Risk Assessment and Management

You've used Microsoft Project to create a detailed plan for your project and you believe you've accounted for everything. What could possibly go wrong? Plenty! The question is, "Where will the project go awry and what can you do to avert disaster?" Assessing and managing risks is the best weapon you have against project catastrophes. By evaluating your plan for potential problems and developing strategies to address them, you'll improve your chances of a successful, if not perfect, project.
The Basics
There are four steps to assessing and managing risks, and effective risk management requires all four of them.
1. Identify risks
2. Quantify risks
3. Plan for risks
4. Monitor and manage risks
To adequately analyze risk, you'll need a detailed plan. So, the best time to perform an initial risk analysis is just prior to saving your baseline and starting the project. But don't make the mistake of thinking that risk analysis is a one-time task. You'll want to reevaluate the plan and your risk analysis from time to time throughout the project and whenever major deviations from the plan occur.
Identify Risks
There are numerous ways to identify risks. If you have a limited amount of time, the best ways to identify risks are to:
· Review the task list and schedule.
· Brainstorm and talk with the experts.
Review the Task List and Schedule
In your Microsoft® Project plan, look first at the critical path tasks, then at tasks that are almost on the critical path, and finally at noncritical path tasks. Look for:
· Tasks for which your team has no expertise. The duration and cost estimates for these tasks are more likely to be inaccurate.
· Duration and cost estimates that are aggressive. Ask the estimators how confident they are in their estimates, especially for critical path tasks. Helpful views.
· Situations where you have a limited number of resources that can do particular tasks and where those resources are fully allocated, overallocated, or may become unavailable. A resource can become unavailable when it leaves your organization or because of commitments within the organization. Helpful views.
· Tasks with several predecessors. The more dependencies a task has, the greater the likelihood of a delay.
· Tasks with long durations or a lot of resources. The estimates for these larger tasks are more likely to be inaccurate.
Brainstorm and Talk with the Experts
All of your project risks may not be apparent from analyzing the project plan. It's worth your time to call a brainstorming meeting with key resources on your project. Ask these people where they see the most risk to the project. You may be surprised at what you uncover.
If you have some experienced project managers available, have them review your plan. Also, talk with people who have expertise in particular areas of the project. For example, if you're planning to use an outside contractor, talk to people who have used that contractor or other contractors.
Quantify Risks
Quantifying risks is a discipline unto itself. Your options range from sophisticated probability analysis to the simpler techniques outlined below. Obviously, the accuracy of your results is commensurate with the techniques you use. This article outlines some basic, but effective techniques.
To quantify risks:
· Determine your tolerance levels.
· Assign a probability to each risk.
· Assign a cost to each risk.
· Assign a priority to each risk.
Determine Your Tolerance Levels
If you work for a small company, an additional project cost of $250,000 or a delay of two 2 months may put your entire company at risk. If you work for a large organization, these overruns may be acceptable for a project. Write down some hard numbers. How much cost and delay is acceptable? Remember that this isn't your preference, it's just the bottom-line numbers you can tolerate.