Uncertainty is an element of all projects. Risk in projects must be recognized, evaluated, and considered as part of the project prioritization and selection process, as well as during the execution of selected projects. In managing risk, the goal is to minimize the potential for failure to achieve the project's benefits. The risk-based process has these key elements:
• Evaluate proposed projects against the selection criteria using each business case scenario: once with the base case and again with the potential upside and downside case data.
• Consider bypassing a proposed project that has excessive risk. Make sure that there is a clear policy for risk, and then adhere to it.
• Reduce the ranking of a proposed project where the range of risk-based results is large. A high level of uncertainty is not a desirable condition.
• Where risk is large enough to demote a project, consider risk mitigation options to contain such risk.
• Add the cost of mitigation actions (if any) to the project proposal data.
• Balance risk, that is, don't put too many high-risk projects in a portfolio.
• Don't stop with project selection. Consider the effect of risk and change in ongoing projects.
• Conduct periodic project status reviews. Note any items that can influence the decision to have that project in the portfolio. Consider delay or termination where warranted.
• Conduct periodic Stage-Gate reviews. Include significant risk milestones.
• Consider active projects as well as proposed projects when conducting the periodic ranking, selection, and resource allocation exercises.
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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.