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Managing Risk in Project Management

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1. Why should all projects include risk in their project planning? What are some of the drawbacks if risks are not considered?

2. What does project risk management mean in the context of project management? Describe project risk management as a component of the project management process.

REFERENCE:

Kendrick, T. (2009), Identifying and Managing Project Risk. Second Ed. New York, New York: American Management Association.

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Solution Summary

This solution discusses risk management in project management.

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Kendrick identifies key project risk areas:

-Risk to Schedule (TIME)
-Risk to Resources (RESOURCE/PEOPLE)
-Risk to Activity (which I will equate with SCOPE)

Kendrick provides some good advice/wisdom to managing project risk:
- The bigger the project, the bigger the risk
- Every project has risk, but good planning minimizes it
- Luck helps a lot, but don't count on it

Risks of TIME can be minimized by analysis of historical data on similar endeavors or projects, or by using organizationally established rules of thumb.

Risks of RESOURCES may be better addressed not by attempting to minimize a project's downside, but by attempting to maximize its upside.

Risks of SCOPE or ACTIVITY may be mitigated by a clear, evidence-based understanding of whether the risk is 1) known and controllable; 2) known and not controllable; and 3) not known. Whether a risk is controllable or uncontrollable may depend on its definition.

Project management is all about managing the risks involved in managing the relationship between SCOPE, TIME and RESOURCES. It is impossible to change one of these three factors without changing at least one of the other two. Before we delve into resource related risk, let's look at each element individually. SCOPE is what needs to be done - does a training project ...

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