5 Risk Tolerance Considerations for Project Managers

How Much Risk You Are Willing to Tolerate?

Every project manager deals with risk assessment and risk management. If done right, the project manager will ensure the overall project plan includes a risk management plan early in the project. The risk management plan is typically guided by the risk attitude of the project stakeholders, which is determined by their risk appetite, risk tolerance, and risk threshold.

The PMBOK Guide offers detailed definitions and guidance for each of these factors. For this discussion, we will use simplified descriptions:

Risk appetite is the level of risk that an organization is willing to accept to reach its goals and objectives. Risk appetite is typically culturally determined within the organization.

Risk tolerance tells you how sensitive the organization or the project stakeholders are to risks, their willingness to accept or avoid risk. Risk tolerance is variable, if not fluid, from person to person.

Risk threshold is the level of impact, typically a clear figure, beyond which the organization will no longer tolerate the risk. Risk threshold is a negotiated or determined quantified limit.

Project stakeholders are hardly ever asked what their individual tolerance level is. They agree on the risk management plan, but transfer their trust and expectations to the project manager. Stakeholders may understand the risk, but they may not fully grasp what acceptance of the risk means in practice.

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Running an Effective Fit-Gap Analysis - Abraic

Running an Effective Fit/Gap Analysis

Commercial, off-the-shelf (COTS) software—not custom software—continues to be the preferred option for many firms, especially for ERP and CRM solutions.

The benefits of COTS solutions have been publicized widely and revolve around reduced time to deploy, cost avoidance, standards based, best practices included, solution maturity and platform flexibility, to name a few. However, many COTS deployments end up being disappointments, if not failures, once in production. Thus, many of the touted benefits are not being realized.

A critical success factor in a COTS solution deployment is the fit/gap analysis. COTS solutions are not ‘plug and play’, no matter what their marketing materials say. During the fit/gap analysis phase, decisions need to be made about customizations and functional configurations.

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IT project health report Abraic

7 Elements of an IT Project Health Report

A health check is a formal examination assessing if an IT project is on track and under control, and serving as a valuable continuous improvement tool. The outcome is a project health report that proactively and impartially informs project stakeholders of the well-being of the initiative.

Too often, a project health check is only initiated once a project already is in trouble. But best-in-class organizations require health checks at several points during a project’s life cycle.

Creating the health report can be time-consuming, and it is typically not the responsibility of the project manager (PM). Instead, such reports should be produced by an independent party for the benefit of the project sponsor. I’ve seen health checks carried out effectively by a central Project Management Office, an internal auditor, or an external 3rd party.

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Diagnosing a Dead-End IT Project- When to Fail Fast and Move On1

Diagnosing a Dead-End IT Project: When to Fail Fast and Move On

An IT department’s most critical point of failure lies in its inability to cancel a dead-end project. Canceling a project can be a great move, but it is uncommon. (When was the last time you canceled an IT project?) All too often, IT departments waste significant time and money on a fruitless effort.

Let’s explore the major reasons why an IT project reaches an impasse. Knowing the reasons will help find an effective, yet low-risk path to fail fast and move forward.

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