During the closeout phase, agreements for risk sharing and risk transfer need to be concluded and the risk breakdown structure examined to be sure all the risk events have been avoided or mitigated. The final estimate of loss due to risk can be made and recorded as part of the project documentation. If a Monte Carlo simulation was done, the result can be compared to the predicted result.
Risk Closeout on John’s Move
To close out the risk mitigation plan for John’s move, John examines the risk breakdown structure and risk mitigation plan for items that need to be finalized. He makes a checklist to be sure all the risk mitigation plans are completed, as shown in Figure 11.4.
Risk is not allocated evenly over the life of the project. On projects with a high degree of new technology, the majority of the risks may be in the early phases of the project. On projects with a large equipment budget, the largest amount of risk may be during the procurement of the equipment. On global projects with a large amount of political risk, the highest portion of risk may be toward the end of the project.
KEY TAKEAWAYS
- During the initiation phase, risks are identified that could threaten the viability of the project. Mitigation options are considered to see if they would be sufficient to protect the project.
- During the planning phase, risks are identified and analyzed for each activity group in a risk breakdown structure, and mitigation is planned for each risk.
- During the execution phase, risks are checked off as activities are completed or mitigation is performed if loss does occur. New risks are identified and added to the plan.
- During the closeout phase, insurance contracts are cancelled and partnerships terminated. A summary of actual costs associated with risks are compared with initial estimates to refine estimating capabilities. The successes and failures of the risk management plan are summarized and saved with the project documentation to add to the company’s corporate knowledge.
EXERCISES
- High-risk events that require expensive mitigation options threaten the choice of the project during the phase.
- A risk breakdown structure is developed during the phase.
- Risk transfers and risk sharing arrangements are terminated during the phase.
- If you plan an outdoor wedding, what is a risk that would threaten the project in the initiation phase and a mitigation plan that would allow the project to proceed?
- In your own words, describe risk management during the planning phase.
- In your own words, describe risk management during the closeout phase.
Risk Assessment
Recall a project that you considered at one time but decided against during the initiation phase because the risks were too great or the mitigation plan was insufficient to proceed. Describe the project, the risks, the mitigation plan, and why you chose not to go forward.
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