As I look out my office window this morning, I once again see snow! It has been an uncommon winter for snow here in the north Georgia mountains! I wonder when it will be safe to drive again, maybe later today – or possibly tomorrow? How should I plan the next day or two? It’s uncertain right now.
As project managers, we are typically faced with a lot of uncertainty as we get together with our teams to plan our projects. A lot of that uncertainty will become clear fact further into the project life cycle. Previous snow storms have provided information about what to expect, but each storm is a bit different, isn’t it? Even if our projects don’t experience “storms,” there is always some uncertainty as we get started. How much should materials or equipment cost to purchase or rent? How long should certain schedule activities take to accomplish? Are the skills of the project team adequate to meet the deadline and budget constraints that exist? Well, looking back later, we’ll know for certain. Until then, maybe at best it’s an educated guess.
Dealing with all of this project uncertainty is what Project Risk Management is all about. In short, “risk” is “uncertainty.” It’s not just about threats and the uncertainty of the negative effects on our project success, Risk Management is also about the uncertainty of the opportunities, or positive risk events, and the potential benefits to our project! Risk Management involves a lot of planning:
- Identifying the uncertainties,
- Analyzing their respective probabilities of occurring and the associated positive or negative impacts if they do occur,
- Evaluating the potential budget or schedule impact in terms of money or time, and
- Determining a specific set of strategies by which to best protect the project against threats and to best take advantage of opportunities.
That looks like a lot of planning! It is. You may think the associated team time for this planning is expensive – hard to afford. The importance of the success of your project drives the fact that you cannot afford to skip this planning!
In preparation for the PMP® Exam, focus heavily on the specific strategies employed for responding to identified threats and opportunities. The appropriate strategies will be driven by the level of tolerance for risk. Though we often hear the term “risk mitigation,” you’ll find that it is often incorrectly used based on PMI®’s defined seven strategies by which to respond to uncertainty. Huummmm…. Maybe I should share a series of thoughts about the Magnificent Seven? I’m a little uncertain right now.