A project team has identified a risk and wants to accept it as an opportunity to finish a project earlier than planned. The project manager realizes that the sponsor may not accept the risk since the sponsor is risk averse.
What should the project manager do?
In this situation, the project manager should create a contingency reserve to manage the identified risk while considering the sponsor's risk aversion. By setting aside a contingency reserve, the project manager can ensure that any potential negative consequences of the risk are covered, thereby providing a safety net. This approach balances taking advantage of the opportunity to finish the project earlier with the sponsor's desire to manage risks effectively.
In this situation, the project manager should focus on communicating the potential benefits and cost savings associated with accepting the identified risk as an opportunity. By emphasizing that accepting the risk could lead to finishing the project earlier and at a lower cost, the project manager can align the decision with the sponsor's interests. Providing a clear business case and demonstrating the positive impact on the project's overall success may help in gaining the sponsor's acceptance, especially when dealing with a risk-averse sponsor.
This analysis can provide a probabilistic assessment of the project’s completion time, which can help the project manager and the sponsor make an informed decision about the risk.
Opportunity to finish earlier - Non Even ris - "C" is the right answer.
This risk positively impact schedule but may or may not positively impact cost. So, contingency reserve is important to accept the risk. So, A seem more suitable answer. Option D assumes that risk will cost less which is not evident from the question.
In project management, "nonevent" risks are those with a positive impact or opportunity. Since the project team has identified this risk as an opportunity to finish the project earlier than planned, it's important to communicate this to the sponsor. By explaining that this risk represents a favorable opportunity for the project and doesn't pose a threat, the project manager can help the risk-averse sponsor understand the potential benefits of accepting it.
Nonevent by name suggests unknown. So how will you determine whether it will have a positive or negative impact? Some risks arise from uncertainty when some aspects of a planned task or situation are unknown. They are more subtle in nature. Variability: Uncertainty about some of the key characteristics of a planned event, activity, or decision Ambiguity: A lot like event risk, but more limited in terms of the unknown condition
In this situation, it's important for the project manager to communicate effectively with the sponsor. The project manager should provide a clear explanation of the identified risk, emphasizing that it is an opportunity rather than a threat. It's crucial to address the sponsor's concerns about risk aversion and demonstrate how accepting this particular risk can lead to benefits such as finishing the project earlier and potentially reducing costs. Clear communication and highlighting the positive aspects of the risk can help build understanding and acceptance.
D. Convince the sponsor that this will cost less, ultimately resulting in more profit for the sponsor. In this situation, the project manager should engage in effective communication with the sponsor to explain the potential benefits of accepting the identified risk as an opportunity. Demonstrating how accepting the risk could lead to cost savings and increased profitability may help persuade a risk-averse sponsor to consider this option. Providing a clear and compelling business case can be crucial in gaining sponsor approval for accepting the risk as an opportunity.
Option A is the most appropriate action to address the risk while accommodating the sponsor's risk aversion by having a plan in place to manage the potential consequences.
B. Conduct a Monte Carlo analysis to determine if the team will complete the project early.
La meilleure démarche serait de présenter des arguments basés sur une analyse détaillée et les bénéfices potentiels, tout en fournissant des garanties appropriées. Analyse de Monte Carlo : Cette technique de simulation permet d'évaluer les différentes probabilités et scénarios liés au risque. En effectuant une analyse de Monte Carlo, le chef de projet peut fournir des données précises sur les probabilités de terminer le projet plus tôt, ainsi que sur les impacts potentiels des différents scénarios. Cette approche fondée sur des données chiffrées est plus susceptible de convaincre un promoteur prudent, car elle réduit l'incertitude et démontre une évaluation rigoureuse du risque.
The problem with option C as an answer is that it does not clearly give a rational/reason why the risk should be accepted. It is not enough to just say that it is a non-risk even and should therefore be accepted, especially when dealing with a risk averse sponsor. That's why Option D is the correct answer.