Budget and Cost Estimates are two terminologies that even senior project managers use them interchangeably all the time. Well! one may say that these are the opposite side of the same coin. Estimate – To produce a statement of the approximate cost of (Merriam-Webster Online, http://www.m-w.com/dictionary/estimate) Budget – A plan expressed in quantitative, usually monetary, terms that covers a specific period of time […]
Residual Risk and Secondary Risk The PMBOK® Guide ver 6 defines risk as “An uncertain event or condition that, if it occurs, has a positive or negative effect upon at least one project objective.” Residual Risks The risks that might remain after the planned response of risk and those that have been purposely accepted. PMBOK […]
Risk Attitude, Risk Appetite, Risk Tolerance and Risk Threshold Risk Tolerance According to PMBOK Guide 6th Edition, Risk tolerance is the identified range of acceptable outcomes Risk tolerance informs you regarding the sensitivity of the organization or to people’s life. High tolerance refers to individuals’ capability to take high-level risk while low tolerance means people […]
Mitigation plan, Fallback Plan, Contingency Plan and Workaround Mitigation plan In risk mitigation, action is taken to reduce the probability of occurrence and/or impact of a threat. PMBOK 6 is used for the risk with high probability and impact and therefore place in action to minimize the impact. Risk mitigation revolves around reducing the impact […]
Contingency Reserves VS Management Reserves Reserves is a buffer in terms of Schedule or Cost while estimating is added to the estimated schedule and cost to account for risks or uncertainties both for known and unknown risks Padding is unwelcomed practice as it adds unplanned values or reserve over the output of estimations As explained in […]
Passive Acceptance of Risk and Active Acceptance of Risk These are two different risk response strategies to deal with the risks on the project. The idea behind good risk response strategies is to provide the team with various options and identify the actions that could reduce or eliminate threats to project objectives. Risk management team […]
Known Risks and Unknown Risk The risk is future uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. [PMBOK6] The risk is the effect of uncertainty on objectives, and an effect is a positive or negative deviation from what is expected. [ISO31000] Project risk […]