Page 160 - DMGT521_PROJECT_MANAGEMENT

Unit 9: Financial Estimates and Projections

While it is not possible to alleviate all risks, some risks can be eliminated by thoughtful problem Notes
solving, while others can be successfully managed so their impact on the project is kept to a
minimum.
When the coach of a football team relays the play to the quarterback and the quarterback calls
the play in the huddle, a number of uncertainties exist. Will the play work? Will the center-
quarter back exchange go smoothly? Will everyone block the way they are supposed to? Will
the receiver get open? Will the quarterback throw the ball accurately? Will the receiver catch the
ball Will the pass receiver get tackled and fumble? Will the receiver or someone else on the team
get hurt? There are many uncertainties. And there are many threats, too. The defensive team
might blitz. A linebacker might anticipate a pass, fall back and play pass defense. A defensive
back might intercept the football. A pass rusher might evade a blocker, tackle the quarterback,
and fall on top of him. The quarterback might end up flat on his back, injured.

Figure 9.1: Greater the Uncertainty Greater the Risk

To increase the likelihood of the football team winning, the team is, first of all, composed of
talented players and coaches who then plan and practice in advance. Every team member knows
his role and responsibilities to the team. Plays are practiced over and over. Various scenarios are
rehearsed: if this happens, then do this; if that happens, then do that. In football, talented players
and coaches who plan and practice are the keys to winning because they reduce the risks that
prevent winning.

9.7.1 Strategies for Controlling Risk

PMs must control the threats and uncertainties that could potentially adversely affect their
projects. There are a number of strategies for doing this. They include:
1. Prevention: reduce the number of uncertainties and/or threats.
2. Transference: make some other party responsible for the uncertainties or threats.
3. Mitigation: lessen the impact of the uncertainties or threats should they occur.

4. Contingency planning: plan in advance for coping with uncertainties or threats should
they happen.
5. Assumption: identify the uncertainties or threats and accept their potential impact on the
project because the cost of prevention, mitigation, transference, and contingency planning
are greater than their possible impact.

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