PMI understand that unidentified risks may cause project failure unless the cost of it is determined and dealt with in a Risk Reserve.
So – why do they not consider that risks have a potential to DELAY projects? Any time a risk with a potential schedule impact occurs – it can certainly delay a path – and perhaps the critical path thereby delaying the project.
Failure to consider the time value of risk may doom every project to schedule failure.
Some manage by the Critical Chain Method (the process of adding a “pad” between every milestone to make up for actually breaking the work down and managing properly). If those pads are meant to handle risk – then project managers need to calculate it correctly instead of padding (defined by PMI as unethical for a reason).
PMI proclaims: 1. Cost Impact of Risk * Probability of Risk Occurring = EMV (Expected Monetary Value) of Risk
2. Total EMV or Risks = Risk Reserve to be added to the Budget
PMI needs to include: 1. Time Impact of Risk * Probability of Risk Occurring = ETV (Expected Time Value) of Risk
2. Total ETV of Risk = Risk Schedule Reserve to be added to the Schedule
3. Risk Schedule Reserve should be added to the Network Diagram from all paths just before the END.
Exceptional project managers should account for the ETV (Expected Time Value) of risk correctly to ensure successful project schedules.