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Business Strategy: Professional Project Risk Management Tips

Mar 28 2012, 04:33 PM by

All projects start off with an enthusiastic churn. Budgets are established, timelines are set and tasks are delegated. Yet somewhere along the lines the ends seem to fray, at best, and at worst the project completely derails. According to Standish Group’s CHAOS Report, 31% of projects get cancelled before completion and 52% of projects’ costs shoot up to 180+% of their original estimates. For business owners and project managers facing failures or set backs, it’s critical to first understand why this happens and then work to limit project failure.

Unfortunately, there are no cookie-cutter answers. If you want your project to succeed, you need to ask why it could fail. Successful project management requires performing pre-mortem project analysis to limit failure if not offset it completely. The best way to do this is by practicing risk management – a process that identifies all the factors that will threaten the success of a given project - and then tackling those factors during planning.

Project delivery also has certain costs associated with three primary constraints: time, quality and resources. A change in these parameters after the start of the project can affect project scope and in turn affect the project delivery – and it can also lead to disgruntled clients. It’s in the best interest of an organization to minimize the uncertainty in project delivery (delay, over-budget, cancellation, etc.) – all of which are risks if left unmanaged and unplanned to the finest degree.
8 Tips to Manage Risk and Avoid Project Delivery Setbacks
If you’re well-equipped to tackle risks, you can limit (if not avoid) project delivery setbacks – starting with these key tips:
  1. Identify and record risks in a risk register.
  2. Determine the likelihood of a risk.
  3. Determine risk consequences.
  4. Prioritize risks.
  5. Identify strategies to avoid the given risks.
  6. If it is not possible to avoid the given risks, identify strategies to reduce their impact.
  7. Assign resources in accordance with a risk response plan.
  8. Monitor, review & close the risk.
What Your Project Manager Needs to Know
While many leading companies contract independent professional project managers to oversee the process and manage internal teams and contracting parties, you can vet your manager or designate a team member by equipping them with the skills they’ll need to make sure your project delivers above and beyond expectations.

Transparency: Involve relevant stakeholders, be transparent with them & ensure accountability. Encourage team members/customers to highlight and register risks, which are easy to tackle if they are noticed early on. Make sure that you clearly and regularly update stakeholders about the risk’s status, severity, course of actions and delegation.

Process: Make risk management a systematic process by identifying, analyzing, tracking, controlling, delegating and communicating risks.

Balance: Understand that risk management is an art as well as a science. While tackling risks, the judgment of assessing and building a response plan in its subjective part is an art, but the systematic and repeated risk management approach with set of guidelines can evolve as a science. Like project planning, risk management is a continuously evolving process.

Communication: Ensure the communication is clear and frequent. Bad news only gets worse if it’s suppressed.

Alignment: Align your risk management strategy with project objective(s). As you create/execute a risk response plan (be it to mitigate, avoid, transfer, accept risk or create a contingent plan), make sure you align all these actions with project objectives and the objective(s) of your organization.

Resources: Use the right software tools to help you get the job done. If you are not using the right software, your risk management strategy is dependent upon error-prone people rather than calculable science.

Posted in Tips & Resources, Growing Your Business

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