Risk Management on Projects



Project Risk Management

How can project risk management differ from any other sort of risk management? Well in many regards it doesn't. However, since it is a project concentrated action it will help simplify the total focus by looking only at the core job fundamentals of scope - that are price, quality and time. Bear in mind that, I will test you later!
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There are a number of good training videos available on YouTube that cover this principal. I have added a few below to help bring home the point of this article. I find watching a presentation often easier to take in than reading some else's thoughts.

Project Risk Management

So what's job Risk Management is all about? In a previous article I talk about what risk and risk management are all about. If you're still confused about what risks are and what risk management is all about then read this guide, it must bring you into the image. On endeavors we discuss risk as any function that might lead to an unplanned shift to the projects scope - i.e. impact the job costs, deadline or quality of the deliverables, or some other combo of those three.

What isn't always obvious when speaking about project risk management is that we also need to think about the positive effect a risk may have on a project - i.e. reduce expenses, reduce the time line or increase the quality of deliverables. In reality it is not so often that project risks present favorable chances. Never the less, as project managers we have a responsibility to recognize and act on such risks negative or positive. That is Project Risk Management.

David Hinde wrote a fantastic post back in 2009 concerning using the Prince 2 Risk Management technique. Without getting imbedded in any particular methodology, the overall approach to project risk management must follow a similar framework and this is as good as any for the purpose of this article:

David talks through a Seven Step procedure,

Step 1: Having a Risk Management Strategy

This usually means setting up a procedure and procedure and receiving full buy-in from stake holders in how the organization will handle risk management for the project.

Measure 2: Risk Management Identification Techniques

Where do you begin in the identification of dangers around a project? There are many risk management techniques and David suggests a few that are excellent. But I like to take a step back and make a listing of all of the essential elements of a project on the basis of "if this task doesn't happen will it be a show stopper?" . This helps be construct a prioritized list of critical tasks against which I will then think about the dangers - what might go wrong to impact this undertaking.

Here's my thought process on hazard identification outlined:

  • List out crucial deliverables
  • List outside, against each deliverable, dependent jobs
  • List out from all determined tasks and critical deliverables "any" potential event that may delay or stop the delivery to plan.
  • Grab a template hazard analysis matrix and fill out the first pass of evaluation - probability v impact for each risk.
  • Take it into a project assembly and use it as the baseline for brainstorming.

Step 3: Risk Management Early Warning Indicators

Do not rely on fundamental performance of the job as an indicator that what is going well. Standing reports demonstrating a steady completion of jobs could be hiding a potential risk.

In risk management a number of different aspects need to be on the job managers radar on daily basis. Things that I always look for are shipping dates from vendors - the way confirmed are they, is there a movement in shipping dates (you'll only see this if you frequently request verification updates from the vendor), resource issues - key people taking sick leave or personal leave more often than usual.

Delays in getting particular approvals signed-off by the steering committee or other governance bodies - will this impact orders heading out or conclusions being made on crucial tasks? Getting qualified folks in for inspections and certification (new buildings by way of example require a whole lot of local regulatory reviews). These are only a couple of the daily challenges that a Project Manager will face and all may be signs of difficulty to come.

As you gain more expertise in hazard management you start to automatically recognize the early warning signs and challenge the culprits earlier in the procedure. You will also finds that the a great job manager will build-in reduction for the frequent project ailments in the very beginning, sometimes viewing the tell-tale signs when selecting vendors or suppliers will be sufficient to select better choices and this is what I call dynamic risk management on the job.

Also keep an eye on the world around you - economical or geological events elsewhere may have a dramatic impact on local suppliers and supplies of key project materials. By way of example, flooding in Thailand has influenced the delivery of different computer components that are manufactured there, causing effect in both distribution lines and pricing. (Yes, I operate in Asia so see this sort of impact first hand. .)


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