Plan Risk Responses
By Simona Belindean, Northwest University
The benefit to knowing the risks that could possibly affect the outcome of the project is that in identifying risks, a great project manger will also pinpoint and pursue the best possible solutions. For example, in knowing that it will rain on the that day we will be spectators at a much anticipated outdoor soccer game, we will use that knowledge of the weather forecast and take rain coats, boots, hats, and umbrellas – to not only be prepared for the rain, but to ensure enjoyment and fulfillment at the planned outing.
By having and utilizing responses to negative risks, a project manager effectively reduces the impact of threats to the project. In knowing that a specific product will cause an increase in the overall budget of the project, the project manager (or team member) can shop around for a less expensive manufacturer, and if successful, completely avoid the threat of the higher cost product.
In knowing that a specific part of the project involves specialized equipment or industry specific skills, a project manager can plan ahead and contract that phase of the project out, increase liability insurance, or completely transfer responsibility to a third party until all aspects of that work is completed.
In mitigating, a project manager will negotiate certain aspects of risk so that the negative effects will be lessened, or tolerable. For example, if a project manager knows that the team members have never before performed a specific task or process, they will mitigate with the sponsor to ensure proper training or completely outsource that task so that the work can be completed, and become a successful part of the project.
If the risk is small enough, and its negative implications will not affect the overall goal of the project, a project manager may choose to only monitor that risk, and simply accept its existence.
In order that changes, challenges, or even failures are addressed, project managers must set up contingency reserves. For example, if a project has the time line of 24 months, a good project manager will automatically run it as a 22 month project, and have a built in reserve time of two months, in which to handle the unpredicted changes or risks. Reserves can also be applied to the project’s budget. In knowing that the project has a $150,000 budget, a project manager would be wise to run the project on a $125,000 budget, and have $25,000 in reserves to effectively handle changes or other unanticipated risks.
Risks can also bring positive effects to a project, and in those instances, it is in the project manager’s best interest to eliminate doubt, and ensure that that specific risk/opportunity occurs in order that the benefit is experienced, exploited to its fullest, and possibly shared with others. In sharing positive risk, the project manager also empowers and allows for personal growth for others on the team, or within the organization.
Northwest University opened to students on October 1, 1934. It is a regionally accredited institution awarding associate, baccalaureate, and master’s degrees.
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