In a previous article, “How to Plan Risk Responses,” I focused on risk response planning for negative risks or threats. But what about positive risks that appear as opportunities? How best to plan risk responses for opportunities?
Let me illustrate positive risk response strategies by using a real-life example of a very significant project opportunity.
On a project for which I was providing oversight services, we became aware of the potential for an enhanced funding match from one of the major federal government agencies. Following a meeting with the funding sponsor, we estimated the likelihood of being able to take advantage of the new funding model at a 90% probability or higher. We assessed the positive impact on the project as “very high.” This assessment of the opportunity caused me to drop everything to take immediate action in developing the request for the enhanced funding.
The PMBOK® Guide (Project Management Institute, 2017, p.444) describes five strategies for handling opportunities:
- Escalate – This strategy should be used when the opportunity is outside the scope of the Project Manager’s authority.
In this situation, the contract had been signed, the project had begun, and the scope had been set. However, the opportunity to take advantage of increased funding, though outside of our responsibility, was worth escalating to the major project sponsors. The sponsors agreed to pursue the additional funding and, upon receiving it, were able to use the funds to enhance the overall functionality of their new system.
- Exploit – This strategy seeks to ensure that the opportunity is fully realized, and that the potential benefit definitely happens.
Again, the project sponsors were motivated to take full advantage of this opportunity. I was temporarily relieved of my oversight responsibilities to develop the funding request documentation and submit it prior to the deadline.
True, once we were awarded the additional funds, there was much work ahead of us – the equivalent of an entire sub-project. We modified the Project Management Plan, extended the schedule, conducted additional requirements workshops, updated existing requirements and design documents, recruited additional resources, and executed the new plan.
- Share – This strategy shifts the ownership of the opportunity to a third-party.
In this situation we did not actually shift ownership of the opportunity to third-party; however, we were able to share the benefits of the enhanced funding with a sister organization. We developed new data exchanges and enhanced existing interfaces with the other organization, such that, upon implementation, both organizations were able to serve their clients more quickly and accurately.
- Enhance – Enhancing an opportunity is probably the most used risk management strategy for positive risk events. It involves taking action to increase the probability of a risk’s occurrence or its impact on the project. Good risk management planning attempts to take advantage of opportunities early in the project lifecycle rather than trying to improve upon them after they have occurred.
For this opportunity, not only did the project sponsors act quickly to ensure that we could take advantage of the enhanced funding; but upon receiving word that we would be awarded the funds, we changed course to include additional functional requirements in the system. Although this action initially affected our schedule negatively, the overall development and implementation schedule was only slightly affected because we acted so quickly. The system was implemented with additional functionality that benefited the clients of the organization.
- Accept – There are some opportunities for which no proactive action is planned or taken, either because it’s not feasible or cost-effective to address them. Some contingency should be reserved to be able to take advantage of these positive events with the assumption that they will happen. However, no other strategy to handle them may be practical at the time.
In this example, the minute we learned of the potential for enhanced funding, we began to track and monitor the opportunity. So, for this opportunity, as serendipitous as it was, we were able to escalate, exploit, share, and enhance our risk response to it.
However, as we took advantage of this huge opportunity, secondary opportunities materialized. For those we used this acceptance strategy as the project progressed, taking advantage of some while ignoring others.
Similar to the previous article, “How to Plan Risk Responses,” communication is a large part of this risk management strategy. Ongoing communication is necessary as risk tracking and monitoring become significant to the management of the project. The risk register and response plans must be actively worked by the risk owners and communicated regularly to the appropriate stakeholders, whether the risks are threats or opportunities.
Note that in the real-life example used for this article, the project plan, budgets, project scope, resource management plans, assumptions and constraints, and the myriad of subsidiary plans were reviewed as appropriate for potential updates. The resulting changes went through a rigorous change control process (which will be the subject of an upcoming article).
Similar to planning risk responses for threats, the risk response planning for opportunities must receive the same amount of focus and rigor. The expert judgment involved, the past experience involved, and the creative problem-solving required are more than just process elements within project management. As illustrated in this example, they all focus on the people aspects of project management.
Staying on top of potential risk events that can enhance the objectives of the project is well worth the additional required effort, and this activity may be one of the most important to be undertaken to improve project success.
Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition. Newton Square, PA: PMI Publications, 2017, Print.
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