When most of us think of project management, we think of schedules, costs, margins, charters, scopes and deliverables. However, many of us seem to overlook one of the most important variables in project management: risk. There are two primary forms of risk; foreseeable such as delays in material arrival, whether conditions or other tangible risk that could have been predicted and mitigated or accounted for. However, there could also be unforeseeable risk factors that many managers do not account for in the scheduling or cost equations. An article posted in ITBusinessEdge.com takes the reader through a “Five-Step Risk Management Process.” According to the articles, the first step in project risk management is risk identification. To most of us who have lead teams in projects, understand the importance of this step during the planning phase. However, the author of this article enforces the importance of assessing risk sporadically throughout the duration of the project using tools such as process flowcharts, analogous project comparisons, risk checklists, work breakdown structures, and brainstorming. The second step in risk management is to quantify the risk. It is vital to assess the probability that the risk will occur and subsequent consequences that are possible with regard to project schedule, cost, scope and quality.
Another step in risk management is to initiate a risk response plan. Also, identifying the risk as positive or negative will enhance the effectiveness of the risk response plan, allowing project managers to focus on avoiding or mitigating negative risk and exploiting positive risk to their advantage. The next step to risk management is continual monitoring and control of risks. Whether foreseeable or not, many times we get so focused on meeting deadlines and staying on budget that we forget to evaluate and control risk as it comes up. Monitoring and controlling risk should be a day to day operation for project managers, rather than a one time activity.
This article mentions that project managers are to predict foreseen and unforeseen risks. In most cases this is easier said than done. I was recently working on a project at work. We had outlined all the potential risks that could affect our schedule and bottom line. In addition this was a long term project that should have evolved into a full-time corporate initiative if successful. As the project continued, there were some unpredictable legal and regulatory changes that had come up in lieu of ObamaCare and other government initiatives. Although we knew these changes were coming, there was no way to predict when and how it will begin to affect Medicare Advantage plans. The timelines had been postponed numerous times so it was a difficult circumstance to predict. Nevertheless, there were no margins built into this project to accommodate the possibility of these new changes. Had the project management team assessed the circumstances and risk throughout the duration of the project, we could have accounted for these changes and avoided a major financial and schedule setback.
Have you ever experienced a risk that could have been mitigated if the five rules above were incorporated?
Taylor, Michael. “How to Effectively Manage Project Risks.” ITBusinessEdge, 2012, QuinStree, Inc. http://www.itbusinessedge.com/slideshows/show.aspx?c=83993