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Effective Risk Management

Apr 19, 2022

Few project leaders want to spend the up-front time and money to actually put together a risk management plan, but it truly needs to be your first step in effectively managing risks on your project. Without a plan in place at the beginning, your customer and team have no idea how you’re going to manage risks and issues and what their role is going to be. And let’s face it, if you don’t lay out everyone’s role in advance, then you’re likely the one who will be doing all the work--and that’s not a productive solution either.

What about your executive management? They want you to be successful, right? But they’ve attended the project kickoff meeting (hopefully, because this really kicks off the project right for the customer as it’s a good confidence booster for them) and now they want action. Action isn’t exactly sitting down and putting together plans on how you’re going to manage risk, communications and changes on your project. That feels like busy work to them--the opposite of action. And, it basically is. But that doesn’t mean it those plans aren’t important.

Putting the proper plans in place up front--and getting paid for them as deliverables (we’ll address this another time because it’s a subject you’ll need to take up with the deal closer in your organization)--can set the stage for very productive work on the project as the engagement progresses. And it gives you as the project manager pre-planned milestones and signoff opportunities to verify and track completed work. (Mention this to executive management as billable work and deliverable signoff and they’ll be excited.)

Back to risk management: Your risk management planning needs to include four steps in order to be effective and in order to be a “sellable” tool in your project management process:

  1. Document a risk plan. As the project manager, it is your responsibility to formally document (at the very beginning of the project) how you and your team--along with the customer’s help--will go about identify, documenting and reacting to risks throughout the project. Gain the customer’s buy-in and signoff and use it as the yardstick of reference as you move along in your risk management process.
  2. Risk identification. Sit down with your team and customer very early in the project and brainstorm on the risks that may affect the engagement. Look at all possibilities that could potentially affect the project in terms of timeframe, costs and resources. This activity is the basis for the rest of your risk planning process and how you review the potential risk items and continue to identify more possible risks throughout the rest of the engagement.
  3. Look for ways to mitigate risks. As you work with your team and customer to identify risks, it’s critical to also document what the overall impact to the project may be if the risk is realized and then to also document how that risk could possibly be minimized or mitigated. You’re basically looking for any possible angle to lessen the severity of the risk if it hits your project. In the case of risk mitigation, you know there will be at least some impact to the project in the form of a potential budget increase or a timeframe extension. But with proper planning, you’ll know the action to take to lessen the blow to the project and maintain the necessary forward momentum.
  4. Look for ways to avoid the avoidable. I personally prefer risk avoidance over risk mitigation whenever possible because it is the process of taking proactive, evasive action to help ensure that the potential risk is never even realized. Most risks can’t be truly avoided or predicted, but if you possibly can avoid them your project will be better off. You won’t to take the risk head-on, and you’ve eliminated the possibility that your project will be knocked off course in midstream.

It’s critical to set aside time on your project for risk planning activities. You and your team will be that much more prepared when potential risks are realized on the project. Think of it as buying homeowner’s insurance. You many never need to make a claim, but you’re more confident when you know it’s in place and you’re sure glad you have it if the unthinkable ever happens.

One more thing to consider: Don’t underestimate the potential risks that can be invited in to play from outside vendors you use on your project, and from your customer as well. Be sure to look into all angles when you’re analyzing potential risks during the planning phases of your engagement.

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