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Friday, June 15, 2012

Inputs to Create the Risk Management Plan

In the previous chapter, we saw the importance of having a good Risk Management Plan in order to conduct the risk management activities efficiently in our project. But, before we can actually look at how to create this plan, we need to take a look at the resources or items that we will use as inputs in the creation of the same.

There are several key items we will use to create the risk management plan. All these items will be listed as “inputs” in the “Plan Risk Management” process in the PMBOK guide. In this chapter, we are going to take a detailed look at these resources.

Before we begin, do you remember that in one of the earlier chapters, I said that the risk management plan is a subsidiary plan of the project management plan? Well, three of the inputs/resources we will use to create this risk management plan too are subsidiary plans of the project management plan as well.

Inputs/Resources used to Create the Risk Management Plan:

The input items or resources we will use in the creation of a risk management plan are:

1. Project Scope Statement – This provides a list of the projects deliverables as well as the important information about what the project is going to accomplish. This information will be used as the guideline as to how risk management will be conducted in our project. Also, the scope statement will contain details like the Project Constraints, Assumptions & Acceptance Criteria which will be vital for the risk management plan.

Can you guess why these constraints & assumptions are vital to the risk management plan? What if you assumed that your peer project manager will release one of his QA Testers after 3 months so that you can he can perform your projects QA activities and after 3 months your peer PM refuses to release that resource? Wouldn’t that be a risk? What about a deadline that the project has to go live by 31st Dec of this year? Wouldn’t that be a risk?

The reason why these constraints & assumptions are critical are because, these can contribute directly to risks.

2. Cost Management Plan – This provides us with information like the Risk Budget, Contingencies available as well as the Management Reserves (We will be learning about contingencies & reserves very soon)
3. Schedule Management Plan – This provides us with information on the Schedule Contingencies
4. Communication Plan – This defines how risks and risk responses will be reported, who should he keep in loop about the risk progress, who is responsible for sharing the information and when etc

In the previous paragraph I had said that 3 of the PM Plans subsidiary plans are used as inputs in this process. Can you guess which ones they are?

Answer – Points 2, 3 & 4.
5. Enterprise Environmental Factors – These are the Project Environment related factors like Risk Attitude & Risk Tolerance of the Organization as well as stakeholders. These are very important in planning the risk strategy and approach for your project.
6. Organizational Process Assets – This includes documents and templates for the Risk management plan, the risk register, risk categories, roles & responsibilities, authority levels, lessons learned etc.

A Word of Caution:
The Enterprise Environmental Factors & Organization Process Assets may seem like no-brainers but can have a direct impact on the quality of the RM Plan you create and most importantly on the overall risk management in the project. Since each organization has a different risk tolerance and procedures to handle risk, the environmental factors & process assets vary from org to org. So, if you are someone who just moved into a new organization, this is all the more important because the new company may handle risks in a totally different way when compared to what you are used to in your previous job.

Armed with all this information, we are all set to create a good quality risk management plan. But, just having these inputs is not enough. We need to know how to utilize them property in order to create a good risk management plan. This whole scenario can be compared to cooking a complex dish by seeing a celebrity chef’s cookbook. You can read it thoroughly and get all the ingredients ready on your kitchen table. But, the quality of the dish depends entirely on how you execute the recipe. Isn’t that right? Same is the case with the creation of the risk management plan. No matter how good your inputs are, if you don’t know how to utilize them properly your risk management plan will practically be useless.

Now that we know the inputs we need to create the risk management plan, in the next chapter we are going to look at the tools & techniques (the how-to) to create it.

Prev: Introduction to Risk Management Plan

Next: Creating the RM Plan

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