Would you like to inspect the original subtitles? These are the user uploaded subtitles that are being translated: 1 1 00:00:01,290 --> 00:00:03,530 Now, let's look at the practical essentials 2 2 00:00:03,530 --> 00:00:07,650 of risk management planning, including the six steps 3 3 00:00:07,650 --> 00:00:09,610 of the formal process, 4 4 00:00:09,610 --> 00:00:12,480 baselining the risk register and budget, 5 5 00:00:12,480 --> 00:00:16,400 allocating the time buffer using critical chain management, 6 6 00:00:16,400 --> 00:00:17,773 and opportunity planning. 7 7 00:00:19,571 --> 00:00:21,220 We have a solid baseline for scope 8 8 00:00:21,220 --> 00:00:25,220 with the work breakdown structure, time with the Gantt chart, 9 9 00:00:25,220 --> 00:00:27,240 and cost with the deliverables roll-up 10 10 00:00:27,240 --> 00:00:29,150 and perhaps a cost curve. 11 11 00:00:29,150 --> 00:00:31,970 Now, we need to be ready for things that might go wrong. 12 12 00:00:32,900 --> 00:00:34,700 And we shouldn't shy away from them. 13 13 00:00:35,550 --> 00:00:38,240 A realistic project plan considers problems 14 14 00:00:38,240 --> 00:00:41,860 that might occur, minimizes them before starting, 15 15 00:00:41,860 --> 00:00:44,310 and reserves time and money to deal with them 16 16 00:00:44,310 --> 00:00:45,503 if they do happen. 17 17 00:00:46,610 --> 00:00:48,210 This risk management planning 18 18 00:00:48,210 --> 00:00:50,320 is one of the greatest advantages 19 19 00:00:50,320 --> 00:00:52,020 of the project management process. 20 20 00:00:53,870 --> 00:00:57,963 First, what is the difference between risks and issues? 21 21 00:00:58,840 --> 00:01:03,060 Risks differ from issues because they are uncertain. 22 22 00:01:03,060 --> 00:01:05,053 They really might not happen. 23 23 00:01:06,340 --> 00:01:09,380 Best practice says risks must have a probability 24 24 00:01:09,380 --> 00:01:11,823 of 80% or less. 25 25 00:01:12,830 --> 00:01:16,060 At 90% and above, there is not enough likelihood 26 26 00:01:16,060 --> 00:01:20,300 of heading them off and they should be treated as issues. 27 27 00:01:20,300 --> 00:01:21,960 You should put the time and the money to deal 28 28 00:01:21,960 --> 00:01:24,760 with them directly in the plan and if they don't happen 29 29 00:01:24,760 --> 00:01:25,823 then you got lucky. 30 30 00:01:26,670 --> 00:01:28,510 You should spend your time on the problems 31 31 00:01:28,510 --> 00:01:31,010 you have a realistic chance of managing 32 32 00:01:31,010 --> 00:01:33,683 with probability 80% or less. 33 33 00:01:35,270 --> 00:01:39,430 Now, for small projects, perhaps under about $20K, 34 34 00:01:39,430 --> 00:01:41,050 you can allocate a risk budget simply 35 35 00:01:41,050 --> 00:01:42,620 by setting aside time and money 36 36 00:01:42,620 --> 00:01:45,360 as a percentage of the rest of the project. 37 37 00:01:45,360 --> 00:01:47,630 Most commonly 15%. 38 38 00:01:47,630 --> 00:01:50,800 For example, for a 40 day $20K project, 39 39 00:01:50,800 --> 00:01:54,913 add 6 days and $3K to the risk budget and move on. 40 40 00:01:56,300 --> 00:01:59,450 For larger projects, it is very worthwile 41 41 00:01:59,450 --> 00:02:01,993 to conduct the full risk planning process. 42 42 00:02:02,960 --> 00:02:05,110 Then you will be able to justify 43 43 00:02:05,110 --> 00:02:06,480 whatever amount of time and money 44 44 00:02:06,480 --> 00:02:08,120 you put in the risk budget. 45 45 00:02:08,120 --> 00:02:12,363 Commonly between five and 15%, but could be more or less. 46 46 00:02:13,200 --> 00:02:16,350 If your project is $10 million, management is unlikely 47 47 00:02:16,350 --> 00:02:18,920 to approve a risk budget of $1.5 million 48 48 00:02:18,920 --> 00:02:22,390 without a good reason, and the risk planning process 49 49 00:02:22,390 --> 00:02:25,650 gives you the information to justify the budget, 50 50 00:02:25,650 --> 00:02:27,203 whatever amount it might be. 51 51 00:02:28,470 --> 00:02:32,230 And second, the process is actually useful, 52 52 00:02:32,230 --> 00:02:35,450 and really can significantly reduce the risks 53 53 00:02:35,450 --> 00:02:37,300 before you start. 54 54 00:02:37,300 --> 00:02:41,983 That is planning is a project improvement exercise. 55 55 00:02:43,580 --> 00:02:46,750 As you go through risk planning and later monitoring 56 56 00:02:46,750 --> 00:02:50,580 and control, remember, in a professional organization, 57 57 00:02:50,580 --> 00:02:52,910 management wants to know the risks. 58 58 00:02:52,910 --> 00:02:55,323 So you should never ever minimize them. 59 59 00:02:56,400 --> 00:02:58,843 Here's a story about how I learned this lesson. 60 60 00:02:59,810 --> 00:03:02,410 Once when I was a fairly junior employee, 61 61 00:03:02,410 --> 00:03:04,780 the president of the company I worked at asked me 62 62 00:03:04,780 --> 00:03:07,493 how risky an idea was that I was proposing. 63 63 00:03:08,620 --> 00:03:11,700 I really liked my idea and wanted to get his support, 64 64 00:03:11,700 --> 00:03:14,753 so made the mistake of saying there was no risk. 65 65 00:03:15,820 --> 00:03:18,190 Several minutes later, he stopped lecturing me 66 66 00:03:18,190 --> 00:03:21,530 about how there was no such thing as no risk. 67 67 00:03:21,530 --> 00:03:24,890 That concept didn't exist in this universe. 68 68 00:03:24,890 --> 00:03:27,710 He wanted to know the risk, and it was my job 69 69 00:03:27,710 --> 00:03:29,570 to tell him the risk. 70 70 00:03:29,570 --> 00:03:30,960 You are putting your job on the line 71 71 00:03:30,960 --> 00:03:33,853 by saying something like that son, et cetera. 72 72 00:03:34,760 --> 00:03:38,633 So I have never said the words no risk again. 73 73 00:03:39,620 --> 00:03:43,430 There might be low risk, there might be manageable risk, 74 74 00:03:43,430 --> 00:03:46,600 but to say something has no risk is a fast way 75 75 00:03:46,600 --> 00:03:49,100 to lose credibility with your listeners about anything 76 76 00:03:49,100 --> 00:03:50,050 you say after that. 77 77 00:03:51,080 --> 00:03:54,030 You want to be as accurate as you can, but if you are going 78 78 00:03:54,030 --> 00:03:56,180 to make a mistake estimating risk, 79 79 00:03:56,180 --> 00:03:58,223 never make it on the low side. 80 80 00:04:00,230 --> 00:04:03,110 Doing a good thorough job on risk planning 81 81 00:04:03,110 --> 00:04:05,690 will go a long way to convincing the stakeholders 82 82 00:04:05,690 --> 00:04:08,913 that the projects is in realistic safe hands. 7224