In the previous chapter, we took a look at all the strategies we could use to handle Threats or Negative Risks. The next set of strategies we are going to cover are to handle Opportunities or Positive Risks. Before we begin, let me start off by saying that “Accept” is one of the strategies to handle opportunities and we already covered it in the last chapter. So, we will be covering only the other strategies we can utilize to handle opportunities.
Trivia:
Most project managers are accustomed to dealing only with negative risks or threats. In fact most managers don’t even consider opportunities as risks and hence don’t address them at all. If you want to capitalize on any good opportunities that may come up during your projects lifetime, you would not want to ignore this activity.
Just like for Threats, Opportunities too have multiple strategies. Let us look at them one by one.
Trivia:
Each strategy to handle an opportunity has a corresponding strategy to handle a threat. You can compare & relate them in order to understand them better.
Exploit
Exploit is the opposite strategy of Avoid for negative risks.
Definition: To Alter the Project in some way in order to make sure that the risk (opportunity) occurs
Can you see that the definition is extremely similar to the Avoid strategy we saw in the previous chapter? Avoid was aiming at ensuring that the risk does not occur while Exploit is aiming at ensuring that the risk occurs.
Why the difference – Because by avoiding the negative risk we are minimizing losses whereas by exploiting the opportunity we are maximizing gains.
Pause for a moment and go back to the Performance Bonus example from the previous chapter. If you hired an additional guy in the team upfront before execution to ensure that your team finishes work by September that is referred to as exploiting the opportunity as a strategy
Just like the Avoid strategy, the exploit strategy results in changes to the Project Management Plan. If you have to hire and utilize an additional guy in the team that involves to changes to the Schedule Management Plan, Cost Management Plan, Human Resource Management Plan etc. Is this Right?
Also, another important consideration here is that, the earlier we utilize this strategy the easier it is because, changes to the Project Management Plan are easier to implement and integrate during the planning or the early execution stages of the project when compared to when you are towards the fag end of your project.
Share
Share as a response to opportunities is similar to the Transfer strategy for handling threats. Here, a third party is involved and the responsibility of handling the opportunity is *fully or partly” given to them.
Definition: To share the responsibility or ownership of the risk with a third party who is better able to take advantage of the opportunity
The idea here is to bring in someone else (mostly an expert from outside the team) on board, who is a specialist in the area in order to capitalize fully on the opportunity that has come up. Just like the Transfer strategy, we cannot ensure that the opportunity will materialize. Instead, we are just enlisting the help of someone who can improve the chances of the opportunity materializing because he is more equipped to deal with the situation than we are.
Example:
IT Outsourcing is a very common example where organizations share some responsibility in maintaining/developing their IT systems with IT consulting companies instead of doing it all by themselves. They do it because, in a majority of the cases, they do not have the capabilities in house to cater to their IT requirements. So, they share the opportunity with someone who can do it better than them.
Just like with the Transfer strategy, a contract is usually created and signed by the involved parties in order to share the responsibilities. The contract will contain details on who is responsible for what and how much responsibility each party will own, plus the financial & timeline aspects as well.
Enhance
The Enhance strategy is similar to the Mitigate strategy for threats.
Definition: Increasing the probability and/or the impact of a risk.
The resemblance with the mitigation strategy is striking isn’t it? There we tried to reduce the probability and/or the impact of the threat whereas; we are trying to increase them for this opportunity.
Enhance is considered a more proactive and effective strategy than hoping that the opportunity occurs. Just like Mitigate, Enhance as a strategy when Exploit is not a feasible option. In this case we identify those factors that may result in the risk occurring and then try to maximize them.
Example:
Hiring a senior guy to the team may be a good way to enhance opportunities related to using latest technologies and improving project quality. But, this does not guarantee that fact. Isn’t it?
As a general rule of the thumb with respect to all opportunities, we typically are forced to work within the projects scope, schedule and cost constraints. Only when the opportunity is large or its benefits are substantial that we actually change the project’s scope or schedule parameters to accommodate it. In majority of the cases, the original scope and schedule is rarely altered.
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