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How to Effectively Manage Project Risks

  • How to Effectively Manage Project Risks-

    Risk is always to be analyzed by the probability of the event occurring and the consequence if it does occur, and should focus on the project schedule, costs, scope and quality.

    • Probability – the likelihood that a risk condition will actually occur.
    • Consequence – the impact that might occur from the risk

    The estimates of probability and consequences are completely dependent upon subjective estimates. This means that if an estimator is unskilled or inexperienced, the estimates will be inaccurate. If the project manager is not confident in the estimator’s judgments, then subject matter experts from other projects should be invited to participate in the qualitative analysis process.

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How to Effectively Manage Project Risks

  • 1 | 2 | 3 | 4 | 5 | 6 | 7
  • How to Effectively Manage Project Risks-3

    Risk is always to be analyzed by the probability of the event occurring and the consequence if it does occur, and should focus on the project schedule, costs, scope and quality.

    • Probability – the likelihood that a risk condition will actually occur.
    • Consequence – the impact that might occur from the risk

    The estimates of probability and consequences are completely dependent upon subjective estimates. This means that if an estimator is unskilled or inexperienced, the estimates will be inaccurate. If the project manager is not confident in the estimator’s judgments, then subject matter experts from other projects should be invited to participate in the qualitative analysis process.

Risks can be foreseeable and unforeseeable. In both cases, astute project managers are prepared with some means of dealing with them. Many risk management plans address only foreseeable risks and fail to address the unforeseeable ones. For that reason, project planning must include a degree of schedule, cost, and scope margin.

Michael Taylor, a project manager with more than 30 years of experience, suggests that the most effective way to manage project risks is to adopt a process that systematically deals with the overall problem of uncertain events and conditions that might affect a project’s objectives. This process involves the following five steps.

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