Concepts
Underestimating or failing to recognize this critical element can result in severe project failures or even total project collapse. This article will walk you through how to quantify the risks associated with assumptions and constraints, using examples for practical application.
Understanding Assumptions and Constraints
Before deciding how to assess risks, it is essential to understand what assumptions and constraints mean.
An assumption is a belief or expectation that something is true or likely to happen, without concrete proof. In project management, assumptions are factors that, for planning purposes, are considered to be true, real, or certain, without evidence that they are.
Constraints, on the other hand, are limitations imposed on the project, such as budget limits, resource availability, timeframes, or technology/technical aspects.
Recognizing Risks Associated with Assumptions and Constraints
Every assumption presents a potential risk because if an assumption does not prove correct, it can impact the project’s scope, quality, schedule, and cost. It can result in delays, cost overruns, reduced quality, and customer dissatisfaction.
Constraints, on the other hand, limit the project management team’s options. For example, budget constraints may prevent the hiring of additional resources, or time constraints may affect the project scope. Risks associated with constraints might include not delivering on time or within budget, deviating from the project scope, or delivering a lower-quality output.
Risk Assessment Process for Assumptions and Constraints
Risk assessment entails assigning a probability and impact to each assumption and identifying the risks associated with each constraint.
For assumptions, the project team should make a list of all the assumptions and next to each one, assign a probability that it will, in fact, be correct and an impact if it were not. For example, if the assumption is “The client will provide all necessary input on time”, the probability might be high (or 80%) that this will occur based on past experience. However, if this assumption proves incorrect, the impact might be high because it could result in project delay.
To assess risk for constraints, list all project constraints and identify a risk factor associated with each. A common technique is to use a scale of 1-10 for assessing the likelihood and impact. For instance, a project may have a budget constraint that there will be no additional funding. The associated risk could be “The project may need additional funding for unexpected costs”, and the likelihood and impact might be 7 and 8, respectively.
Prioritizing and Mitigating Risks
Once you have recognized and quantified the risks, the next step is to prioritize and develop mitigation strategies. Risks with high probability and high impact should be prioritized. For instance, if an assumption about supplier stability proves incorrect, the impact and probability might both be high, making this a high-priority risk.
Mitigation strategies should also be developed. This could involve sourcing different suppliers or always having a backup supplier on hand.
Summary
Understanding and effectively managing the risks associated with assumptions and constraints is a key skill for the PMI Risk Management Professional. While each project has distinct challenges, the principles outlined here can be applied to any project.
Answer the Questions in Comment Section
True or False: Assumptions and constraints are always risk-free in a project.
- True
- False
Answer: False
Explanation: Assumptions and constraints come with a level of uncertainty which if not correctly defined, managed, and controlled, can lead to potential risks affecting the project timeline, budget, and resources.
True or False: All assumptions are negative risks.
- True
- False
Answer: False
Explanation: Not all assumptions are negative risks. Some assumptions may result in positive outcomes or opportunities for the project.
The assumption log should be updated:
- A) At the beginning of the project only
- B) At the end of the project only
- C) Throughout the project lifecycle
Answer: C) Throughout the project lifecycle
Explanation: The assumption log should be updated throughout the project lifecycle to track assumptions and manage associated risks.
True or False: An effective risk management plan does not consider assumptions and constraints associated with a project.
- True
- False
Answer: False
Explanation: Assumptions and constraints are an integral part of a risk management plan as they can potentially impact the project’s success.
Which of the following is not a characteristic of a constraint?
- A) It limits the project team’s options
- B) It is a potential risk to the project
- C) It enhances the project team’s abilities
Answer: C) It enhances the project team’s abilities
Explanation: A constraint is a limitation or restriction on the project team, not a facilitator of their abilities.
Assumptions analysis is a tool used in which risk management process?
- A) Risk identification
- B) Risk quantification
- C) Risk monitoring and control
Answer: A) Risk identification
Explanation: Assumptions analysis is a tool used in risk identification to identify potential risks from assumptions made during the project.
Multiple select: Risk can be derived from these things:
- A) Assumptions
- B) Constraints
- C) Opportunities
- D) Threats
Answer: A) Assumptions, B) Constraints, D) Threats
Explanation: Risks can be derived from assumptions, constraints, and threats. Opportunities, while a part of risk management, are typically seen as positive and not a source of risk.
Which of the following is an example of a project constraint?
- A) Timeline
- B) Team size
- C) Budget
- D) All of the above
Answer: D) All of the above
Explanation: All these factors are examples of constraints as they limit the options and actions of the project team.
True or False: An assumption analysis is a qualitative risk analysis tool.
- True
- False
Answer: True
Explanation: An assumption analysis is considered a qualitative risk analysis tool as it helps to identify risks from the uncertainties in assumptions.
Multiple select: Which of these are areas where risks may be found?
- A) Assumptions
- B) Constraints
- C) Requirements
- D) Stakeholder expectations
Answer: A) Assumptions, B) Constraints, C) Requirements, D) Stakeholder expectations
Explanation: All these areas function as potential sources of risk to a project when subjected to change or when not clearly defined or managed.
True or False: Making many assumptions can reduce the associated risks.
- True
- False
Answer: False
Explanation: Making too many assumptions can actually increase the associated risks, as each assumption comes with a degree of uncertainty.
The assumptions log should be reviewed and updated _____.
- A) Only at project initiation
- B) Only when a risk occurs
- C) Regularly throughout the project
Answer: C) Regularly throughout the project
Explanation: The assumptions log should be reviewed and updated regularly throughout the project. Any changes can influence the risk associated with the project and must be managed continuously.
Great blog post! The importance of assessing risks associated with each assumption cannot be stressed enough.
I completely agree. If assumptions are not validated, they can significantly impact the project’s risk profile.
Can anyone provide an example of how to assess the risk of a specific assumption?
Thanks, very helpful post!
How do constraints differ from assumptions when it comes to risk assessment?
Great article! I loved the part about prioritizing assumptions based on their impact and likelihood.
This post offers a great methodology for assessing project assumptions and constraints.
When assessing risk for assumptions, do we need to consider both internal and external stakeholders?