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These are the user uploaded subtitles that are being translated: 1 1 00:00:01,320 --> 00:00:02,820 Now that we have numbers, 2 2 00:00:02,820 --> 00:00:04,680 we can record all the risk information 3 3 00:00:04,680 --> 00:00:08,500 in a risk register, typically a spreadsheet. 4 4 00:00:08,500 --> 00:00:10,600 See the templates in the download section. 5 5 00:00:11,740 --> 00:00:15,200 Here's an example showing the most important columns. 6 6 00:00:15,200 --> 00:00:18,800 line:15% We typically also record the standard risk statement form, 7 7 00:00:18,800 --> 00:00:23,800 line:15% owner, trigger, and response plan in additional columns, 8 8 00:00:23,880 --> 00:00:25,800 line:15% although on larger projects these might go 9 9 00:00:25,800 --> 00:00:28,003 line:15% in a separate risk management document. 10 10 00:00:29,520 --> 00:00:32,690 The total risk budget is the sum of the probable time 11 11 00:00:32,690 --> 00:00:36,090 and probable cost of the individual risks. 12 12 00:00:36,090 --> 00:00:38,740 line:15% Some risks will happen, and some won't, 13 13 00:00:38,740 --> 00:00:41,500 line:15% and as long as we have five or more risks, 14 14 00:00:41,500 --> 00:00:44,811 line:15% this works surprisingly well, usually giving us 15 15 00:00:44,811 --> 00:00:47,340 line:15% pretty close to the amount of time 16 16 00:00:47,340 --> 00:00:48,903 line:15% and money we will need. 17 17 00:00:50,340 --> 00:00:52,280 Once we see the whole budget, 18 18 00:00:52,280 --> 00:00:54,600 we should review the total time and cost 19 19 00:00:54,600 --> 00:00:55,713 and do a gut check. 20 20 00:00:56,570 --> 00:00:58,210 According to best practice, 21 21 00:00:58,210 --> 00:00:59,830 the risk budget should be a minimum 22 22 00:00:59,830 --> 00:01:04,660 of 5% of the project, with 10% to 15% common, 23 23 00:01:04,660 --> 00:01:06,660 and higher if the project is very risky, 24 24 00:01:06,660 --> 00:01:08,833 and that's what the analysis indicates. 25 25 00:01:10,090 --> 00:01:13,290 If the budget seems too high or too low, 26 26 00:01:13,290 --> 00:01:16,850 then add or adjust risks, and reconvene the team 27 27 00:01:16,850 --> 00:01:19,573 to revisit the estimates and assumptions as needed. 28 28 00:01:20,640 --> 00:01:22,010 line:15% You want to be accurate, 29 29 00:01:22,010 --> 00:01:23,580 line:15% but if you're going to make a mistake, 30 30 00:01:23,580 --> 00:01:25,500 line:15% make it on the high side. 31 31 00:01:25,500 --> 00:01:28,243 line:15% Never underestimate the risks. 32 32 00:01:29,960 --> 00:01:31,620 line:15% The first time I participated 33 33 00:01:31,620 --> 00:01:33,066 line:15% in preparation of a risk register 34 34 00:01:33,066 --> 00:01:35,069 line:15% using this best practice, 35 35 00:01:35,069 --> 00:01:37,083 line:15% I had a very hard time with it. 36 36 00:01:38,120 --> 00:01:41,517 line:15% I said to my boss, "We're just making this up. 37 37 00:01:41,517 --> 00:01:43,587 line:15% "We're just pulling these numbers out of the air, 38 38 00:01:43,587 --> 00:01:46,447 line:15% "and we're putting them in a fixed price contract bid 39 39 00:01:46,447 --> 00:01:49,185 line:15% "where we could lose any amount of money. 40 40 00:01:49,185 --> 00:01:50,767 line:15% "I can't handle this." 41 41 00:01:52,000 --> 00:01:55,867 line:15% And my boss said to me, "I understand how you feel. 42 42 00:01:55,867 --> 00:01:58,847 line:15% "We do have two other options. 43 43 00:01:58,847 --> 00:02:02,277 line:15% "The first option would be, if you have a crystal ball, 44 44 00:02:02,277 --> 00:02:05,297 line:15% "please bring it in tomorrow, and we will use that 45 45 00:02:05,297 --> 00:02:07,333 line:15% "to tell the future exactly. 46 46 00:02:08,437 --> 00:02:10,887 line:15% "Now, if you don't have a crystal ball, 47 47 00:02:10,887 --> 00:02:13,787 line:15% "our only other alternative to this best practice 48 48 00:02:13,787 --> 00:02:16,807 line:15% "would be to put no risk budget aside. 49 49 00:02:16,807 --> 00:02:19,447 line:15% "And that does not seem like a very good idea." 50 50 00:02:20,830 --> 00:02:22,430 So then I got it. 51 51 00:02:22,430 --> 00:02:24,940 line:15% If you are using the best practice you have, 52 52 00:02:24,940 --> 00:02:27,663 line:15% you should be happy you are doing the best possible. 53 53 00:02:28,580 --> 00:02:31,070 line:15% And experience shows this best practice 54 54 00:02:31,070 --> 00:02:33,860 line:15% works very well, avoiding putting 55 55 00:02:33,860 --> 00:02:36,800 line:15% too much risk budget aside, and reserving 56 56 00:02:36,800 --> 00:02:39,380 line:15% on average as close to the actual amount 57 57 00:02:39,380 --> 00:02:42,760 line:15% of time and cost you will need as we know how, 58 58 00:02:42,760 --> 00:02:44,260 line:15% short of using a crystal ball. 59 59 00:02:46,760 --> 00:02:48,260 Where does the risk budget go? 60 60 00:02:49,440 --> 00:02:51,630 The cost goes into a special account 61 61 00:02:51,630 --> 00:02:53,480 controlled by the finance department. 62 62 00:02:54,440 --> 00:02:56,960 To access the budget once project is under way, 63 63 00:02:56,960 --> 00:02:59,570 you need to fill out a form and explain why, 64 64 00:02:59,570 --> 00:03:01,860 but no other approvals are necessary. 65 65 00:03:01,860 --> 00:03:03,620 It's the project manager's budget, 66 66 00:03:03,620 --> 00:03:05,990 so use it when needed. 67 67 00:03:05,990 --> 00:03:07,240 When you do need to access it, 68 68 00:03:07,240 --> 00:03:08,800 often you need to move fast, 69 69 00:03:08,800 --> 00:03:11,790 and the process should support that. 70 70 00:03:11,790 --> 00:03:13,470 You can always explain more fully 71 71 00:03:13,470 --> 00:03:14,570 at the monthly review. 72 72 00:03:16,470 --> 00:03:18,640 All of the time goes just before 73 73 00:03:18,640 --> 00:03:22,560 the key customer event at the end of the project, 74 74 00:03:22,560 --> 00:03:25,650 so the risk buffer takes the hits from schedule slips, 75 75 00:03:25,650 --> 00:03:26,883 not the customer. 76 76 00:03:27,980 --> 00:03:29,230 Let's take a closer look. 6829