Prince2 header
products page

PRINCE2 - Planning (PL) part 7



Analysing Risks (PL6)

Fundamental principles

Commitment to a course of action without consideration of the risks inherent in that course is courting disaster.
Risks should be considered and modifications made to the course of action in order to remove or lessen the impact of those risks.

Context

Once the plan has been produced, it should still be considered a draft until the risks inherent in the plan have been identified, assessed and the plan possibly modified.

Process description

Analysing Risks (PL6) runs parallel to all other planning work.
It is an iterative process and the results of analysing risks may result in returning to previous steps and repeating the sub-process as necessary.

An overview or the management of risk is given in the components section.

Any planning assumptions create a risk.
Are the assumptions correct?

Each resource should be examined for its potential risk content.
Is the resource s known quantity?
Is the quality of work required and the ability to meet deadlines known?
Is the level of commitment known?
Will the resource be totally under the control of the Project Manager?

Where the answer is ‘No’, there is a risk involved.

Countermeasures would include tighter and more frequent monitoring until confidence in the resource is achieved.

It might be better to allocate work that is either easy to do or less critical to the schedule until the skill level has been checked.

Each activity should be checked for risk.
Is there any spare time or does the entire schedule depend on no slippage for the activity?
Everything on the critical path therefore represents a risk.
At the very least the countermeasures should include more frequent monitoring to give early warning of any problems.

The planning information produced so far should be examined for risks.
All identified risks should be entered into the Risk Log.

Examples of risk that might be inherent in a plan are:

  • A sub-contractor might fail to deliver a needed product on time
  • A product to be delivered by a third party might be of poor quality
  • A resource may not perform at the required level
  • A specific resource, on which the plan is dependent, might be removed from the project
  • External events may create a crisis
  • The timetable is very tight and depends on the timely delivery of several products, any of which might be delayed

Responsibilities

The Project Manager is responsible for the analysis and monitoring of risks, with assistance from those with Project Assurance responsibilities.
There may be risks outside the control of the Project Manager.
These fall within the responsibilities of the Project Board.
The Project Manager should discuss any such risks with the Project Board to ensure that the risks are being adequately monitored.
They should also discuss risks with Team Managers and subject experts.

Information needs
Management information Usage Explanation
All planning information so far Input Basis of the risk assessment.
Risk Log Update Any new risks should be added to this.

These are given in tabular form in the file ‘PL6 analysing risks.doc’ in the product package.

Key criteria

  • Are there any dependencies on products or other support from external sources that have not been listed as risks?
  • When does the cost of risk avoidance or reduction approach the cost of the risk if it occurs?
  • Has a range of means of addressing each risk been considered?
  • Are the risks so great that they put the viability of the project in question?

There are various risk management and analysis methods and tools available to assist with these aspects of the process.

Allocate to each high risk or critical activity a resource in which management has confidence.

Monitor the schedule and quality of any external product to be delivered on which any activities in the plan are dependent.

Check items such as holidays and training to make sure that they don’t have an impact on the schedule.

In case of illness consider the actions needed for any resource that cannot be replaced.
Train other resources as back-up for any critical and scarce skills.

The addition of risk management [see ‘The Complete Risk Management package’] activities will elongate the schedule and require extra resources.
The benefit of the protection against risks is valuable, but remember to allow fro the ‘cost’ of these activities in the plan.

Where the project is part of a programme, any risks identified at programme level should be examined for impact on the project.
Where there is an impact, the risk should be added to the project’s Risk Log consideration should be given to whether further project-specific risk analysis is required.

Similarly, any project risks should be examined for programme impact.

Non - PRINCE2 information

This product contains EVERYTHING in the publications:

Managing Successful Projects with PRINCE2 - 2005 edition
Managing successful Projects with PRINCE2 – 2009 edition
Directing Projects with PRINCE2.
plus:
The Complete Project Management package.

And much more besides - at a fantastic price.