How to Control a Project Risk Management Plan

Project risks are most effectively controlled through risk management plans.

In terms of project management, a risk is defined as some type of adverse event that has the potential to negatively impact a project in terms of cost, time or technical goals. All projects have some level of risk and a project leader is responsible for controlling and managing a project's risks.

Instructions

1. Identify risks for the specific project during project initiation and planning. Document risks on a spreadsheet by listing any events that have the potential to fail using the following to identify potential risks: "lessons learned from previous projects, resource availability lists, resource skills levels, project peer reviews, management project plan reviews, schedule constraints, cost constraints" (Cleland & Ireland, 2004).

2. Add two columns to the spreadsheet for probability and consequences. Quantify risks in terms of probability and consequence in order to weigh for mitigation purposes. Rank probability of occurrence between 0.1 and 1.0, with 0.1 being improbable and 1.0 being very probable. Rank the consequence for each risk between 1 and 5, with 1 being very low and 5 being very high.

3. In a fourth column, multiply the probability value by the consequence value to get an overall risk weight. Rank each risk in order of the magnitude of impact to prioritize the most critical risks over the less than critical risks. Identify high-risk items as red, medium risk as yellow and low risk as green.

4. Develop a risk mitigation strategy for each of the risks, starting with the red items first. Risk mitigation can be completed by changing the current plan, adding resources, changing the technical approach or various other actions. Ideally, all red risks should be mitigated to a green or yellow status through the plan.

5. Identify a contingency for each risk to document an alternative solution in the event that the risk is realized. The contingency plan can consist of alternative ideas, such as contracting portions of the work, reducing scope or employing different technologies.

6. Monitor the project risks throughout the course of the project to continually determine whether risk can be discharged or if probability or impact of risk has changed. The project manager or leader should be responsible for managing a project's risks in order to minimize impact to timing and cost.

Tips & Warnings

• The risk schedule should be regularly monitored and updated throughout the course of the project, as risks can arise that may not have initially been recognized during project initiation and planning.

References

• "A Guide to the Project Management Body of Knowledge (PMBOK Guide)"; William R. Duncan, Project Management Institute; 2005
• "Project Manager's Portable Handbook"; David I. Cleland & Lewis R. Ireland; McGraw Hill; 2004

Resources

• PMI: Project Management Institute
• Microsoft: Risk Management Plan Templates