The previous qualitative definition of risk is one with which most project managers will be both familiar and comfortable. However, at the risk of introducing a degree of circularity into the reasoning, none of this means anything at all in real terms unless you have set some kind of thresholds for your qualitative definitions.
What do we mean by a medium risk? If a risk is likely to cause a five-week delay to your project or cost you £10k where does that sit on the scale of ‘very low’ to ‘very high’ in relation to your particular project? You must do these threshold definitions and understand what are high cost and time implications for your project before you can assess risks in a meaningful way.
The following table suggests a general measure of impact in the education environment.
| Impact | Cost | Time | Quality |
|---|---|---|---|
| Very low | Variations manageable by virement against internal budget headings | Slight slippage against internal targets | Slight reduction in quality/scope with no overall impact on usability/standards |
| Low | Requires some additional funding from organisation | Slight slippage against key milestones or published targets | Failure to include certain ‘nice to have’ elements or ‘bells and whistles’ promised to stakeholders |
| Medium | Requires significant additional funding from organisation | Delay affects key stakeholders and causes loss of confidence in the project | Significant elements of scope or functionality will be unavailable |
| High | Requires significant reallocation of organisation funds (or borrowing) to meet project objectives | Failure to meet key deadlines in relation to the academic year or strategic plan | Failure to meet the needs of a large proportion of stakeholders |
| Very high | Increases threaten viability of project | Delay jeopardises viability of project | Project outcomes effectively unusable |
There are many variations on this table. In the commercial world percentage scales are often used for the cost and time components. The scale frequently goes from less than 5% variation (low) to greater than 20% variation (very high).
You may also see the term ‘insignificant’ variation used in the definition of ‘very low’. Here we contend that a ‘risk’ with an ‘insignificant’ impact does not warrant your time in monitoring and managing it. That is not to say that in your first trawl for identified risks you will not come up with suggestions of this nature that on analysis turn out to be not worth including.
Some purists would say that all of these suggestions should be logged and constantly reviewed but experience shows that the larger and more intimidating the risk log the harder it is to take effective action about the risks that matter. If you are doing your monitoring and horizon scanning thoroughly then changes in the risk situation will become evident to you.
It may be worth taking the above table and putting in specific figures relating to your project eg, a very low risk is one costing up to £500 on our scale and a very high risk is one over £15K or a very low risk is one causing a delay of less than a week whereas a very high risk causes a delay of three months or more etc.