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Suggest You - Increasing Project Value through Risk Management
Come on, don’t deny it; we’ve all said that at one time or another (yes, under your breath still counts). We know that our job is to get things done – not to do them ourselves. So why do we often end up frustrated when we think something hasn’t been done properly?The easy answer is that we have employees who don’t have the initiative, skills or experience to do anything except follow instructions. (OK when we’re starting out, not when we’re growing quickly.) But - what about the ones who are giving the instructions (that would be us)? How well do we hold up our end of the deal?Things don’t get off to a good start if we only delegate when we’re overwhelmed and missing deadlines. We’r
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, bu
"You are testing my patience."I had just shared an article with my husband on "Secret Dining", a hip new trend making its way from Chicago to New York. Essentially these underground "restaurants" offer gourmet dinners at invitation-only parties in exchange for "donations". Sometimes dinners are combined with salon-type discussions, art showings or other events. Cool, exclusive, hip. All the fun of running an upscale restaurant without all the health department hassles.I am a woman with a many interests. In one recent lunch conversation a friend and I managed to touch on a mind-boggling array of topics including martial arts, knitting and crocheting, gourmet cooking, Tarot cards, dream interpretation, ma
It may be time to stop thinking of risk assessment as the killjoy exercise which drains the enthusiasm from your project and to start thinking of it as a tool for enhancing your project's value.
Understanding the Fundamentals:
A project risk is any problem that could cause some loss or threaten the success of the project1. Risks differ from issues because they refer to the future or to the potential for adverse outcome.
“A risk consists of a condition which is not currently true, the likelihood that the condition will materialize, and a consequence or impact on the project if the condition does materialize.”
Risk management is the process of identifying, analyzing, and addressing project risks proactively to maximize positive consequences (opportunities) and minimize negative consequences (losses). Risks are addressed by formulating mitigation plans, which are aimed at reducing the likelihood that the condition will materialize, and contingency plans, which are aimed at addressing the condition when it does materialize.
As mentioned above, the value of a project is determined by its net return and its risks. The net return on the project is equal to the present value of the project minus the costs (return = present value - costs). This return assumes that the project will proceed as planned and budgeted - that is, it assumes a risk-free project. But projects are rarely risk-free. To get a true assessment of the project, the return must be evaluated against the risks.
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, bu
Sure, all clients are different. They have different kinds of strengths, weaknesses, cultures and goals. Even what blocks their efficiency and growth (blind spots) is different. Davis, Kingsley & Company has conducted hundreds of interviews and there are four strong themes that always emerge.Listen to me. This is the Big Daddy of client desires. Your clients want you to listen to them. The implications of this theme lead to a variety of creative programs that will put you in a listening position with your clients. While surveys, at times, can be useful, we have found they do not satisfy a client's need to be heard.Show me you’ve listened. If your clients take the time to speak up and offer t
It may be time to stop thinking of risk assessment as the killjoy exercise which drains the enthusiasm from your project and to start thinking of it as a tool for enhancing your project's value.
Understanding the Fundamentals:
A project risk is any problem that could cause some loss or threaten the success of the project1. Risks differ from issues because they refer to the future or to the potential for adverse outcome.
“A risk consists of a condition which is not currently true, the likelihood that the condition will materialize, and a consequence or impact on the project if the condition does materialize.”
Risk management is the process of identifying, analyzing, and addressing project risks proactively to maximize positive consequences (opportunities) and minimize negative consequences (losses). Risks are addressed by formulating mitigation plans, which are aimed at reducing the likelihood that the condition will materialize, and contingency plans, which are aimed at addressing the condition when it does materialize.
As mentioned above, the value of a project is determined by its net return and its risks. The net return on the project is equal to the present value of the project minus the costs (return = present value - costs). This return assumes that the project will proceed as planned and budgeted - that is, it assumes a risk-free project. But projects are rarely risk-free. To get a true assessment of the project, the return must be evaluated against the risks.
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, bu
Once you’ve made the choice to promote your business with engraved or printed keyrings, you have to start looking at keyring materials. There are three basic types of printed keyring textiles – metal, plastic and leather. There are hybrids as well, like those that contain metal and leather as well as metal and plastic. Which is best for your business?Very Small BudgetIf you need a lot of promotional items and a very small budget, you may think keyrings are out of your price range. Not so, but you may have to settle for a keyring with fewer features.The least expensive printed keyring is the mini ad loop keyring. A soft, flexible plastic loop holds your message while a sturdy metal ring hol
“A risk consists of a condition which is not currently true, the likelihood that the condition will materialize, and a consequence or impact on the project if the condition does materialize.”
Risk management is the process of identifying, analyzing, and addressing project risks proactively to maximize positive consequences (opportunities) and minimize negative consequences (losses). Risks are addressed by formulating mitigation plans, which are aimed at reducing the likelihood that the condition will materialize, and contingency plans, which are aimed at addressing the condition when it does materialize.
As mentioned above, the value of a project is determined by its net return and its risks. The net return on the project is equal to the present value of the project minus the costs (return = present value - costs). This return assumes that the project will proceed as planned and budgeted - that is, it assumes a risk-free project. But projects are rarely risk-free. To get a true assessment of the project, the return must be evaluated against the risks.
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, bu
You're interested in becoming a nurse. How do you get into the field? First of all, you need to assess your basic interest. Why do you want to get into nursing? Are you getting ready to graduate from high school and always wanted to be a nurse? Do you want to go into nursing, because a relative is in the profession or your family has a tradition of graduating nurses, and it seems like the right thing to do? Nursing seems like a nice secure profession-the pay attracts you? You've always liked helping others and you care a lot?Have you worked in another career field and want a change for various reasons? Does the "nursing shortage" make you feel like you need to be a part of the "gold rush," because you have rea
As mentioned above, the value of a project is determined by its net return and its risks. The net return on the project is equal to the present value of the project minus the costs (return = present value - costs). This return assumes that the project will proceed as planned and budgeted - that is, it assumes a risk-free project. But projects are rarely risk-free. To get a true assessment of the project, the return must be evaluated against the risks.
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, bu
Have you ever finished listening to an explanation from a purported subject matter expert only to wonder what it was they just said? It has been my experience that the more vague, general or ambiguous an explanation, the less command of the subject matter the person doing the explaining likely possesses. It is one thing to toss around the latest buzz-words, but it is quite another thing to actually know what they mean and have the ability to correctly apply them. In today’s blog post I’m going to reveal the tricks of those who practice what I call “the black art of confusion.”Those of you that know me have come to understand that I prefer to cut to the chase and get to the root of an issue as quickly as possib
Applying Risk Management:
Suppose I have a project proposal to unify two corporate databases. I estimate that this will save the organization $100,000 over five years and that it will cost $80,000 to implement. The return is $20,000 without factoring in any risks, but there are risks.
1. Due to some uncertainty in the requirements, there is a 50% likelihood that the development effort will cost an additional $10,000. This comes to a reduction of the return by $5,000 ($10,000 x .50).
2. Although the project team has assurance from sales that the impact upon the sales force will not be substantial, the team believes that there is still a 25% likelihood that upon seeing the changes, sales will require additional training, costing $8,000, thereby reducing the return by $2,000 ($8,000 x 25).
3. Due to some inherent uncertainties regarding the technologies, as well as the direction of the organization and some anticipated acquisitions, there is a 10% likelihood that the entire project will fail or be superseded by other efforts. This means a reduction of the return by $8,000 ($80,000 in overall project costs x .10).
When all risks are factored, the reduction on the return is $5,000 + $2,000 + $8,000 or $15,000. The return is now $20,000 - $15,000 or $5,000, making the project substantially less attractive than it originally appeared. But by managing the risks, the value of this project can be increased to a level that again makes it attractive.
1. First, the requirements could be tightened by first developing a proof-of-concept or simply by delaying the project until the uncertainties can be eliminated. By taking this approach, the value of the project can be increased by eliminating the $5,000 reduction for the risk of uncertainty.
2. A proof-of-concept could also be evaluated by the sales force to ensure that they will not need training, as feared, thereby eliminating the second risk and increasing the project's value by an additional $2,000.
3. Finally, although external uncertainties cannot be eliminated, mitigation and contingency plans can be put in place to reduce the over
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