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Creating a Risk Project Management Templates Plan

August 17 2007

Project Management Templates for Risk Management

Being a Project Manager is not an easy job. Having to manage time, cost, quality, suppliers, customers and staff can be enough to keep anyone awake at nights!

It’s no surprise that a high percentage of Projects (quoted by the Standish Group as over 70%) fail to deliver the expected business benefits. To ensure your project delivers successfully, you need to create a comprehensive Risk Management Plan using your Project Management Templates for your project. By reading this newsletter, you will learn the:

4 critical steps to creating a Risk Management Plan

So what is a Risk Plan? It’s a document through project management templates that identifies all of the foreseeable project risks and the actions needed to prevent each risk from occurring. To gain the best results, you need to create a Risk Plan for your project as early in the Project Lifecycle as possible, ideally soon after the Project Plan has been created. Take these 4 critical steps to building a Risk Plan for your project:

Step 1: Identify the Risks

Sounds easy right? Most Project Managers will agree that identifying all of the high priority risks for a lengthy project is more of an art than a science. Firstly, you need to identify all of the potential categories of risk (i.e. areas within the project which are likely to contain risks) such as the scope, schedule and budget. Then for each category, list the risks which are likely to adversely affect the project. For Example:

  • “That the scheduled delivery timeframe will be exceeded”
  • “That the project will spend more than the budget allocated”
  • “That change requests will lead to scope creep and delays”

Having a comprehensive risk list in your project management templates is critical to delivering a project successfully.

Step 2: Prioritize the Risks

The next step is to prioritize each risk by determining its likelihood of occurrence and the impact on the project should it eventuate. Here’s how to do it:

  • For each risk identified, assign a score (between 1 and 10) to describe its likelihood of occurrence. For instance, a risk that is almost certain to occur will score from 8 to10 whereas a risk with a low likelihood will score between 1 and 3.
  • Then assign to each risk an impact score (between 1 and10) to determine the severity of the impact of the risk on the project scope, scheduled end-date, budget or other key success criteria.
  • Now take an average of the likelihood and impact scores, to determine the overall risk priority. The higher the average score, the higher the priority of the risk. Of course, high priority risks will not only be monitored by the Project Manager, but the Project Board will also keep track of them to ensure that they do not adversely affect the project during the Project Lifecycle.

Step 3: Create a Risk Schedule

Great. So you now have a full list of risks and their priorities for your project. The next step is to identify the actions needed to reduce the likelihood and impact of each risk, by creating a Risk Schedule.

The Risk Schedule lists all of the risks identified to date and for each risk, it describes the

  • Overall priority of the risk (low, medium, high)
  • Preventative actions to reduce the likelihood of the risk occurring
  • Contingent actions to lessen the impact of the risk on the project
  • Resource responsible for taking the actions identified
  • Timeframes for undertaking the actions listed

Step 4: Define the Risk Management Process

Empowered with a detailed Risk Schedule, the Project Manager requires one more tool to be able to manage risk effectively within the project— a clear Risk Management Process. This process will enable them to react to new risks identified throughout the course of the project and to mitigate them wherever possible. We’ll describe how to create a clear risk process within the next fortnightly Method123 newsletter, so watch this space…