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Types of Risk: Risks Inherent in a Project

Could you please go more in-depth or elaborate in greater detail on the below questions you answered last week?

What types of risks are inherent in a project? Where do they originate? Can they be mitigated? Explain how. What are the consequences of ignoring a conflict within a project team?
There are 3 types of risk:
1) Inherent Risk-These are risks that result from the nature of the project. This would include the type of software that is being developed, the size of the team, the geographical diversity etc.
2) Acquired-These are risks that arise due to decisions made by the project team. These would include project methodologies, experience of team members etc.
3) External-These risks arise from factors outside of the project or the project managers control. This would include legal issues, illness, problems with the software etc.
Inherent risks would include:
Duration of the project-The longer the time frame, the greater the risk of losing focus, people etc.
Number of clients-The more clients (stakeholders) in the project, the greater the risk. This can be caused by scope creep, conflicting desires etc.
Definition of scope-The less defined the scope is, the greater the risk of failure.
Project team knowledge and client knowledge-The more knowledgeable the client and team are, the less the risk.
Dependency on resources outside of the team-The more the project has to depend on others outside of the team, the greater the risk.

Client commitment-The more committed the client is to the project, the lower the risk.
Changes to existing procedures, processes and policies-The more changes, the greater the risk.
Project manager experience-The more experienced the manager, the less the risk.
Use of formal methodology-There is less risk, if a formal methodology such as waterfall, etc is used.
Risk can be mitigated by assessing it ahead of time and planning contingencies
Conflict within a team can be beneficial or destructive. Conflict can help to bring issues to light and resolve them. For example, there may be a conflict within the team regarding how to accomplish a task. By working through the conflict, a superior method may be developed to accomplish the task. Conflict can also be destructive, especially if it is personal and/or emotional. The risk that can arise by ignoring conflict, is that it becomes intractable and personal. For example two parties may have a conflict regarding the workload. If the project manager doesn't work to resolve it, then team members may become bitter and refuse to work on the project or not give it all of their effort.
Mochal, Tom. Look for inherent risks before starting your project. ZDNet. Retrieved on October 26, 2011 from http://www.zdnet.com.au/look-for-inherent-risks-before-starting-your-project-139257486.htm

What is the importance of a variance to a project budget, schedule, or specification? How does a project manager find the root cause of a variance? Is there an acceptable variance? Is a variance ever acceptable? Explain your answer.
Variance is defined as a measurable difference between actual and some known standard or baseline. For example, you may have a budget for the project of 1000$. However, the actual expenditure is 1500$. You have a variance of 500$.
In project management, you determine the baseline by looking at the cost, schedule and scope. The scope represents all the work that needs to be done. The scope can be represented by a work break down structure, showing all of the tasks. The cost and schedule can then be generated from the work break down structure.

Cost, schedule and Scope are the triple constraints in project management. A change in any one of these factors, will alter the other 2. The project manager should track the variances of scope, schedule and cost. If the variances are positive, under budget, under cost or within scope, then the project is preceding successfully. If the variances are negative, then the project is not going successfully and one or more of the triple constraints needs to be adjusted accordingly or expectations need to be adjusted.

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What types of risks are inherent in a project? Where do they originate? Can they be mitigated? Explain how. What are the consequences of ignoring a conflict within a project team?
There are 3 types of Risk:
1) Inherent Risk-These are risks that result from the nature of the project. This would include the type of software that is being developed, the size of the team, the geographical diversity etc.
2) Acquired-These are risks that arise due to decisions made by the project team. These would include project methodologies, experience of team members etc.
3) External-These risks arise from factors outside of the project or the project managers control. This would include legal issues, illness, problems with the software etc.

Inherent risks would include:
1)Duration of the project-The longer the time frame, the greater the risk of losing focus, people etc.
2) Number of clients-The more clients (stakeholders) in the project, the greater the risk. This can be caused by scope creep, conflicting desires etc.
3) Definition of scope-The less defined the scope is, the greater the risk of failure.
4) Project team knowledge and client knowledge-The more knowledgeable the client and team are, the ...

Solution Summary

The solution discusses the types of risks and risks inherent in a project.

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