Risk Management and scheduling

Every project manager does risk management to some extent. How extensively it gets documented depends organisations process maturity. Documentation or no documentation, invariably, every manager does his/her risk management. Let us look at what is Risk management, what are the normal mistakes done by managers while doing it.

Risk is an event that may or may not happen and has an impact (positive/negative) on the project. PMI calls the risks with positive impact as opportunities and the risk with negative impact as threat. During this post, I will concentrate on Threats but will call it risk, even though a large part of my discussion can also be applied to opportunity as well.

What is involved in Risk management?
1. Risk Identification - We need to identify risk and quantify the probability and impact of the same. We also need to identify the risk trigger/symptoms.
2. Mitigation plan - What do we need to do to influence either probability or impact of the same
3. Contigency plan - What can we do if the risk actually happen?
During the course of project, the probability, impact of a risk may change. Also, mitigation plan and contigency plans may have to be adjusted depending on the situation.

People generally do identify risks reasonably well. They also put a nice mitigation plan. They also make a wonderful contigency plan.
How ever, ask your self of the following questions to avoid common mistakes:
1. Have we budgetted for all the resources required for contigency?
2. Have we included the mitigation plan into the schedule?
3. If the risk probability has reduced/increased, does it have an impact on my total project effort, cost adn time? If it does not, then obviously, our schedule does not reflect the reality. Herem the contigency plan may be same, but if the risk probability reduces, my expect contigency effort and duration will be lesser and hence we should be able to plan to finish earlier.
4. Each activity in the schedule may be having associated risks. But, if the activities in the schedule are complete and the risks did not occur, does it reflect on the overall project estimated effort/dates?

Thearitically, people use What-if analysis to analyse the impact of the risks on the schedule, but, practically, I have not seen any one do this extensively. The reason is lack of tools. I am planning to throw some light on how this can be done in my future posts!