Wednesday, January 14, 2009

Accepting Risks with a Contingency Plan

In addition to avoidance, transference, and mitigation, acceptance is also an important strategy for effective risk response planning. Acceptance is a strategy that indicates that a project manager and a project team have decided not to change the established project plan in order to deal with an identified risk. Acceptance may also be performed if a project manager is unable to identify any other suitable risk response strategy to effectively handle the identified risk.

If you choose to accept a project risk, you need to develop a contingency plan that can be implemented should the risk occur. Developing a contingency plan in advance can greatly reduce the cost of future risk responses.

Every contingency plan contains specific details that are only relevant to the identified risk and the project at hand. However, all contingency plans should contain the following components: the plan objective, implementation criteria, roles and responsibilities, resource requirements, operation procedures, and discontinuation criteria.
  • The plan objective
    For a contingency plan to be effective, a project manager must first ensure that there is an established plan objective. This objective should clearly detail the risk of failure that prompted the creation of the contingency plan.

    A project manager must also decide what the desired outcome of implementing the plan will be: to continue normal operations, to continue operations in a degraded mode or to abort a project area as quickly and as safely as possible. The plan objective should also outline the potential impact, in terms of financial costs, on the organization.

  • Implementation criteria
    In addition to establishing a plan objective, a project manager must ensure that an effective contingency plan contains well-defined implementation criteria.

    You and your project team must understand when your contingency plan should be implemented. In addition, this criteria outlines the specific failure, or risk trigger, that necessitates the start up of your project's contingency plan. For example, the contingency plan will be implemented in the event of a network failure.

  • Roles and responsibilities
    The third essential component of an effective contingency plan is the designation of roles and responsibilities. A project manager must decide who will be responsible for making implementation decisions, such as implementing the contingency plan or informing the team that the project is operating in contingency mode.

    The roles and responsibilities component clearly outlines who is responsible for plan implementation. For example, the technical engineer on duty will be in charge of activating the contingency plan in case of a network failure.

  • Resource requirements
    The resource requirements component details the equipment, supplies, funding, and overtime estimates needed to activate the planned response. To create a list of required resources, you need to ask yourself the following questions.
    • What equipment will be needed to implement the contingency plan? What equipment will be required once the plan is activated and in full operation?

    • What types of materials or supplies will be needed to implement and operate the contingency plan? What quantity of materials and supplies will be required?

    • How much should your contingency plan budget be in order to effectively fund the contingency mode operations?

    • How much overtime will employees be expected to undertake in order to keep the project on track during contingency mode?

    Having a list of resource requirements available before an emergency arises allows you to move quickly and easily into contingency mode to meet the plan objective.
  • Operation procedures
    Operation procedures outline plan implementation instructions so that everyone will know what to do in an emergency. For example, in case of a network failure, Sarah will switch the network to backup mode in order to save important data.

    The procedures must also describe how project personnel will be informed that the plan is being implemented. Operation procedures should also define how records will be managed and data security ensured.
  • Discontinuation criteria
    Discontinuation criteria describe how to determine when a project should move from contingency mode back to normal operating mode. This criteria will outline the conditions or events and the timing that make it possible to discontinue the contingency plan. For example, the network has to be fully tested and be 100 percent operational before returning to normal mode.
The development of an effective contingency plan, as part of acceptance, will help you create options and potential actions that will serve to reduce threats to critical project objectives and to promote project success.

2 comments:

Anonymous said...


Tag: PM206A54. Let me share all of you about #5 Tips for Project Management Success,, I hope you enjoy it

1. Plan your day using time management techniques

As a project manager, time management skills are essential because you are dealing with a wide range of tasks that demand a quick turnaround time. Planning your day will go a long way in keeping you organized and increasing your productivity. Assist your task planning by using project management software which helps you track the work of you and your team.

If you are not very tech savvy, a simple to-do list can also be a great organizational tool. Prioritize your most important tasks by putting them at the top of the list and less important ones at the bottom. Having a visual plan of your daily tasks helps to keep you on track and aware of time.

Related post: Free ebook 104 secrets to become a great project manager

2. Include stakeholders in important project conversations

While you will have plenty of responsibilities regarding the project, don’t neglect your clients.

Good communication is essential is keeping both parties informed of project progression, curtailing scope creep, and apprised of changing requirements. Some clients may have different expectations when it comes to communication, so make sure to establish the frequency and type of communication (like emails, phone calls, and face-to-face conversations) at the beginning of your project.

Establishing communication expectations early helps alleviate stakeholder uncertainty about communication frequency and delivery.

3. Regularly communicate with your team

Daily team communication helps keep misunderstandings and unclear requirements under control. Keeping your team informed in every step of the project is essential to project management success.

For example, a study published by Procedia Technology found that good communication skills were the cornerstone of project management. The study examined over 300 “construction project managers, architects, construction managers, engineers and quantity surveyors” and their successes and failures on various construction projects.

4. Anticipate project setbacks

Even the best-laid plans often go awry.

Remember that even with a high amount of planning and attention to detail, your project may still encounter some challenges. Pay attention to complaints from stakeholders or colleagues, and other warning signs, like a missed deadline or cost overrun, that there may be a problem.

Preventing a crisis will keep your project running smoothly, save you a lot of time, and keep you, your team, and your stakeholders confident in progressing with the project.

Unfortunately not every complication can be avoided. Crisis management skills are essential for dealing with the unexpected. Project managers need to be flexible and pragmatic. Improvise and make sharp decisions when needed.

Related post: 92 free project management templates

5. Stay focused on the details

A common problem project managers encounter is having the project aims not aligned with the organization’s objectives. A great project manager will strategize a plan for the project to lead back to the overall success of the business.

Know your project’s scope by heart and avoid wandering outside of the project’s requirements. It’s too easy to get lost in minor details and forget what your focus is, so a well-planned project scope is essential for success.

And final, you should use KPI to measure effectiveness of the project, here are full list: 76 project management KPIs


EXPLORE COURSES said...

Hey if you want to do the PMP Certification then you should click on this link - PMP Certification in Noida