Explorer

• Risk Management
  • Introduction to Risk Management
  • Mandatory Process
  • Corporate Risk Management
• Risk Management Documents
  • Introduction to Risk Management Documents
  • Risk Management Terminology
  • Risk and Opportunity Management Strategy
  • Risk and Opportunity Management Plan
  • Risk Register
• The Four Stage Project Risk Management Process
  • Introduction to the Project Risk Management Process
  • Identify
    • Identify Stage
    • Categories of Risk
    • Project Areas Affected by Risk
  • Analyse
    • Analyse Stage
    • Qualitative Analysis
    • Quantitative Analysis
  • Plan
  • Manage (Implement)
• Opportunity Management
• Three Point Estimating and Confidence Figures
• Risk Management in Acquisition
  • Business Case Approvals
  • Optimism Bias
  • Contracting for Risk Management
  • Assurance
• Risk Tools
• Competences and Training
• Common Terms
• Contacts

Opportunity Management

What is Opportunity Management ?

The term ‘risk’ is used by risk practitioners to embrace the possibility of both negative and positive consequences despite the dictionary definition. The latest view is that ‘risk’ in a negative sense should be referred to as threat whereas ‘risk’ in a positive sense should be called opportunity. For the purposes of this guidance opportunity is specifically used to define those unplanned and uncertain events with the possibility of positive consequences.

Opportunity Management is the technique by which projects can identify and understand possible improvements to their project objectives. As with previous risk definitions an opportunity is characterised by its lack of certainty, in other words, if an improvement is certain to be achieved then it is no longer an opportunity. The term ‘probability’ is again used to describe the likelihood of occurrence.

Who is Responsible for Opportunity Management ?

The Risk (Process) Manager typically implements the Opportunity Management process.

How is Opportunity Management carried out ?

The process for managing opportunities is very similar to that defined for managing risks. The same four stage iterative process - Identify, Analyse, Plan and Manage - should be deployed with a documented plan of who does what, when and how. This is usually combined with risk management in a Risk and Opportunity Management Plan.

How is the Identify Stage of Opportunity Management carried out ?

Opportunities can be identified through formal and informal methods including brainstorming, experience, and previous project history. Opportunities can be listed in an Opportunities Register, separately from the Risk Register, or combined in one register. The same attention to source, ownership and context is necessary to provide a clear understanding. It must always be borne in mind that an opportunity may create additional risks, which should be added to the Risk Register and managed in the same way as other risks.

How is the Analyse Stage of Opportunity Management carried out ?

The function of the Analyse Stage is to describe the probability and positive impacts (e.g. cost or time savings or performance enhancement) that would arise if the opportunity came to fruition. Criteria bands (e.g. high, medium and low) for probability and impacts (cost, time and performance) should be defined for opportunities in the same way as for threats. Using a probability impact diagram, a view of the priority the opportunities should be given for determining further action can be formed.

Establishing quantitative probability and impact data for identified opportunities provides for a more detailed analysis, including plan/schedule and cost schedule impact analysis. As with threats, estimating techniques should include the use of subject matter experts and peer reviews, detailed records of the outcome should be kept, such records can be added to the Opportunity Register.

If the probability of occurrence of an Opportunity reaches 100% then it becomes an issue and will become part of the main programme of work. The opportunity register must be updated to reflect this.

How is the Plan Stage of Opportunity Management carried out ?

As with threats there are four opportunity handling strategies to be considered: Exploit; Improve; Transfer; Accept. These strategies are likely to be focused on the source of opportunities. Any specific actions taken in respect of an opportunity are usually described simply as ‘Take the opportunity’.

• Exploit - take action to build the opportunity into the project plan, ensuring it occurs, so that the beneficial outcome is certain (probability becomes 100%).
• Improve – identify Enhancement Plans with the purpose of increasing the probability of occurrence and or increase the impact (benefits) should the opportunity occur.
• Transfer – allocate management to another party who is best able to handle it, both in terms of maximising the probability of occurrence and increasing the benefits which may occur.
• Accept (tolerate) – leave the situation to chance, if the opportunity occurs the project is fortunate, if not the beneficial outcome is not realised.

Quantitative data is needed to perform the cost and benefit comparison analysis justifying the cost of implementing actions aimed at realising the opportunity. Similar to threats the pre-enhanced and forecast post-enhanced position, for time and cost, should be analysed. The analysis will lead to recommendations on the strategies and component actions with action owners. The resulting data is used to support the decision making process.

How is the Manage Stage of Opportunity Management carried out ?

The overall Opportunity Management activity should form part of normal project management with regular reviews of past, ongoing and future opportunities and handling actions. Decisions should be agreed by all relevant stakeholders, implemented and monitored through project review meetings and records maintained for audit trail purposes.

The Opportunity Management process itself should also be reviewed regularly for its effectiveness and improved if necessary.

Change History