Tips on using this forum..

(1) Explain your problem, don't simply post "This isn't working". What were you doing when you faced the problem? What have you tried to resolve - did you look for a solution using "Search" ? Has it happened just once or several times?

(2) It's also good to get feedback when a solution is found, return to the original post to explain how it was resolved so that more people can also use the results.

Should risks be used only for those events which have a negative bearing on the outcome of the project

5 replies [Last post]
A V
User offline. Last seen 2 years 17 weeks ago. Offline
Joined: 22 Apr 2017
Posts: 2
Groups: None

Hi,

       According to many risks can either have a negative outcome or a positive outcome. So if a risk has a positive outcome why is it considered as a risk and not as an opportunity? I realize that positive thinking says that look at all the risks as opportunities. But doing to defeats the following two purpose

1) It is not objective

2) Does not clearly distinguish between risks and opportunities.

 

     So the question is why are risks not limited to only those items or events which have a negative impact on the project? Why not segregate and have two different lists one for risks and the other for opportunities? A risk may turn into an opportunity and vice versa, but that should lead the item to be reclassified as either an opportunity or risk respectively.

     Can you please shed some light on this?

_____________________________

Regards

Replies

Mark Sales
User offline. Last seen 26 weeks 1 day ago. Offline
Joined: 20 May 2008
Posts: 16
Groups: None

Risk can be regarded as the obverse of Opportunity. As such, they can be dealt with similarly.

 

If you have a risk of a potential 10 day delay on one activity, you can also have the Opportunity of a ten day saving (on another activity) if you had used a duration that turns out to be longer than you may need.

 

TRA (time risk allowance) added to durations is one way of building in some potential opportunity for time savings. My preference on a construction project is to add 15% to the durations that are calculated using production rates.

Thus, I am building in a small opportunity for time savings on every activity.

Cheers

Santosh Bhat
User offline. Last seen 4 hours 54 min ago. Offline
Joined: 15 Apr 2005
Posts: 210
The term risk simply implies an uncertainty of outcome. It can be positive (opportunity) or negative (threat), or even, as is the case with a risk like production rate can be both. Its simply about the terminology being adopted.
Santosh Bhat
User offline. Last seen 4 hours 54 min ago. Offline
Joined: 15 Apr 2005
Posts: 210
The term risk simply implies an uncertainty of outcome. It can be positive (opportunity) or negative (threat), or even, as is the case with a risk like production rate can be both. Its simply about the terminology being adopted.
Anoon Iimos
User offline. Last seen 18 weeks 4 days ago. Offline
Joined: 22 Sep 2006
Posts: 1416
I'm a layman and for me, entering any business venture (especially Construction) is a "Risk" by itself. Perhaps that's why the "business players" are called "Stakeholders". Risk(s) is real life uncertainties (either negative or positive), and always unpredictable. Maybe similar or has no difference with "Gambling" where "Luck" plays a vital role. However, "business risks" are always identifiable, in other words, the cards and the odds are always known or transparent (unlike gambling). So I guess (literally), there's no such thing as "Luck" in business. Perhaps if any, then I would say that it is an "act of God" (or act of evil if acquired by cheating). Anyway, I for one believe that in Construction or any business, you should always avoid "Short-cuts". At least you will lessen the risks if not totally avoid them.
Alexandre Antonios
User offline. Last seen 11 weeks 1 day ago. Offline
Joined: 28 Nov 2018
Posts: 18
Groups: None

Hello AV,

People do projects for people. By extension, one or more people might collaborate together in the result of an outcome that is targeted to another person or another group of people. 

Regarding the classification of risk within practices they can be classified to whichever methodology suits the person: the simpliest examples would be a SWOT (for an organisation / INTERNAL vs EXTERNAL) or SVOR (for a project / POSITIVE vs NEGATIVE). 

Example of SVOR (retrieved from Mesly, Olivier (2017). Project feasibility – Tools for uncovering points of vulnerability. New York, NY:Taylor and Francis, CRC Press, 546 pages, 9 ISBN 9781498757911). 

ForcesInternalMathematical linkExternal
PositiveTotal ForcesTotal Forces given constraints = Infrastructures / OpportunitiesOpportunities
Mathematical linkVulnerabilities given constraints = 1 / Total Forcesconstant kOpportunities given constraints = 1 / Risks
NegativeVulnerabilitiesRisks given constraints = k / VulnerabilitiesRisks
 

In different disciplines, risks and opportunities are the most volatile components in an analysis.
In projects, many variables are highly volatile and risks and opportunities grow in volatility exponentially. 

From a practical and professional point of view, in contracts, it is a generality to classify them exclusively in the risk section. In their 'volatile' nature we attempt to integrate risks and opportunities within plans, projects and contracts. 

In the conditions of being ethical and professional, it is accepted to classify them as 'risks' to present the existance of those 'volatile events' either they are positive or negative. The 'positive' or 'negative' judgement would come from the audience that can derive from the different people in the project (or contract). 

Not everybody perceives 'positive' and 'negative' impacts with the same reception. It is better to classify them as risks from a contracting, operational and financial point of view AND/OR adapt once infront of a certain audience. 

I hope this helps,
AA