Options to Address Project Cost Risk

Project cost risks tend to receive serious scrutiny by stakeholders as financial metrics like return on investment,
research and development expenses, gross margins and net profit/loss are so important in determining
organizational performance. Any changes to other project objectives schedule, resources, scope, product
quality, risk can have a potential added cost associated with them. Thus, it is very important for project leaders
and their teams to understand available options for responding to project cost risks and issues that may arise.
Here are good questions to consider for determining the best responses to project cost risks:
Is there any way to shorten the project schedule and save on marching-army expenses?
One example: support staff costs that are basically schedule dependent. Paying expedite costs could enable an
overall project cost reduction if enough total schedule reduction is realized as a result.
Are there any soft or nice-to-have product requirements that can be eliminated?
Some people like keeping soft requirements on the list. From a project management standpoint, especially on
highly technical projects, this is a detriment; for example, good engineers are often perfectionists by nature and
will strive to satisfy every listed requirement, so it is safer to eliminate unnecessary requirements altogether, if
possible.
Can we save money by contracting with outside resources?
Assuming they are perceived to be technically more capable and reliable than your own internal resources, this
can enable you to not only save on expenses, but to transfer the risk associated with performing those tasks, as
well.
Is there a clear understanding as to what constitutes complete relative to all critical project
deliverables?
Are there any assumptions that are invalid? Are some completion criteria too stringent? What (if anything) can
be changed to successfully accomplish project objectives without overcomplicating the process, and enable a
reduction in project expenses?
What can be done to reduce waste or eliminate extra non-value-added work to get lean?
Some examples to consider are:
Conduct well-organized meetings
Provide templates
Simplify reports and other written communications (e.g., via bullet points)
Use more informal processes for example, change control boards with only three members until the
product design is mature enough to warrant tighter change controls
Colocate the project team for more rapid decision-making and closer team coordination
What can be effectively leveraged from other projects or work packages to save on effort?
Examples would include modifying an existing software package versus building everything from scratch;
retaining as much of a prior electronics boards layout as possible and adding only what is unique to the new
design; and so forth.
adapted from Project Risk Management
A Practical Implementation Approach (PMI, 2016)
by Michael Bissonette