Chapter 14Estimating Risk Reserves

Every project has risks due to unknowns (e.g., requirements, external interfaces, platform performance, commercial off-the-shelf [COTS] characteristics, and personnel skills) and unanticipated changes (in the same), and estimation errors. This section describes how to identify risks, estimate their impact and mitigation costs, estimate a reasonable risk reserve, and integrate risk-related tasks into the project plans, budget, and schedule. Setting a “reasonable” reserve is important. A large reserve may cause the project’s price to be non-competitive. A small reserve may be inadequate to handle the problems that will inevitably occur. This chapter describes a method to estimate an “optimal” reserve for a list ...

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