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mistakes. Without any knowledge of these probabilities, the actions taken to achieve the possible benefits would be dependent upon the project manager's tolerance for risk.

Most project management professionals seem to agree that the most serious risks, and the ones about which we seem to know the least, are the technical risks. The worst situation is to have multiple technical risks that interact in an unpredictable or unknown manner. As an example, you are managing a new product development project. Marketing has provided you with two technical characteristics that would make the product highly desirable in the marketplace.

The exact relationship between these two characteristics is unknown. However, your technical subject matter experts have prepared the curve shown in Figure 17-15. According to the curve, the two characteristics may end up moving in opposite directions. In other words, maximizing one characteristic may require degradation in the second characteristic.

Working with marketing, you prepare the specification limits according to characteristic B in Figure 17-15. Because these characteristics interact in often unknown ways, the specification limit on characteristic B may force characteristic A into a region that would make the product less desirable to the ultimate consumer. Figure 17-15 is a utility representation of product feature A versus product feature B, and the curve is Pareto optimal—meaning that you cannot have more product feature A without having less product feature B.

Although project management methodologies provide a framework for risk management and the development of a risk management plan, it is highly unlikely that any methodology would be sophisticated enough to account for the identification of technical dependency risks. The time and cost associated with the identification, analysis and handling of technical risk dependencies could severely tax the project financially.

As companies become successful in project management, risk management evolves into a structured process that is performed continuously throughout the life cycle of the project. The four most common factors supporting the need for continuous risk management are how long the project lasts, how much money is at stake, the degree of develop-

Desirable u d

Undesirable

Product Featrure B

Undesirable

Product Featrure B

Desirable

FIGURE 17-15. Interacting risks.

mental maturity, and the interdependences between the different risks. For example, consider Boeing's aircraft projects where designing and delivering a new plane might require ten years and a financial investment of more than $5 billion.

Table 17-12 shows the characteristics of risks at Boeing. The table does not mean to imply that risks are mutually exclusive of each other. New technologies can appease customers, but production risks increase because the learning curve is lengthened with new technology compared to accepted technology. The learning curve can be lengthened further when features are custom-designed for individual customers. In addition, the loss of suppliers over the life of a plane can affect the level of technical and production risk. The relationships among these risks require the use of a risk management matrix and continuous risk assessment.

Another critical interdependency is the relationship between change management and risk management, both of which are part of the singular project management methodology. Each risk management strategy can result in changes that generate additional risks. Risks and changes go hand in hand, which is one of the reasons companies usually integrate risk management and change management into a singular methodology. Table 17-13 shows the relationship between managed and unmanaged changes. If changes are unmanaged, then more time and money are needed to perform risk management, which often takes on the appearance and behavior of crisis management. And what makes the situation even worse is that higher salaried employees and additional time are required to assess the additional risks resulting from unmanaged changes. Managed changes, on the other hand, allow for a lower cost risk management plan to be developed.

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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