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Benefits & Practices

What are the benefits and best practices of Project Risk Management?

Possible Reasons for Risk Taking

Some potential rewards include:

·         Achieving a desired result using limited resources

·         Advancing the "State of the Art"

·         Meeting an urgent end date

·         Or recovering a schedule slippage

·         Enhancing profitability

·         Increasing a budget or schedule contingency allowance

·         Saving money or offsetting a fiscal variance

·         Improving the firm's market position

·         Enhancing customer or user satisfaction

Benefits of Project Risk Management

The benefits of project risk management include:

·         An objective assessment of the project management process

·         Proper accounting for project risks and uncertainties

·         Increased confidence in investment and management decisions

·         Following a thorough analysis of the data

·         Contingency planning permits controlled and predetermine responses

·         Without the delay of figuring out what to do

·         Risks and responses can be documented as an historic record for future reference

Avoiding Unnecessary Project Risks - 1

·      With careful planning and good management some inherent risks in the project management process can be much reduced

·         Or virtually eliminated

·      Steps towards this goal include:

·         A thorough and realistic appraisal of the project's concept

·         And hence the ability to solidify the project scope definition

·         Through the planning phases

Avoiding Unnecessary Project Risks - 2

·         Observing good project management planning practices

·         Including genuine and realistic estimating of time and cost

·         For defined scope and quality requirements

·         Identifying key uncertainties and risks associated with the project

·         In clear and precise terms

·         Openly examining these risks

·         And identifying ways of mitigation

·         And/or making appropriate reserve allowances

·         Where the scope of work is uncertain

Avoiding Unnecessary Project Risks - 3

·         Seeking innovative but practical solutions to offset potential risk areas through project risk management

·         Preparing contingent action plans and workarounds

·         Verifying quality and constructability, assemblability, or otherwise practicality of designs

·         Developing a sound procurement strategy

·         Supported by an appropriate organizational structure

·         And proper distribution of responsibility

Avoiding Unnecessary Project Risks - 4

·         If contracts are employed, ensuring that contract wording is clear and appropriate

·         Includes appropriate allocation of responsibilities

·         And terms for handling changes and disputes

·         Assigning responsibilities for project risk in such a way that motivates by recognizing that risk and reward go together

·         Avoiding incompatibility of contractual representatives

·         Or personality conflicts between