Stakeholder deliverable reviews will start soon and additional work is expected to resolve any issues or required adjustments. Budget overruns during execution have put serious constraints on the remainder of the project's budget. What should the project manager do next?

The project's circumstances have changed significantly due to budget overruns, which introduces new constraints and potentially elevates the impact of existing risks. The upcoming stakeholder reviews are a known source of uncertainty that could lead to changes and rework, further straining the constrained budget. Therefore, the most appropriate and proactive step is to conduct a risk reassessment. This involves re-evaluating identified risks and identifying new ones in light of the new financial reality. A reserve analysis is a critical component of this process, used to compare the remaining contingency reserves against the remaining risk exposure to determine if the budget is adequate for future uncertainties.

A. Request a budget relief using the management reserve. Management reserve is for unforeseen risks (unknown-unknowns), not for expected work arising from a planned activity like stakeholder reviews.
C. Review the consequences of potential changes. This action is a component of a risk reassessment but is not as comprehensive as option B, which includes both reassessment and reserve analysis.
D. Coach stakeholders on risk identification practices. While beneficial for project culture, this does not address the immediate and critical issue of managing potential budget impacts from the upcoming reviews.

1. Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th ed.).

Section 11.7 Monitor Risks: This process involves "monitoring the implementation of agreed-upon risk response plans, tracking identified risks, identifying and analyzing new risks, and evaluating risk process effectiveness throughout the project."

Section 11.7.2.2 Risk Reassessment: "Project risk reassessments should be regularly scheduled... A risk reassessment may also be required when the project deviates significantly from the baseline, or when a major risk has occurred." The budget overrun constitutes a significant deviation.

Section 11.7.2.3 Reserve Analysis: "Reserve analysis compares the amount of contingency reserves remaining to the amount of risk remaining at any time in the project in order to determine if the remaining reserve is adequate."

2. Project Management Institute. (2019). The Standard for Risk Management in Portfolios, Programs, and Projects.

Section 5.8 Monitor Risk: This section emphasizes that risk monitoring is an ongoing process. It states, "As the project progresses, the overall project risk may change from its initial state. It is therefore important to repeat the Perform Qualitative Risk Analysis and Perform Quantitative Risk Analysis processes..." This directly supports the need for reassessment.

Figure 5-15. Monitor Risk: Tools and Techniques: Lists "Risk Reassessment" and "Reserve Analysis" as key tools for this process.

3. Hillson, D. (2009). Managing Risk in Projects. Gower Publishing, Ltd.

Chapter 10, Risk Review & Reporting: This chapter explains that the risk process is iterative and that regular reviews are essential to maintain relevance. It notes that triggers for a risk review include "significant change in project context or scope," which applies to the scenario of serious budget constraints. The review process described includes re-evaluating existing risks and checking the adequacy of responses, including contingency. (Specific reference to iterative review process and triggers for it).