As the Project Manager, you guide your team in planning and executing their projects. Managing risk appropriately is what makes projects successful in an uncertain world. Think about it. How often is a project implemented in an environment that isn’t filled with instability, assumptions, change, unexpected circumstances, and risk? Probably never. That is why project risk management is essential to successful implementation and in setting realistic expectations.
Risk management provides the basis upon which to identify risks, estimate the amount of cost and schedule contingency reserves that are needed to cover risk responses, and to provide a level of confidence for meeting project objectives. At each stage of your project’s lifecycle, you are likely to face different types of risk. When a project is originally sold or contracted many decisions, agreements, and contracts are set. Yet, at the beginning, uncertainty is highest and overall project risk is actually the greatest. That does not mean the project should not go forward, just be aware and have a plan. Typical risks at the outset include unclear objectives and requirements, unavailable subject matter experts, and hasty planning. As you go into detailed planning, risk management is likely to focus on getting started with the project work effort and the urgency of risk surrounding inexperienced team members, resource availability, poor role definition, unclear statements of work, compliance, and technology risks. With good risk management practices in place, there are appropriate responses to identifiable risks as well as ways for dealing with unidentified risks.
As you are nearing the end of a project’s implementation, it is common for poor quality, areas of disagreement with the customer, scope changes, and hitting budgets to become the focus of project risk. At this point, it feels like there is a lot of time, cost, and energy at stake and if you are dealing with risk that could hurt the client relationship, there may be a desire to throw anything and everything at the final phase risk solutions to make any negative customer impression go away. As the organization shares their project risk experiences these tendencies can be anticipated and better managed.
When addressing risk management strategies for your project, it is helpful for the organization to consider what PMI calls “The 6 Critical Success Factors for Project Risk Management”. This includes Indoctrinating project managers in risk management and emphasizes that risk management is everybody’s responsibility. You also want to create an environment allowing for honest communication about uncertainty. It is important to have high-level management support of risk management activities and to scale the risk effort appropriately for the project. And, lastly, integrate risk management with overall good project management processes.
Risk management does not just include negative risks. The flip side is possibly even more important as positive risk (opportunity) management is where tremendous project management value is realized by the organization. We like to call that “Thinking Positive About Risk”. It is through the opportunity identification and appropriate response through innovation, creativity, and advanced problem solving, that the benefits of good project and people management are the most powerful.
How often does your team discuss risk in your project meetings?
Does your organization’s management actively discuss and place importance on risk identification and developing response strategies?
Check out our Project Risk Game as a tool to build your skills and make you a risk management savvy PM.