Creating the Project Risk Plan 63 plete, you should estimate the required reserves to cover the risks that have been identified and accepted. For example, if your project team has identified the loss of a key team member to retirement as a high-priority risk (probability and impact), contingency actions will require the hiring of a re- placement from outside the organization. The cost and schedule impact of the hiring process and team member assimilation must be estimated and added to the contingency reserve. Management reserves are designated amounts of time and/ or budget included in your plan to account for risks to the project that cannot be predicted. Sometimes you don't know what you don't know. Management reserves are created to cover unknown risks to the project. For example, if the current project involves a high percentage of research and development and an analysis of past similar projects using actuals (historical data) indicates an av- erage budgetary overrun of 10 percent, this 10 percent is not at- tributed to any particular risk event. However, it should trigger the need for a 10 percent increase to the overall project budget as a management reserve. Managing Multiproject Risks Many, if not most, project managers find themselves leading more than one project. The multiproject manager confronts unique issues not normally encountered when managing a single project. In the multiproject world, many projects overlap or ex- perience direct dependencies with other projects, similar to those in a typical network diagram (see Chapters 7 and 8). Two perspectives are required here. First, you must focus on the individual project and the associated risks for each. Then, you must assess your entire portfolio and determine the nature of the relationship of these projects. Your portfolio is the sum of all projects under your purview. The relationship among these proj- ects may vary widely. A program typically involves multiple projects working toward the completion of a single deliverable. These projects must all be American Management Association · www.amanet.org