At the end of this week, you are to finalize the overall project cost and clearly document project risks gathered throughout the project. As part of the risk management plan, you are expected to share a risk response plan. Project cost and risk management plans will include the following components: – Overall project budget (utilizing EVM – share current and forecasted project status) – Project requirements – Cost management plan – outlining contingency plan for project changes – Risk management matrix – Change management process – Project RAID (Risk, The assumption, Issues, and Dependencies)
In order to finalize the overall project cost and document project risks, several components need to be included in the cost and risk management plans. These components assist in effective project planning and control, ensuring that potential risks are identified, analyzed, and appropriate risk responses are developed.
The first component to include in the project cost and risk management plans is the overall project budget. This budget should be developed using the Earned Value Management (EVM) technique, which provides an integrated view of project cost, schedule, and performance. The current and forecasted project status should be shared using the EVM metrics, such as the Budgeted Cost of Work Performed (BCWP), Actual Cost of Work Performed (ACWP), and Budgeted Cost of Work Scheduled (BCWS).
The project requirements should also be clearly outlined in the cost and risk management plans. These requirements serve as the foundation for determining the project’s scope, deliverables, and associated costs. Any changes to the project requirements should be properly managed and controlled, which leads to the next component in the plans: the cost management plan.
The cost management plan outlines a contingency plan for project changes. It includes strategies for handling cost variations due to scope changes, resource fluctuations, and other factors that may impact the project’s budget. The plan should detail procedures for approving and controlling changes, as well as the mechanisms for estimating and tracking the costs associated with these changes.
Another critical component is the risk management matrix, which is used to identify and assess project risks. The risk matrix categorizes risks based on their impact and likelihood, helping project managers prioritize their response efforts. Risks should be analyzed in terms of their potential impact on the project’s objectives, such as cost, schedule, quality, and scope. This analysis will guide the development of appropriate risk responses.
The change management process is also essential in the cost and risk management plans. It details the mechanisms for reviewing, approving, and implementing changes to the project. This process ensures that all changes are formally documented, evaluated, and communicated to stakeholders, minimizing the risk of project disruptions.
Lastly, the cost and risk management plans should include a Project RAID (Risk, Assumption, Issue, and Dependency) log. This log provides a centralized repository for capturing and tracking project risks, assumptions, issues, and dependencies. Each entry in the log should include a description, impact assessment, assigned owner, and status.
By including these components in the project cost and risk management plans, the overall project can be effectively monitored, controlled, and managed. These plans enable project managers to proactively identify risks, develop appropriate risk responses, and ensure that the project stays within its cost and timeline constraints.
