Benefits of Project Risk Management:

A brief guide

Practical Project Risk Management

SERIES ARTICLE

By Martin Hopkinson

United Kingdom

Purposes

1. Provide a checklist against which a project management process can be assessed.
2. Mark the 20^th year of the APM PRAM Guide 2^nd

Association for Project Management (APM) PRAM Guide (2004)

The APM’s second edition of its Project Risk Analysis and Management (PRAM) Guide remains one of the best sources of guidance on risk produced by a professional body. A key feature is its advocacy of a top-down multi-cycle approach, making it well-adapted for the management of risk as from the outset of a project. A simple explanation of this can be found on the Top-down Multicycle Risk Management Process guidance sheet (June, 2022).

Another feature of the PRAM Guide is its chapter identifying the benefits of risk management. This content was developed with professional workshops and identifies the following hard and soft benefits.

Hard Benefits for Projects (PRAM Guide)

1. Enables better informed and more believable plans, schedules and budgets.
2. Increases the likelihood of a project adhering to its schedules and budgets.
3. Leads to the use of the most suitable type of contract.
4. Allows a more meaningful assessment and justification of contingencies.
5. Discourages the acceptance of financially unsound projects.
6. Contributes to the build-up of statistical information to assist in better management of future projects.
7. Risk analysis enables objective comparison of alternatives.
8. Identifies and allocates responsibility to the best risk owner.

Soft Benefits for Projects (PRAM Guide)

1. Improves corporate experience and general communication.
2. Leads to a common understanding and improved team spirit.

More…

To read entire article, click here

Editor’s note: This series of articles is by Martin Hopkinson, author of the books “The Project Risk Maturity Model” and “Net Present Value and Risk Modelling for Projects” and contributing author for Association for Project Management (APM) guides such as Directing Change and Sponsoring Change. These articles are based on a set of short risk management guides previously available on his company website, now retired. For an Introduction and context for this series, click here. Learn more about Martin Hopkinson in his author profile below.

How to cite this paper: Hopkinson, M. (2024). Benefits of Project Risk Management: A brief guide, Practical Project Risk Management series, PM World Journal, Vol. XIII, Issue II, February. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/02/pmwj138-Feb2024-Hopkinson-Risk-Management-Benefits-brief-guide.pdf

About the Author

Martin Hopkinson

United Kingdom

Martin Hopkinson, recently retired as the Director of Risk Management Capability Limited in the UK, and has 30 years’ experience as a project manager and project risk management consultant. His experience has been gained across a wide variety of industries and engineering disciplines and includes multibillion-pound projects and programmes. He was the lead author on Tools and Techniques for the Association for Project Management’s (APM) guide to risk management (The PRAM Guide) and led the group that produced the APM guide Prioritising Project Risks.

Martin’s first book, The Project Risk Maturity Model, concerns the risk management process. His contributions to Association for Project Management (APM) guides such as Directing Change and Sponsoring Change reflect his belief in the importance of project governance and business case development.

In his second book Net Present Value and Risk Modelling for Projects he brought these subjects together by showing how NPV and risk modelling techniques can be used to optimise projects and support project approval decisions. (To learn more about the book, click here.)

To view other works by Martin Hopkinson, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/martin-hopkinson/