List of Risks for the Deck Project

To create a list of risks for the deck project, the project manager meets with his team to brainstorm negative and positive risks. To engage the team in the process, the project manager asks the team members to write risks on sticky notes. The project manager later combines sticky notes to eliminate duplicates and organizes the sticky notes into the risk categories. As team members often focus on product risks rather than project risks (usually because the product is tangible and easier to think about), the project manager should separately create lists of project risks and product risks.

Table 7.2 contains a list of the risks for the deck project.

Appendix J contains the positive and negative risks for the Community Gardens project, along with a table of risk categories.

Table 7.1 Risk Categories

PRODUCT RISKS ENVIRONMENTAL/EXTERNAL RISKS • Requirements/Scope

• Design and technology • Quality and feasibility

• Vendors

• Legal/Regulatory/Safety • Market

• Customer/Stakeholder PROJECT ENVIRONMENTAL RISKS PROJECT MANAGEMENT RISKS

• Decision making • Change management • Life cycle • Conflict management • Organization structure/ Dysfunction • Executive/Sponsor • Scope • Schedule • Budget/Cost • Quality • Resources

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7.4 Checkpoint

Consider the risks to your project and create a list. Try using the phrasing suggested above and create separate lists for positive risks and negative risks. Using the risk categories from Table 7.1, record the risk category for each item. You may find that you need addi- tional risk categories—this is fine and will result in an expanded list of risk categories that you can use for future projects. Use the categories to jog your thinking to add additional risks to each cat- egory. Working with your team, the sequence of actions might:

• Create a list of risk categories. • Create a list of risks.

• Sort the risks into the categories.

• Think about each category; decide if there are other risks spe- cific to the risk category.

• If there are risks that do not fit into an existing category, create additional risk categories as necessary. Keep in mind that you can reuse the risk categories from one project to the next.

Table 7.2 Risks for Deck Project

NEGATIVE RISKS (THREATS) POSITIVE RISKS (OPPORTUNITIES) • There is a risk that the neighbors object

(due to noise) and they block the permit with the consequence that the deck cannot be built. (stakeholder risk)

• There is a risk that PM inexperience leads to quality problems with a consequence that the deck doesn’t pass inspection and it cannot be used. (quality risk)

• There is a risk that the soil cannot support the weight of the deck and the team needs to reinforce the soil with a consequence that it takes longer and costs more. (scope, schedule, and cost risks) • There is a risk that the wood cannot

handle the weight and it sags and splinters with a consequence that we need spend more money to reinforce and refinish the deck. (quality, cost risks)

• The small interested group of stakeholders provides an opportunity to get accurate scope and timely approvals. (stakeholder risk)

• Neighbors decide they want to build decks also; we have an opportunity to buy materials in bulk with a consequence that we save money. (cost risk)

• The team discovers a synthetic wood product that lasts much longer than more traditional wood deck products with a consequence that the life of the deck is much longer. (scope and quality risk) • The young children in the neighborhood

like playing on the deck; as a

consequence, we have an opportunity to monitor their activities. (safety risk)

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ProjeC t risks 7.5 Probability and Impact

On a complex project, the project manager may have a long list of negative and positive risks; it is often not practical to address all of these risks. A best practice is to prioritize the negative risks and the positive risks and develop plans to mitigate the most significant nega- tive risks and optimize the most significant positive risks. Rather than develop these plans for all the negative and positive risks, the proj- ect manager develops plans only for the risks that will help the most (positive risks) or hurt the most (negative risks) if they are realized.

A widely used approach is to develop a risk score and compare the risk scores for all risks, or for all risks within each risk category. The risk score is a blend of probability, impact, and urgency.

Probability is the likelihood that an event will occur; impact is the effect or influence of the event.

For example, what is the probability that the project manager will be struck by lightning within the next 60 seconds? Unless he is out- doors in the middle of a thunderstorm holding up a metal golf club, the likelihood is small. But, if he is struck by lightning, the impact is likely to be very big.

Urgency suggests that a “risk event” may be imminent. For exam- ple, a weather watch for lightening suggests conditions that lightening may occur in the next several hours. A weather warning for lighten- ing suggests that lightening is imminent and you should take shelter immediately. Another consideration is whether the project manager is in an area that is prone to this type of risk. For example, tornadoes often occur in areas called “tornado alley” so he needs to consider if he is in an “environment” where the risk event is likely to occur.

Still another consideration might be the expertise of the source of the risk assessment. A weather warning from NOAA (National Oceanic and Atmospheric Administration) or a weather station has more credibility than a neighbor predicting a storm based on his sci- atica pain.