Project Management Essentials by Kloppenborg Timothy & Wells Kathryn

Author:Kloppenborg, Timothy & Wells, Kathryn [Kloppenborg, Timothy]
Language: eng
Format: epub
Publisher: Business Expert Press
Published: 2015-08-24T16:00:00+00:00

Managing Risks

Prior to creating a baseline schedule, you also need to spend some time brainstorming and planning for risks. In project management terminology, risks are positive or negative events that may happen and, if so, would affect your project. Risks are inherent to every project, and it is not your goal to avoid risks altogether. Positive risks represent opportunities you want to capitalize on, while negative risks are threats you would like to prevent or minimize.

The planning we are about to suggest focuses on preventing or mitigating negative risks. Like many other project management planning processes, planning for risk should begin with a brainstorming session. Your project team, as well as any subject matter experts you include, should begin by identifying any and all potential risks to your project. It may help to consult your project charter and other planning documents you have so far. When we lead this brainstorming session with students or clients, we have participants use a post-it note for each risk identified, no matter how small or far-fetched. (Remember, one rule of a brainstorming session is to include all answers.)

Project risks will fall into one of three categories: known knowns, known unknowns, and unknown unknowns (also called unk unks ). Known knowns are comprised of the risks that can be most easily foreseen. This may sound like an oxymoron, since we stated above that uncertainty is inherent to risks. Yet, that degree of uncertainty can vary widely. For instance, a common known known in the construction industry is rain. Although we cannot predict with much accuracy when it will rain over the course of a project that lasts several weeks or months, it is almost certain—at least in most climates—that it will rain at some point. Something less likely but still well within the realm of possibility is a known unknown. Sticking to our construction example, a known unknown may be a blizzard, if you live in a climate where that is possible but infrequent.

Finally, unknown unknowns are the types of risk that, frankly, you don’t even see coming. They involve a previously unforeseen threat such as a supplier going out of business, geopolitical changes that affect your project, death of a key stakeholder, etc. You may be wondering, how can I plan for something I cannot even predict? In short, there isn’t much you can do—especially at this stage of risk identification. However, the very existence of unknown unknowns will be taken into account in Chapter 6 when we get to budgeting for the project. For now, we want you to know about all three categories of risks, but we realize you will only be able to identify and plan for the known knowns and known unknowns.

Once your team has identified as many project risks as they can come up with and listed them, one per post-it note, you will discuss as a team how to rank each risk according to two criteria: probability of the risk happening and impact if it does. If your

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