The purpose of this chapter is to understand how Risk Analysis and Risk Management fit into the overall scheme of things in Project Management. Actually speaking, risk management is an integral part of project management. Unless we identify risks and manage them effectively, there is no way we can manage our project properly, much less make the project a success. Since risk analysis is an integral part of risk management, we can safely say that risk analysis too is an integral part of project management.
Look at the image below:
This is a simple illustration of how the various items in a project are connected/related to one another.
1. The Project Management Plan and Scope are in the center – This is because the whole project revolves around these two entities. You can’t manage a project without the PM Plan or without knowing the scope of work to be done. So, they take their rightful place in the center.
2. Schedule, Budget, Resources, Procurements are all in the bottom because they are influenced by both the PM Plan and the scope
3. Communication, Quality and Risk are on top of the triangle. Can you guess why??? Many Project Managers feel that these items Communication, Quality and Risk are not so important or view them as additional no-value-add activities on the project and hence ignore them to a great extent. Unfortunately these activities are vital to the overall success of the project and that is why they intentionally placed at the top of the triangle. They can have a direct bearing on all aspects of the project and hence they are rightfully on top of everything else.
Risk Analysis & Management not only considers what is happening inside the project. They also consider outside elements that may influence/impact the project. As risks are analyzed, more details like “when we can expect an activity to finish?” become clear. This information is usually fed-back into other processes so that they will know when to start/stop. Risk Management is literally connected to every single activity that happens in a project. That is why Risk Management is so important.
To summarize – Risk Analysis & Risk Management:
• Help control project outcome
• Consider both internal and external factors
• Has a dynamic relationship with almost all elements of the project
• Have a direct bearing on the overall success of the project
In short – Improper Risk Analysis can directly result in Project Failure. Now, can you understand why the PMI has given the highest weightage to the Risk Analysis domain in the exam from the no. of questions perspective?
Risk Analysis contributes 30% of the questions in the exam. You can revise the exam objectives of the Risk Analysis domain by Clicking Here
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