Managing Risk

Written by | Published February 16, 2012

Risky Business

Risk can either be an opportunity or a stumbling block; nothing is guaranteed but either way it is going to have an effect on your project’s goals and is an essential part of business. Without risks businesses wouldn’t grow or venture into new markets, which in an ever-changing environment could wind up costing them the business itself.

Taking risks is scary, but when guided by a professional who has undergone PRINCE2 Training and knows how to use risk management techniques, looking for potential benefits at every possible opportunity. To be able to do this an individual must be able to use a set of processes and principles to be able to identify, record, analyse and control risks, knowing what best courses of action to take in different situations.

There are a number of things to take into account when coming up with a risk assessment strategy to ensure that your business’s future isn’t completely left to chance, but an extremely calculated risk. Or as calculated as it can be. This is why we are going to look at some of these principles to help you manage risk and help you make your own risk management strategy:

Learn more about PRINCE2 with our previous post on the Seven PRINCE2 Principles.  (more…)

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PRINCE2 Tolerance

Written by | Published October 19, 2010

If you are a project manager, having a tolerance can make your life significantly easier. This means that you can go a little over or under and not have to constantly return to your project sponsor for any new approval on such things as budget, timescales and/or quality. This allows you a little leeway and can help you get on with more important aspects of the job.

Tolerances are just one important area of Project Management that are covered in PRINCE2 Training. There are two levels of PRINCE2 Qualification: The PRINCE2 Foundation certificate is necessary for involvement on projects in the PRINCE2 environment, and proves your knowledge of PRINCE2 theory and its application. Becoming certified as a PRINCE2 Practitioner allows you to manage PRINCE2 projects.

Tolerance in the PRINCE2 framework

Tolerance...

Positive Tolerances

Positive tolerances are the most common for of tolerances; these tolerances allow you to go a little over budget.

Negative Tolerances

You would think that if you came in way under budget or finished the project four months early then your sponsors would be happy? No, because that means you have held on to money that could have been placed elsewhere and the same with employees.

The Six Tolerances of PRINCE2:

Time, cost, scope, risk, quality and benefits

  • Time – Time tolerance is how much you can go over or under the dates of which you expect to complete the project.
  • Cost – These tolerances are normally set up in percentages, for example if you have a 10% tolerance level on £1,000,000 then you can spend up to £1,100,000 before you need to ask for more money.
  • Scope – Scope depends from project to project, you can’t do a percentage on scope. Scope needs to be well thought out and discussed with your sponsor before the project has begun, so if a certain situation arises, you can sort it out without having to get them involved.
  • Risk – Risk tolerance needs to be well documented list of potential upsets the project could encounter. With each risk there needs to be a set tolerance level.
  • Quality – Tolerances on quality are set targets that must be adhered to, to make a product that satisfies the sponsors wants and needs.
  • Benefits – There are very few, if any, instances where you would want to cap the amount of benefits, but there may be a lowest benefits tolerance level.
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