CRIMS - Cost/ Risk Identification and Management System

(Continued) Incorporate Risk in Budgeting

Reprioritizing Resources

Sometimes the allocation of resources, can significantly impact the level of risk. Reallocation can have an impact of increasing the cost of one scenario and reducing the overall risk range. Project managers can determine what type of conditions are optimal, very low minimum range with higher uncertainty or a more balanced allocation of resources. Use risk assessment to drive resource allocation.

Risk Mitigation

Early identification can be instrumental in risk mitigation. Some high risk, critical activities may require extensive lead times to develop alternative arrangements. It may be necessary to budget alternative avenues even before it has been demonstrated that the primary activity can not be accomplished. For risk mitigation it may be preferable to fund the primary and alternative activity to reduce risk uncertainty.

Project Evaluation

Some projects should never be attempted. The risks and uncertainty are greater than the potential reward. The budget may be low, but the sum of uncertainty might make the project several times more expensive than projected. CRIMS, Cost/ Risk Identification can identify the probability that the project be completed at a specific cost. Low probability at a mandated ROI may be justification for canceling the project. Conversely, a high probability could be justification for approving the project. This provides a transparent mechanism for auditors and project reviewers.

Contract Evaluation

Use risk identification as a tool to identify contractor proposals. Offer contractors financial incentive to accurately identify risk uncertainty. Additional costs associated with activities of recognized high uncertainty can be shared and low risks are fixed price. Consider using multiple contractors who have different areas of expertise to reduce the risk and use multiple contractors to develop primary and alternative solutions activities of high uncertainty.