FIGURE 17-14. Ordering of trade-offs (Note: Lower priorities more often undergo trade-offs.)

The interdependencies between risks can also be seen from Table 17-11. The first column identifies certain actions that the project manager can take in pursuit of the possible benefits listed in column 2. Each of these possible benefits, in turn, can cause additional risks, as shown in column 3. In other words, risk mitigation strategies that are designed to take advantage of a possible benefit could create another risk event that is more severe. As an example, working overtime could save you $15,000 by compressing the schedule. But if the employees make more mistakes on overtime, retesting may be required, additional materials may need to be purchased, and a schedule slippage could occur, thus causing a loss of $100,000. Therefore, is it worth risking a loss of $100,000 to save $15,000?

To answer this question, we can use the concept of expected value, assuming we can determine the probabilities associated with mistakes being made and the cost of the

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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