Risks. How to Manage, Mitigate and Budget
Contributor: Dmitry Orel, PM at Archer Software
Let’s talk a bit about risks, how to manage, mitigate and budget them as a part of project estimation.
Every time a PM reviews a new project he has to take a lot of risks into account that are usually related to the project specifications, time, quality, team, etc. And each time he has to predict all the possible risks in order to prevent them from happening and meet the customer`s highest expectations in the end.
When you are doing project estimation, please always keep in mind the worst case scenarios of the project and how you will deal with them.
Basically, I use a few simple points when practice field of risk management, which should allow you to identify and assess potential risks, even at the very beginning of a project:
1. Before working on an estimate for a project, start with these two simple documents: “Project Vision” and “Feature list”. These should be discussed with, and approved by your customer. It will help a lot to clarify the project boundaries and minimize some risks from the start.
2. Use WBS. In WBS, much larger tasks or features are broken down into manageable chunks of work. These chunks can be easily supervised and estimated.
3. List risk. Communicate with the customer’s side and your project team in order to figure out as many of the potential risks as possible. Once you put together the risks list, go through it thoroughly and calculate the following items: Impact (how many hours each risk would cost if it does occur), Probability (how likely is each risk to occure) and Exposure (means actual risk value: Exposure = Impact * Probability).
4. Based on assumptions. If some issues are detected or if you still have any open questions – investigate them together with the customer as soon as possible. You can also get into a situation where the customer can’t provide you with an answer to your questions. If this happens, you should provide possible options to them based on your development teams understanding and then agree on which direction to proceed in.
After this each section and item listed in the project estimation should be identified and agreed upon with the stakeholders, including the customer. This process should be carried out any time a new project is started. This will ensure that you, your team and the customer are all on the same page.
I hope the points above will work for you and that you will be able to integrate them into your estimations successfully.