10. Identify High-Level Risks, Assumptions and Constraints

Note: In this framework, the term initiative refers to programs and projects. The term work execution unit refers collectively to programs, projects, phases, releases, and work packages, all of which are considered temporary organizations.

Context and Purpose of Identification

The identification of high-level risks, assumptions, and constraints is a foundational activity performed during the initialization stage of any program, project, phase, release, or work package. It is not part of the detailed planning stage but is a necessary precursor to it.

The primary purpose is to gather essential information to populate the initializing reference for that specific level of work. This initializing reference is the key document used to seek formal approval to proceed into detailed planning. At this early point, while many specifics are still unknown, it is possible and necessary to identify risks typical for the type of endeavor, define the assumptions that planning will rely on, and recognize any existing constraints.

Core Concepts: Risks, Assumptions, and Constraints

The following concepts and their distinctions apply consistently across all hierarchical levels of work, from a high-level program to a specific work package.

Risks and Assumptions

• Risk: A risk is defined as a potential future problem or an uncertain future condition that could have an adverse impact on the program, project, phase, release, or work package. If an event is 100 percent certain to occur, it is a fact, not a risk. The concept of “positive risks” is referred to as “opportunities.”
• Assumption: An assumption is a statement or condition that is believed to be true for the purpose of planning, even without 100 percent certainty. Endeavors at all levels often proceed based on assumptions that necessary positive events will occur or that potential negative events will not.

The Critical Distinction

A significant overlap exists between risks and assumptions, and the same statement can be classified as either, depending on the specific context of the work. The determining factor is the acceptability of the combined probability and impact of a potential negative event.

• When to Classify as a Risk: If a potential negative event has a combination of probability and impact that is considered unacceptably high for the given endeavor, it must be categorized and managed as a risk.
• When to Classify as an Assumption: If a potential negative event has a combination of probability and impact that is deemed acceptable, it can be classified as an assumption.

For example, the statement “the resources needed will be available when needed” can be an assumption at the program level if there is a large, flexible resource pool. However, for a specific, time-critical project within that program, the same statement may represent a significant risk if there is a realistic possibility that another project could delay resource availability. Similarly, statements like “The Sponsor will provide strong, active support” or “The online infrastructure will be installed by the supplier in time” could be high-impact risks or acceptable assumptions depending on the circumstances of the specific program, project, or phase.

Constraints

Constraints are factual limitations that are beyond the control of the team responsible for the work. Unlike risks, they are not uncertain; they are known realities that must be managed at the appropriate level. Constraints are often hierarchical, with those defined at a higher level (like a program) influencing or dictating the constraints for lower levels (like projects and work packages).

Examples include:

• Date Constraints: A fixed deadline, such as the date of an international exhibition for a new product launch, which would constrain the entire program and all its constituent projects.
• Resource Constraints: A maximum limit on the number of people available, or specific requirements such as language skills or gender representation on a team.
• Budget Constraints: A fixed funding limit that cannot be exceeded. A program is given a total budget, which is then allocated to its projects. If detailed planning for a project reveals that the required work content cannot be achieved within its budget, a negotiation to adjust the work content, the budget, or both is necessary with the appropriate authority.

Analysis of Inherent Risk Factors

Inherent risks are those that exist based on the general characteristics of a program, project, phase, release, or work package. An initial analysis of these factors can provide a high-level assessment of the endeavor’s risk profile. The following table provides characteristics that can be evaluated at any level, though the scale and specifics will differ. For instance, the effort hours for a program will be significantly larger than for a work package.

Note: The specific numbers provided for factors like effort hours and team size are examples and should be adapted to the context of each program, project, phase, release, or work package.

Implications for Strategic Decision-Making

This initial, high-level analysis of risks, assumptions, and constraints provides critical input for strategic decision-making at the correct governance level. Based on these findings, the Sponsor for the program, project, or other work item can make informed choices about its overall design and objectives. If the initial level of inherent risk appears to be excessively high for a particular endeavor, the sponsor may decide to alter its goals, adjust its strategy, or reconsider its viability before committing resources to detailed planning and execution.