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Unformatted text preview: ntingency in the hands of the project manager. This is probably the way it should be when the contingency is allocated to cover risks that cannot be correlated with the way the work will be done. But, if contingency is correlated to the way the work is to be done, it makes sense to have the project manager manage it. If the project manager is entrusted with managing the larger budget of the project itself, surely the project manager can be entrusted with managing the smaller contingency budget. But some companies feel that risk management and, consequently, contingency management are general management functions, rather than project management functions. In this case, the project manager is expected to manage the project according to the project plan to the best of his or her ability in the face of risk without the benefit of contingency. General management may or may not have allocated contingency for a given project, and the project manager may or may not know whether there is any contingency. Sometimes there is the perception by management that if project management is aware of contingency, it will inevitably get expended. This is probably not a healthy view, but it is one that sometimes exists. 9.4— Risk Management Summary Risk is a reality in every undertaking. If we knew the outcome of everything in advance, there would be no risk. Fortunately, for some undertakings, even though we do not know the details Page 242 of the outcome, we can know the outcome generally speaking. This is the case for most projects we undertake. We know that we will be able to complete them, we just do not know precisely how much it will cost or how long it will take. Consequently, we need to be honest with ourselves and to recognize that risk exists. Our plans, no matter how well conceived, need to acknowledge risk. Risk not only needs to be acknowledged; it needs to be managed. Just as we do not trust the execution of a project to luck, we should not leave risk to luck. While we may not be able to completely control risk, just as we cannot completely control the execution of a project, the attempt to control it on average will result in outcomes that are more to our liking than the outcomes we would get if we did not attempt to control risk. The methods presented in this chapter on risk management are straightforward and consistent with the methods of project management that have been presented in previous chapters. They do not begin to cover the diversity in concepts regarding risk management for projects. The intent of this chapter was not to treat this subject exhaustively but to give some practical advice that should work in the majority of cases a project manager will be faced with. Risk management courses and seminars that the author has been exposed to often focus on organizing for risk, creating a risk plan, communicating about risk, and so on. The viewpoint here is that risk management is something like a total quality program; if you get everyone involved, you can somehow stamp out risk as you stamp out poor-quality work. W...
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- Spring '10