Locked lesson.
About this lesson
Contingencies are potential risk response actions that will only be implemented if some triggering event or condition has shown that the risk probability has gone from unlikely to likely.
Exercise files
Download this lesson’s related exercise files.
Contingencies and Triggers.docx61 KB Contingencies and Triggers - Solution.docx
61 KB
Quick reference
Contingencies and Triggers
Contingencies are potential risk response actions that will only be implemented if some triggering event or condition has shown that the risk probability has gone from unlikely to likely.
When to use
When the risk analysis (qualitative and quantitative) has been completed, risks that are high impact but low probability often are addressed with contingencies and triggers.
The triggering condition is tracked by the project team. If the trigger occurs, the risk mitigation response is implemented.
In addition, when a rebaseline occurs or at the beginning of each phase or stage, the risks are again considered for contingencies and triggers.
When a contingency is implemented, other risks are checked to determine if the probability of those are increased or decreased by implementing the contingency.
Instructions
This risk response is a two step response. The first step is to accept the risk. This is usually because the risk is unlikely. At this point the project plan normally remains unchanged.
However, an alternate project plan is developed (at least the first few steps) for the unlikely condition when that risk does occur. This alternate plan normally has some detrimental attributes as compared to the normal plan (it costs more, it takes longer). If the alternate plan was better than the normal plan, the project team should switch to the alternate plan immediately.
In addition to developing an alternate plan, a project condition should be selected to act as a trigger indicator. If the trigger condition occurs, it indicates that the risk has changed from unlikely to likely (or present).
When the trigger indicates that the risk in now likely, it is time for the second step; the project plan is changed to the alternate plan that includes a risk response for the risk condition.
Definition: Contingent Response Strategies: "Responses provided which may be used in the event that a specific trigger occurs." PMBOK® Guide
Triggers
Triggers are monitored by the project leader and Core Team. Effective triggers have these characteristics:
- Appropriate for the type of risk
- Timely to allow implementation of alternate plan
- Discrete for a clear indication of the triggering event, no ambiguity
- Documented so that the team knows what they should be tracking
This definition is taken from the Glossary of the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017.
Login to download- 00:05 Hi I'm Ray Sheen.
- 00:06 I'd like to talk with you now about one of the most commonly used techniques for
- 00:09 managing project risk, and that's using contingency planning.
- 00:13 In fact, in many organizations, risk management is called contingency planning.
- 00:18 Contingency response to risk is a two-step response.
- 00:23 The Project Management Body of Knowledge, the PMBOK Guide,
- 00:26 defines Contingent Response Strategies as responses provided
- 00:30 which may be used in the event that a specific trigger occurs.
- 00:35 Contingent response is appropriate for risk with high impact.
- 00:38 But whose probability is very uncertain.
- 00:41 When you response for this risk would lead to a project approach
- 00:44 that is in some way inferred to baseline plan.
- 00:47 Such as it takes longer or the quality of deliverable's degraded,
- 00:51 then the project team does not want to use this response unless they have to.
- 00:56 That's why this two-step approach is selected.
- 00:59 It provides opportunity to make wise decisions.
- 01:02 The first step of this response is to use the acceptance strategy.
- 01:06 The project baseline is unchanged.
- 01:08 The project condition is as originally planned.
- 01:11 The next step is to prepare an alternative plan using an appropriate risk
- 01:16 response strategy, such as avoid, mitigate, transfer,
- 01:19 exploit, enhance, share, or escalate.
- 01:23 Let's call this plan b.
- 01:24 Plan b is inferior to the baseline plan.
- 01:27 If plan b is better than the baseline plan,
- 01:29 well you should change the plan b immediately.
- 01:32 The last element of a good contingency response strategy
- 01:35 is to have a very clear trigger.
- 01:37 This is the event or the warning that the probability of that risk has changed from
- 01:41 unlikely and uncertain to likely, and the plan b now needs to be implemented.
- 01:47 Let's talk about that risk trigger.
- 01:49 It's a crucial element in managing contingent risk response.
- 01:53 A risk trigger should be set up as part of risk planning.
- 01:56 When you have risk with high uncertainty,
- 01:58 the preferred approach is often contingent response.
- 02:02 Now, the need for establishing the trigger during risk planning
- 02:04 is to ensure that you have buy end on the trigger.
- 02:07 Some people are risk seekers, others are risk avoiders.
- 02:11 Risk avoiders often want to set the trigger at a very early or
- 02:14 very low threshold.
- 02:15 Whereas risk seekers want to stay with the current plan as long as possible,
- 02:20 assuming that it's better than plan b.
- 02:23 If you try to get them to agree on switching to plan b in
- 02:26 the middle of the project, when people have been working 10 or
- 02:29 12-hour days, often there's an argument and conflict on the team.
- 02:33 Because risk seekers will feel like you're giving up and not trying hard enough and
- 02:37 risk avoiders will feel like the current approach is helpless and a waste of time.
- 02:42 Instead, have the discussion during project planning when everyone is calm and
- 02:47 rational.
- 02:48 Select the risk trigger, and when that risk trigger condition occurs, but
- 02:51 not before, you switch to plan b.
- 02:55 The trigger then is used to indicate that it's time to switch to plan b.
- 02:59 This trigger is something whose status needs to be tracked by the core team, so
- 03:02 they know whether it's indicating a change.
- 03:05 Put in your project control plan.
- 03:08 A good risk trigger will have these attributes.
- 03:10 First, it would be appropriate for the type of risk.
- 03:13 Meaning, it really does indicate that this risk has moved from an unlikely condition
- 03:17 to a likely condition, or possibly has even occurred.
- 03:21 Second, the risk trigger is timely with respect to the project schedule.
- 03:25 It provides enough time to respond to the risk and implement plan b.
- 03:28 You wanna avoid a lagging indicator
- 03:31 that shows up well after the risk has been experienced.
- 03:35 Ideally, it is a leading indicator and warrants if the risk is impending.
- 03:39 Third, it is discrete.
- 03:41 Now by that, I mean, it's a clear indication of the risk status.
- 03:45 The trigger is either on or off, it's black or white, but not shades of grey.
- 03:50 That again, avoids debate among the team members,
- 03:53 and it's easier to set the control limit.
- 03:56 Finally, it's documented.
- 03:57 Your trigger and you alternate plan should both be documented.
- 04:01 Then everyone knows immediately what to do.
- 04:04 When it's time to go to plan b, you don't waste time explaining to team members and
- 04:08 stakeholders why you're doing what you're doing.
- 04:11 This has already been done and coordinated with them.
- 04:13 Also, project team members and
- 04:15 even stakeholders often change during the lifecycle of the project.
- 04:19 Documenting triggers helps the newbies come up to speed.
- 04:23 The contingent response is a valuable and
- 04:26 practical response to project risks, use it wisely.
Lesson notes are only available for subscribers.
PMI, PMP, CAPM and PMBOK are registered marks of the Project Management Institute, Inc.