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Risk Management

Uploaded by

srimanthnani9933
Copyright
© © All Rights Reserved
Available Formats
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7.

7 Contingency Funding and Time


Buffer
Contingency Funds
• funds to cover project risks—identified and unknown
• For control purposes, contingency funds are divided
into
• Contingency reserves—cover identified risks and
allocated to specific segments or deliverables of the
project
• Management reserves—cover unidentified risks and are
allocated to risks associated with the total project
Contingency Funding and Time Buffer
Time buffer
• Amounts of time used to cushion against potential delays in the
project
• Add to activities with severe risks
• Add to merge activities that are prone to delays
• Add to noncritical activities to reduce the likelihood that they will
create another critical path
• Add to activities that require scare resources
Budget Estimate

Budget Budget Project


Activity
Baseline Reserve Budget
Design $500,000 $15,000 $515,000
Code 900,000 80,000 980,000
Test 20,000 2,000 22,000
Subtotal $1,420,000 $97,000 $1,517,000
Management - - 50,000
reserve
Total $1,420,000 $97,000 $1,567,000
7.4 Risk Response Control

Risk Register
Details all identified risks, including descriptions, category, probability of
occurring, impact, responses, contingency plans, owners, and current status
Risk Control involves
• Executing the risk response strategy
• Monitoring triggering events
• Initiating contingency plans
• Watching for new risks
Risk Response Control

Establishing a Change Management System


• Monitoring, tracking, and reporting risk
• Fostering an open organization environment
• Repeating risk identification/assessment exercises
• Assigning and documenting responsibility for managing risk
7.9 Change Control Management

Sources of Change
• Project scope changes
• Implementation of contingency plans
• Improvement changes
Change Management Systems
• Identify proposed changes
• List expected effects of proposed change(s) on schedule and budget
Change Control Management
• Review, evaluate, and approve or disapprove of changes formally
• Negotiate and resolve conflicts of change, condition, and cost
• Communicate changes to parties affected
• Assign responsibility for implementing change
• Adjust master schedule and budget
• Track all changes that are to be implemented
Change Control Process
Change
Originates

Change Request Submitted

Review Change Request

Approved
? No
Yes
Updated
Plan Of Record

Distribute
For
Action
Benefits of Change Control Systems
• Inconsequential changes are discouraged by the formal process.
• Costs of changes are maintained in a log.
• Integrity of the WBS and performance measures is maintained.
• Allocation and use of contingency and management reserves are tracked
Benefits of Change Control Systems
• Responsibility for implementation
is clarified.
• Effect of changes is visible to all
parties involved.
• Implementation of change is
monitored.
• Scope changes will be quickly
reflected in baseline and
performance measures.
Sample Change Request
Change Request Log

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