Today I finally listened to the recording of the PMI Risk Management CoP webinar called Integration of Earned Value and Risk Management.
Glen Alleman issued his own comments previously, here are mine.
I am in a situation that is somewhat different from the one discussed in the webinar. I typically don't work on fixed cost projects so I do my own risk management activities. My clients do theirs; I do communicate my risk assessment to clients. The Management Reserve (MR) is invisible to me until a risk turns into an issue that requires funds to mitigate. The size of the MR is actually unknown to me. Same goes with any slack they built in after the deadlines they communicate to me.
Given that, if a risk does not materialize or if it is mitigated using the existing budget (with or without drawing on the MR), what is left is returned to the pot for use at a later date (or not). Same goes with any slack in the schedule.
I would add a Work Package (WP) to the schedule only if the risk, now an issue, involved a missing deliverable. Otherwise, tasks would be added to an existing work package and to the schedule. In either case the MR might get drawn down and Earned Value (EV) affected. If I deliver more value to the project, as opposed to fixing an unforeseen issue, more value is being delivered and that offsets the potential change is cost.
Although it does not happen in my projects; if a risk does not occur, I don't see how leaving the associated funds (or slack) in the PMB would improve performance. If I read Glen's comments accurately, we are on the same page. No deliverable equals no value and keeping the extra funds in the calculation would mess up EV. Same with any extra slack; no issues does not mean you get free slack.
I liked the answer on the use of Monte Carlo simulation in risk management. Limiting the Monte Carlo simulation to the tasks on the critical path is dangerous in my opinion. You could have significant changes in the critical path of a schedule depending on the varying work durations during the simulation.
I would also not say that the MR is for "unknowns unknowns" in the schedule. A bit too Donald Rumsfeld for my taste and also a bit too restrictive in my opinion.
Overall it was an interesting webinar because it gives some insight on how grown ups manage projects. If a risk become an issue you keep on using good project management practices instead of watching the wheels fall off the cart. I also liked that there was not too much material for the hour and that the presenter did not have to race through the presentation.
What do you think? As always questions and comments are welcome.
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