Team Collaboration on Management of Risks

Risks are potential future events or conditions that can have negative effects on the outcome of a project. Risk management is the processes and procedures that enable managers to identify risks, assess them, and arrive at plans for handling them.

Some form of risk management is appropriate for nearly all projects. The extent to which it is used varies from project to project depending on the importance of the project, size and complexity of the project, and level of uncertainty associated with it.

Risk Overview

Risk management should be proactive. If implemented correctly, it helps to anticipate where a process or task may fail. If a project manager suggests that a task will take two weeks, but the resource assigned to it says it may take up to four weeks, the proactive project manager may want to create a risk item with a link to the task. After that, everyone who needs to can see the discrepancy. The reactive project manager may decide and hope that a problem does not occur before doing anything. When the problem occurs, in this example the task already took four weeks to finish, it may be too late to do anythingthe impact on other project tasks has already occurred.

A project risk management plan must be developed by the project team, and its level of detail should be appropriate to the size and importance of the project.For example, building a backyard patio doesn't require sophisticated risk analysis. On the other hand, building a high-rise condominium building complex for 15,000 people requires a sophisticated risk management planthe failure of one of the major subcontractors can lead to significant and costly delays, not to mention many unhappy customers.

Risk is the possibility of an event that, if it occurred, would have a negative effect on a project. After a project begins, new events that were difficult to anticipate might create new risks. For example, unseasonably cold weather might seriously impact the end date of a construction project in southern California.

This section of the chapter further discusses what you can do to prepare for risks.

The steps involved in preparation of a risk management plan in the context of the EPM solution include the following:

• Identify high-risk tasks Identify tasks likely to take longer than expected, end beyond their finish dates, delay the start or finish of related tasks, or delay the project finish date.

• Identify resource risks Resource risks include resources working near, at, or over their maximum availability. These resources can delay the project if they become unavailable. Identify also resources with specialized skills that the project absolutely depends on.

• Identify project budget risks To see overbudget tasks that are likely to cause the entire project to go over budget, identify your project budget risks.

• Specify risk probability Using the Project Server Risks module, you can specify the probability of a risk event that could impact negatively your project budget or cause a significant project delay.

• Involve your resources in identifying additional risks You may need additional resources that can help you identify additional risks. The resources that can best help you identify these additional risks are key people involved in planning and running the project and working on the tasks. In your project plan, look first at the critical path tasks and then at noncritical tasks.

Using the Project Professional client, look specifically for

• Tasks that your project team has little or no expertise in The duration and cost estimates for these tasks may not be accurate.

• Task estimates that look too optimistic Ask your estimators how confident they are in their estimates, especially for critical tasks.

• Tasks for which you have few resources available or that require resources with special skills Especially look at parts of the schedule where these resources are fully allocated, overallocated, or might become unavailable.

• Tasks with several predecessors The more predecessors a task depends on, the greater the chance that one of its predecessors finishes late and delays the successor task. You might not be able to identify all your project risks if you analyze only the project schedule alone. Meet with your key project resources and ask them to help you with identification of additional risks.

Risk Tracking Using Project Server

Using the risk tracking feature in the Project Professional or PWA client, project managers can record, update, review, and escalate project risks for their projects. Team members can keep track of risks assigned to them for resolution.

NOTE

The Risk module in Project Professional does not provide cross-project risk tracking and reporting or sophisticated risk analysis tools based on Monte Carlo analysis.

The Risk module interface exposed in the Project Professional client is the same interface available in the PWA client. You might prefer to use Project Professional for risks, however. Perhaps as a project manager you do most of your project plan work in the Project Professional client, and there is no reason for having to open another client interface if you can do your work in the Project Professional client.

When risk items are created, project managers can specify for each risk item the following default attributes:

• Title A text field that can be used to provide a description of a risk

• Assigned To The person responsible for handling or managing the risk

• Status Whether the risk is active, closed, or inactive

• Category The risk type

• Due Date Risk resolution due date

• Owner Person owning the resolution of the risk

• Probability The degree of probability that the risk will occur, ranging from 0% to 100%

• Impact How significant the risk would be relative to affecting the outcome of a project

• Cost The cost of the risk to the project, in monetary terms, should the risk actually affect the outcome of a project

• Description A text field that can be used to provide descriptions of a risk

• Mitigation Plan The plan to mitigate or minimize the impact of the risk, should it occur

• Contingency Plan The fallback plans, should the risk occur

• Trigger Description A text field that can be used to provide descriptions of a risk trigger

• Trigger The events that cause a risk to actually affect the outcome of a project, including dates, exposure, or incomplete tasks

In addition to the default risk attributes in the preceding list, you can link the risk to other risks, issues, documents, and project tasks.

Collaboration Features for Risk Management in Project Professional

The Risks page helps you document and track the risk events that could negatively affect your project. You must have WSS installed to use the Risks feature.

NOTE

To access the Risks module, select Risks from the Collaboration menu bar.

The first page that displays for risks is a list of all projects you are assigned to or own. Depending on your security permissions, you may view a list of all projects or a subset of projects. Select the hyperlink for the project you want to see risk items for.

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