Overview of Risk Management.

We have not seen an increase in the success rates of projects for some time now. A project should be considered a failure only when it has not delivered the quality “fit for use” deliverables that were con- tractually promised. So doesn’t it make sense that the earlier in our project’s life cycle we identify the road blocks are that will increase the likelihood that our deliverables will not be what were promised. Key information about project constraints: cost, performance, quality “fit for use” and schedules are often unknown until late in the
project. Risk management started at the conception of the project is critical to the successful comple tion of any project. However, risk is probably the most misunderstood project constraint for two reasons: 1) it is the newest con straint to be described as important to most project successes and 2) risk deals with unidentified future event (UFE) for which many consider a waste of project re sources. The risk constraint, how- ever, is usually the constraint that must become the de-stressor once one of the other constraints is modified without managing the result. For example, in many projects, the budget is reduced by a certain amount, say 15%, but none of the other constraints are allowed to destress the budget reduction. Pro ject sponsors simply tell the project team to make do with the current scope, schedule, and quality, but with 15% less budget resources. While this mandate can be made without taking into account the other constraints, if nothing is allowed to take up the budget cut, it will ultimately fall to the risk constraint to restore equilibrium by increasing the risk profile – meaning the risk of an unsuccessful outcome increases accordingly.

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