Project Risk Management

SOTONYE TARIBO

Brief discussions on why estimating activity durations and scheduling can be one of the most risky aspects of any project. Project management terminologies enable us to define and understand concepts and apply to the principles of project risk management. This is why the a clear understanding of terminology used in risk management, project risk selection, classification of risks, the PERIL database etc. can enable us to comprehend why and how errors in estimating activity durations and scheduling can become a source of risk and impact any project. We generally understand that, Risk- is an event that by its occurrence might lead to positive or negative consequences in the future. Risks are actually not uncertainties but, risk is a potential event which can be uncertain in odds and effects that by its occurrence could affect the outcomes of a projects ability to achieve its objectives -if not managed properly. It is the very decisions made daily to achieve an objective in any project that may present a number of uncertainties. While in some projects these may come as opportunities; in others they are risky. So, it can be situational. For instance, a construction project that, provides inadequate contingency time buffers in its scheduling or poor estimates for time, to absorb unplanned risk (threat) of snow/inclement weather during winter months may face potentially adverse delays to the project and perhaps not meet schedule or incur increased cost (labor, resources, funds etc) trying to mitigate the risk event in order to complete the project within schedule. Definitely, such situations call for delays in schedules which risk many aspects of a project and may lead to increased costs project potentially impacting any project. Conversely, in another situation, a snow removal contractor would welcome the risk of snow during winter months as an opportunity in order to take advantage of increasing sales or production. In this instance, the contractor welcomes the risk event (positively) rescheduling and may bring in more labor (costs, safety, etc.) to finish a project ahead of schedule. The PMBOK (2008 p.51, 129) explains that the process of approximating the number of work periods needed to complete individual activities with estimated resources is estimating activity durations. While estimating the type and quantities of material, people, equipment, or supplies needed to perform each activity is estimate activity resources. This credits the fact that developing schedules with actual estimates during

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April 23, 2012

SOTONYE TARIBO Discussion Questions

Feb. 20- 26, 2012

estimating activity durations enables an accurate project schedule which is very important for a projects success. Reasons for project failures and the risks in project selection The reasons include: Objectives as being unrealistic; Resources not made available when needed; Implementation of the project plan being flawed and inadequate project selection; and Risk assessment not conducted or badly conducted. In each of these scenarios and in project selection; not adequately aligning or reconciling the processes of estimate activity resources with estimating activity durations will definitely constitute a project risk. These activities should take cognizance of the requirements which are in line with the 6 components of the project time management as stated in (PMBOK, p. 129 6.1-6.6). These are the define activities, sequence activities, estimate activity resources, estimate activity duration, develop schedule, and control as all these work together hand-in hand towards a successful project completion. For instance, in a developing engineering construction project, as more data become more available, the project objectives at the project scope may be better defined and realistic; or labor or team is more knowledgeable; the accuracy of resources and subsequent duration estimates inputs (activity lists, resource requirements, calendars, project scope statement etc.) will evidently improve and lead to a more accurate estimate duration activity outputs.(Activity duration estimates and project duration updates.)

References Kendrick, T. (2009). Identifying and Managing Project Risk. Essential Tools for Failure-Proofing Your Project. (2nd ed). AMACOM Project Mgt Institute (2008). A Guide to the Project Management Body of Knowledge (4th ed). Project Management Institute, Inc.: Newton Square, Pennsylvania Heldman, K. (2009). Project management professional exam: Study guide (5th ed.).Indianapolis, IN: John Wiley & Sons Inc. Gray, C. F., & Larson, E., W., (2011). Project Management, A Managerial Process (5th ed.). NY, New York: The McGraw-Hill Companies, Inc.

Project Risk Management: Discussions

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