Getting a handle on project risks is a slippery job, but well worth the effort if you and your project team desire to sleep more soundly at night. In Part 2 of this series, we identified various risks related to choosing, estimating, and staffing your projects. In Part 3, we assessed the potential adverse effects of those risks on the project cost, schedule, quality, and features.

Following assessment, the mitigation phase involves brainstorming ways to avoid, eliminate, work around, or otherwise manage each identified risk. This article (Part 4 of the series) takes you through a simple, four-step risk management process. The results can help you and your team decide whether or not to take on the project, and can aid in pinpointing the most effective risk management techniques to use.

Risk Assessment Review

In Part 3, we discussed an example in which your family has approached you about redecorating your kitchen because your relatives are coming for a family reunion the week after next. Your family has many items on its "wish list" (new paint treatment, resurfacing the cabinetry, laying new tile, and installing new crown molding). All of this must be completed in the next two weekends, which gives you only four days!

Since you don't believe you have nearly enough time to complete the project, during your risk assessment, you labeled one of the risks "Too Many Features/Too Little Time." This means the project requirements are too numerous, too complex, or both, given the time available. This risk also scored high in terms of its potential negative impact on cost, schedule, quality, and features.

Mitigating the Risks You've Assessed -- Can You Do It Successfully?

Once you have a list of assessed risks, you can begin brainstorming a variety of ways to avoid, minimize, or manage them. This is a quick and simple process for doing so.

1. Consider whether you can completely avoid or eliminate each risk.

If your risk involves not having enough time to incorporate certain requested features, is it possible to agree on removing the features from the requirements list entirely? Record any ideas for avoiding the risk altogether.

Example. With the kitchen redecorating job, you might consider these options:

-- Radically reduce the number of features; for example, only paint the walls.

-- Push out the schedule significantly. Maybe the relatives can come next year.

2. If you can't avoid a risk, brainstorm risk management alternatives.

Alternatives are ways of mitigating the risk - from the simplest ideas to more sophisticated solutions. For the Features-versus-Time risk, one strategy could be to negotiate a way to phase in the features over time. Another might entail engaging more people or resources to address the features, if feasible. In some situations, you might even be able to buy insurance to mitigate a risk.

Example. With the kitchen redecorating job, you could:

-- Hire professionals to do the work, if there are any available on short notice.

-- Recruit semi-experienced friends or neighbors to help for the next 10 days.

-- Use faster, simpler techniques and materials (such as stick-on vinyl tiles).

-- Plan to have a second kitchen set up in the backyard BBQ area, just in case.

3. Identify your "do-nothing" and "next-to-nothing" alternatives.

These are the options that would remain available to you if you did not pursue the project or solution you're considering. "Do-nothing" could mean the status quo, for example, and "Next-to-nothing" might denote an option that already exists but has been ignored. These will help you remain clear about whether you must do something, and what your fallback position is if you can't do anything.

Example. Instead of the kitchen redecorating job, why not:

-- Hold the family reunion somewhere else, such as in a hotel in another city.

-- Forget what the relatives think. Don't worry about the kitchen because everyone will be too busy visiting to notice!

4. Give each risk alternative a "risk reduction likelihood" score or rating.

If you want to move forward with the project or solution, but can't find a way to avoid or eliminate the risk, you can weigh the relative merits of each alternative you brainstormed in #2 above. Similar to the Assessment Phase, you can assign relevant values to each of your alternatives. In this case, these values represent the likelihood that each alternative can significantly reduce the negative impact of the risk on the four key factors: cost, schedule, quality, and features.

For instance, a High Likelihood of reducing the impact might be a 9, a Medium Likelihood a 5, a Low Likelihood a 1, and No Likelihood a zero, with a different value possible for each of the four key areas.

By adding up the values for each alternative, you'll have a rough score for each that indicates which alternatives seem to be the best candidates for minimizing the risk -- the higher the score, the better. You also might consider whether to combine alternatives. Using two or more together might help reduce the risk in a complementary way.

Example: Your family wishes to move ahead with the project with all of the current requirements. After scoring and comparing the alternatives, it appears that seeking professionals to do the work might best minimize the risk. If that's not possible, your family will do the work with simpler materials and methods and extensive help from friends. Either way, you can always set up a second kitchen as a contingency plan.

What's the Plan?

When you are finished, you'll have a risk management plan consisting of analyzed risks with a ranked list of alternatives for handling each one. And even if you decide not to take on the project you are evaluating, you will have used 20:20 foresight to make that decision instead of the 20:20 hindsight that's usually required to find out the hard way -- after the fact!