• Negative risks are unwanted and potentially can cause serious problems and derail the project, positive risks, on the other hand, are opportunities and are desired by both the Project Manager and the stakeholders, and may positively affect the project, such as increasing the ROI or finishing the project ahead of time.
• Known negative risks have to be managed and accounted for in the risk management plan, this is the same for positive risks. However, positive risks are managed in order to take advantage of them and “tame them”.

Examples of Negative Risks

• The main programmer on the project quitting the job.
• Lack of construction material (such as concrete) because of political issues (such as hostile relations between 2 bordering countries) in case of a construction project.

Examples of Positive Risks

• Receiving much more than the expected number of subscribers on the launch date of the service (for example a new telecommunications service).
• Finishing a part of the project way before schedule and creating a lot of slack, as other resources are not scheduled to work on the project until much later.

  Note that positive risks can easily create negative risks, for example, in the case above where the telecom service gets a lot of subscribers on its launch date, then negative risks may possibly ensue, such as the inability of the switches to handle the load, the inability of the billing system to process all the calls, the clogging of the text messaging system, etc… These negative risks combined, can cause the whole service to fail, as people will be completely dissatisfied with the service. In short, positive risks are good but need to be accounted for and taken seriously.

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  ]]> http://www.projectmanagementlearning.com/what-is-the-difference-between-positive-and-negative-risks.html/feed 0 http://www.projectmanagementlearning.com/what-is-the-difference-between-an-issue-and-a-risk.html http://www.projectmanagementlearning.com/what-is-the-difference-between-an-issue-and-a-risk.html#comments Wed, 18 Nov 2009 17:27:52 +0000 admin http://www.projectmanagementlearning.com/?p=124 Issues and risks are often mistaken for having the same meaning by some Project Managers. In reality, they are not.

  So what exactly is the difference between an issue and a risk?

  • An issue is something happening currently, a risk is something that might happen in the future.
  • An issue is not risky, it is just something unfavorable. It has little or no effect on the scope, the budget, and the schedule of the project. A risk, on the other hand, can have drastic effects on the triple constraints if not managed properly.
  • An example of an issue is: “Tom isn’t very good with stored procedures and we need to write a significant logic of the application in stored procedures”. The solution to the previous is trivial, we can just have someone else write those stored procedures. On the other hand, an example of a risk would be: “The client might not honor the next payment for the project”. Clearly, the latter case has a much bigger impact than the former, a client not honoring the payment can have very negative effects on the project (the project might be killed).

  In short, the main difference between an issue and a risk is the time and the level of impact on the project: Issues are current events that have little effect on the project and solving them is usually easy, risks are future events that may have severe effects on the project and solving them requires ingenuity.

  Note that both issues and risks should be documented in any project for future references.

  © 2009 Project Management Learning – Reproduction of this material is strictly prohibited without the written consent of Project Management Learning.

  ]]> http://www.projectmanagementlearning.com/what-is-the-difference-between-an-issue-and-a-risk.html/feed 8 http://www.projectmanagementlearning.com/what-are-the-benefits-of-project-risk-management.html http://www.projectmanagementlearning.com/what-are-the-benefits-of-project-risk-management.html#comments Wed, 18 Nov 2009 04:37:42 +0000 admin http://www.projectmanagementlearning.com/?p=121 The are several important benefits of Project Risk Management such as:
  • Anticipating risks/uncertainties in the project execution phase by accounting for them in the project plan
  • Creating realistic cost and schedule estimates, leading to an increased confidence in the Project Manager by the different stakeholders
  • Responding calmly and rationally to project risks as they occur
  • Adding a touch of professionalism to the Project Management culture in the company, positively affecting the image of the Project Manager
  • Minimizing the possibility and/or impact of scope creeps
  • Managing stakeholders’ expectations since the Project Manager is able to accurately assess their requirements and the real impact those requirements may have on the project
  • Documenting risks and their associated responses to be used as a reference in future projects. This will improve the reliability of Project Management with every project the company executes.

  The most important benefit is, of course, managing a project that is more likely to succeed.

  It should be noted that there’s a cost of the above benefits: Project Risk Management creates a considerable overhead on the project (especially during Project Planning). To be able to perceive its real value, one should compare it to any kind of insurance: it has high costs, and many never be used, but it adds confidence, and once needed, it does make all the difference.

  © 2009 Project Management Learning – Reproduction of this material is strictly prohibited without the written consent of Project Management Learning.

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