ABSTRACT
No consideration of advanced project management would be complete without proper attention to the many risks that can beset projects and upset the carefully laid plans of their managers. The potential effects of risks range from trivial inconvenience to project disaster. Generally speaking, a risk event that occurs late in a project will have a greater effect and be more costly in terms of time and money than a similar event nearer the start of the project. That is because as time passes there will be a greater value of work in progress and higher sunk costs at risk of loss or damage. If, for instance, an engineer recognizes early in a project that his or her design is flawed and must be restarted, then the potential loss to the project might be significant, amounting to the cost of the wasted design salary and the loss of a week or two in progress. If the lost time cannot be made up, the indirect costs of the project will also rise as an inevitable result of the delay. If, however, the design error should not be discovered until late in the construction or manufacturing phase of the project, far greater costs will be incurred, many more people will be affected and possibly demotivated, and the setback to progress would be severe. Risk assessment must therefore be carried out early in the project life cycle. It should be accepted and performed as part of the project planning process.
