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Greg Polec 5 articles
Residence: IT Italy
CCO at Codest / Consultant

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The Unified Project Management Dictionary

Actual Cost

The incurred cost for the work performed on an activity during a specific time period. Actual Cost of a project represents the true total and final costs accrued during the process of completing all work during the pre-determined period of time allocated for all scheduled activities as well as for all work breakdown structured components.

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Risk management. How can you turn a threat into success?

If you have ever managed any project, you probably know well the issues related to risk management. After all, who has not experienced problems and threats that influenced the project efficiency? I am convinced that every manager has faced these challenges at least once. The question is, how to deal with it? What is the effective approach to risk management, which helps turn a threat into victory?

If you have ever managed any project, you probably know well the issues related to risk management. After all, who has not experienced problems and threats that influenced the project efficiency? I am convinced that every manager has faced these challenges at least once. The question is, how to deal with it? What is the effective approach to risk management, which helps turn a threat into victory?

In the past, I've developed and worked with, several startups. Nowadays, I am responsible for delivering the best possible software products, designed and built by my teams in Codest. We have been operating on the IT market for more than 10 years, getting through a lot of challenges, so trust me - risk management is our everyday life. During my career, I have had the opportunity to run many types of projects - smaller, larger, local and global. Each of them had a special feature. I have in my mind some tough situations like, for example, when in Ticketmaster I had to face the challenge to grow the business from scratch on some new markets. As you may have guessed, I managed risk almost every day.

All of that experience forced me to look for the optimal approach to deal with risk. Sometimes, I was able to predict the emerging threats even before we started a new project, and sometimes new unexpected risks appeared and required immediate action. From my side, it doesn’t matter what type of threat we are talking about. Each of them may have a negative impact on your

project. But ... it can help you too! The point is to strive to turn every risk into success. It is doable.

Let’s move on.

An integral part of planning a project for the start is defining what threats might come up and challenge the success of your business. All risk factors should be written down point by point, this will help you analyze different outcomes and prepare for them. Threats may concern human resources (for example lack of sufficient qualifications), budget, competitors, technology and many others. The person leading this project must be able to identify them. Thanks to this strategy, you already know, from an early stage of your project, the potential threats and you have enough time to manage them.

Risk management model

How to do it? Generally, there are four ways to deal with risk management:

  1. Avoid 2. Reduce 3. Transfer 4. Retain or accept

Depending on the threats identified, you can assign each of them separately to a different group. You will probably be able to avoid some of them, some you will be able to reduce, and others will be completely removed. However, it is important not to overlook anything. Therefore, what I can recommend, is to take your list of every possible threat and stick to the following process.

Risk Management Framework: 1. Identify 2. Measure 3. Manage 4. Monitor 5. Report

Start by identifying each threat separately. Specify its type and chances of occurring in the project. Then go to measure its impact on the project. You can use numbers to create an appropriate table of threats. Excel will be sufficient. The first two columns will allow you to identify the greatest threats and prioritize them.

The third point is the appropriate risk management. You can assign a selected person (for example, a finance employee if the problem concerns the budget and finances) or in case of a high-risk threat, deal with it yourself. The point is that each of the threats should have a person responsible for overseeing its development. It is necessary to set a methodology that will allow you to effectively deal with the threat and overcome the obstacle.

Next comes the phase of monitoring. This is the stage where you check whether your strategy has been effective. If not, you have to react. Also, remember about reporting. If you've done a good job with a potential threat, think about what helped you, put it in writing and use this knowledge in the future. Additionally, if something went wrong, try to determine the reasons.

Of course, during your project, there may also be threats that you did not manage to diagnose at the very beginning. These are sudden situations and are usually much harder to master. However, keep calm and proceed with the implementation of the diagram, which I presented above. You must act quickly and if the threat is substantial, set up a mini team to control the situation. Designate a ledger (preferably the most experienced person) and follow up with the process.

Conclusions

To conclude this article on dealing with risks, I would like to give you one more information: there is no such thing as a risk-free project. Try to treat every emerging risk as a chance for success. I know, it won’t always work. However, if you plan the whole process well and most importantly you will effectively identify the problem that arises, you have a greater chance to see your project develop successfully. This is the way I always try to approach risk management and what I try to instill in each of my teams.


Published at pmmagazine.net with the consent of Greg Polec

pmdictionary.org

The Unified Project Management Dictionary

Actual Cost

The incurred cost for the work performed on an activity during a specific time period. Actual Cost of a project represents the true total and final costs accrued during the process of completing all work during the pre-determined period of time allocated for all scheduled activities as well as for all work breakdown structured components.

more terms