Question

Why is it important to measure the cost and schedule related impacts of project risks in the risk register, and why are qualitative measures such as likelihood and using three point (max, most likely, min) valuable?

Answer 1

It is not only important to deliver the project as per customer specifications, but also ensure the schedule and the costs have been managed well. By ensuring the schedule is followed, the costs are minimized and wastes ( as identified in lean manufacturing - Transportation, Inventory, Motion, Waiting, Over- production, Over-processing , defects and unused or improper use of skills). Thus, it becomes important to deliver the project on schedule as well.

As for the cost, the project must render the expected profits and costs must not exceed beyond the estimated costs during the order finalization stage. Else, the project would become a loss and the organization would suffer a measurable loss . Also, one must understand that, no company does a project for loss. If the costs and /or schedule is escalated, it results in increase in project risks.

Qualitative measures such as likelihood and using three point valuable are used extensively for determining the impact of risks on project and planning or priortizing to tackle these threats to the project.