He is not part of the squad to face Newport Gwent Dragons on Saturday while it remains to be seen whether he returns for Munster's first Heineken Cup match of the season against Racing Metro in a little over three weeks.
But Penney revealed O'Connell can take as long as he wants to get back to full fitness.
"It's probably a week-to-week thing. We've had a lot of discussions. When Paul feels like he's ready he'll be back on the grass," Penney told the Irish Independent.
"He's in a programme but there's no set guidelines on when he'll be back to play. If it takes a month it takes a month, two months then two months. It'll be what it'll be.
"He's making progress, which is great, but there's absolutely no deadline date for him to return.
"For me, to see the guy playing at the highest level at 100 per cent would be a wonderful thing, and being consistent in his ability to play at every level at 100 per cent, so the pragmatic view comes on the back of those things.
"It's very simple really - if you care for your players then those sorts of decisions about their welfare are no-brainers."
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