a more balanced approach to understanding true costs over the live of a project. Doing the cost analysis up front (adjusted over the life of the project) shows the expected saving occasioned by appropriate risk analysis in reduced future costs.
John, Thanks for this input.
Risk management should in the end save cost, but doing it generate some cost that should be outweighed by cost saving.
Jul 17, 2017 6:47 PM
Replying to Eduin Fernando Valdes Alvarado
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I think it is very true that in practice it is considered that the risk management is associated with the costs of the project, in many occasions when managing the risks in the stage of initiation and planning these generate increases in the budget of the project, which makes them very determinant to generate a real final budget.
Edwin thanks,
Risk management add a cost your right. When perform at the early stage initiation and planning it let you choose options from a large array of posibilties, so to take the one the more advantageous to project. Doing so make the project better perform and justify cost of risk management
Mar 13, 2017 8:01 AM
Replying to Sergio Luis Conte
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It is obvious. Everything that is an activity inside a project add cost. It is not a question to be performed from somebody that could argue is a professional in her/his field.
Vincent, I am not saying that you are that person. Sorry if you understand that. My english is not good. I faced this type of questions from top management when I tried to implement quality mainly in fields like software. What I tried to say is: stated in that way, it has no sense. If you add activities you always add cost. As everything in the life. Any type of cost. With that said I ever say what my grandmother said: "prevention is better than cure". And I have (and I think lot of people have) lot of examples. With those examples on hand I was successful to implement quality environments (mainly quality assurance) inside all type of organizations.
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