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In project management, controlling risk is a critical component of the project plan. A well-thought-out plan considers all the risks that can bring a project to its knees, with the goal of minimizing, if not eliminating, their impact on the project. Failure is costly, in time and money.
The 2018 Pulse of the Profession study conducted by the Project Management Institute (PMI), shows organizations have been wasting 27% less money since 2013, yet “9.9% of every dollar is wasted due to poor project performance.”
That’s a lot of money, considering billions are spent on projects every year.
But not all risks are created equally, and with schedule adherence an integral ingredient to project success, teams must know how to prioritize their risks. This is where the risk breakdown structure comes in handy.
Project managers use project management software and an assortment of project management tools to keep their projects on track. The following breakdown structures are some of these many tools:
The risk breakdown structure is an ordered breakdown list of the risks -- internal or external, anticipated or unforeseen -- that can impact the project’s scope, schedule, and budget. It’s hierarchical and graphical in nature.
A risk breakdown structure allows you to do the following:
A risk breakdown structure categorizes the project’s risks, which you can further break down into any levels of detail. Project risk categories can include:
Most risks will fall in any one of the above buckets. In some cases, you may have to create additional categories.
The risk breakdown structure can be used in several ways, including:
Risk identification determines, documents, and communicates risks that can hinder a project from realizing its goals and objectives. Questions to ask during this process include:
Tips for identifying risks
Risk analysis assesses each of the project’s risk events to determine its impact on the project’s objectives or outcome. It follows the risk identification process.
Tips for analyzing risks
Communicating consistently and effectively is a project management basic. Project managers use risk reports to convey risk assessment outcomes to key stakeholders, such as the client or the project owner. The goal is to:
A few things to remember about risk reporting
A project post-mortem is a best practice conducted at project conclusion. One of several RBS benefits is the ample information they provide, which you can use to create post-project reports for future projects.
Tips for identifying post-project lessons
If you need to rank two projects, or select only one, an RBS analysis can compare the projects and understand their associated risks.
Tips for comparing projects
Risk breakdown structures differ based on the nature of the project and the organization. Remember to use the appropriate categories and add as much detail as you need.
Here are some risk breakdown structure examples:
Construction projects are generally complex and involve a lot of moving parts, including numerous partners and stakeholders with different expectations and varying levels of understanding of the risks involved.
Construction risks can have dire consequences. And like all types of project risks, they evolve throughout the life of the project. A risk breakdown structure makes it easy to get everyone on the same page.
Your software development RBS can also come in table form.
You start by identifying the categories, with each level to the right breaking them down to add more details.
Generic breakdown structures are a good place to start when identifying and analyzing project risks.
Look at some examples and then modify as necessary to create your own.
The future is impossible to predict. But one thing is certain: A project implementation plan can fail in countless ways.
If you understand the risk events that can derail a project, you’ve taken the first step toward managing them.
The risk breakdown structure provides a simple tool to identify project risks, structure them so they’re better understood, prioritize them so your team knows which requires the most attention, and then apply the appropriate prevention or mitigation actions in a timely manner.
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