Risk

Having managed small/simple and large/complex projects, risk management is something that I know I have neglected on the small/simple ones in the past, but the need for it becomes apparent on the large/complex ones.

There was a discussion recently Inside pmStudent e-Learning about this.

I’ll share my thoughts, and I’d like to hear yours.

Scaling it Down

photo by Soggydan Dan Bennett via Flickr

A basic principle for me on small projects has been scaling down the important project management processes to suit the environment, not eliminating the need for the process at all.  I didn’t always feel this way, but after managing larger projects my perspective changed.  I now see the value in thinking about even the smallest projects in a structured way.

Sometimes distinct activities become merged on smaller projects, but I have come to the conclusion that this isn’t optimal either.  I find there is a clarity of purpose and thought that comes from respecting the boundaries between discrete project management processes; a focus that yields better results and maintains the integrity of the process.

Intuition

The smaller and more simple a project, the easier it is to intuitively have a grasp on the risks involved.  If your project is 2 weeks in duration, you are going to be thinking about risks while planning the project whether you want to or not.  And because of the short time frame, you’ll probably be pretty good at it if you know anything about the domain and your team has done projects like this before.

The longer a project stretches out, and the more moving parts get involved, the less validity our “gut feel” has in identifying and assessing risks.  That is why on a longer term project you want to do continuous risk management, making sure to identify and assess risks along the life span of the project.  If a project is only a month long however, you may only do this activity once or twice and it’s not going to be a 2-hour discussion for the team.  It should more likely be a 5 minute conversation.

Steps for Risk Management on Small Projects

1. Ask the question “What worries you about this project or your piece of the project / what opportunities do you see” to team members….individually or in a group setting
2. For a short project, pick no more than 3-5 that seem likely or would have a big impact
3. Formulate these in terms of “Given [situation] there is a possibility of [event] resulting in [impact].
4. Prioritize these risks, figure out who the owner is, and figure out 1) how to mitigate if possible and 2) what you might do if it happened.
5. Follow up as necessary (at least weekly in your one-on-ones) with the risk owner to hold them accountable for their planned actions.
6. Report status of the continuous risk management process in your project status reviews.

On a short term project, I wouldn’t spend too much time on risk management.  It’s important, but should be scaled down.  This could be reviewed monthly or so if the project is long enough for that.  Plus on a short project I would consider the PM as the “risk board” and perhaps the technical lead and sponsor too.  It’s all a matter of scale and your particular project’s environment.

What do you think?  How do you manage risk effectively on small projects?

Aren’t you on the edge of your seat? Read on to find the exciting answer…

Josh asked me to write about some of the challenges and obstacles that we face in our environment. In order to do that I should explain a little about that environment.

Over the past 36 months we have transformed ourselves…

…we stayed the night because it was getting worse and the snow plows weren’t going to be out until the next day in that area. I wouldn’t have driven back on Saturday around noon but our dog Snickers needed to be cared for. So I left the family safe and warm inside and I ventured out.

AND THEN IT HAPPENED.

Guest post from Susan de Sousa

When you first start off in project management, spending time writing a contingency plan can seem like a complete waste of time. After all there are so many other things which appear to have a much higher priority, that planning contingency for risks which might never happen doesn’t seem like a good use of time.

Contingency Plan? - by Clearly Ambiguous via Flickr

I have to admit that I certainly fell into this category when I first started off, and in fact even having a risk log appeared to be an alien concept. Certainly when confronted by a sub-section of project managers who are process bound and spend an inordinate amount of time raising risks whilst developing ever more convoluted contingency plans, this can seem like a smart shortcut. However I have learned over 13 years of interim project management that project managers who avoid this completely are simply storing up problems for the future.

The key thing to remember is that simply doing this work will not give you any tangible additional benefit, in much the same way that simply having a risk log won’t help much either by itself. What is important is knowing how to raise the potential problems which really matter and then understand which of these could benefit from being mitigated. This is much harder than it sounds. Get it wrong and your whole delivery could be in jeopardy over something minor, which you overlooked.

Therefore the top 2 reasons for contingency planning are:

1. Successful Project Manager’s know that without this work, the delivery effort is essentially running on a wing and a prayer with the PM desperately hoping that nothing unforeseen occurs to derail it. Of course in these cases the worst always does tend to happen.

2. Top notch Project Manager’s know that by being smart and understanding what to concentrate on and prioritize, it is possible to ensure no matter what happens, you as the Project Manager look “good” and in total control of the delivery. This of course means that you as the Project Manager are in the ideal “win win” situation

Of course it is one thing to know that you should do contingency planning, it is a whole different ball game to be able to do it successfully. It is after all, something which is usually extremely time intensive; something which no Project Manager ever has the luxury of.

Therefore you need to really understand how to balance this work and make sure your efforts are effective enough, whilst not jeopardizing the future of the project, because you weren’t spending enough time controlling it.

Check out my-project-management-expert which provides you with all the information you must know in order to effectively project contingency plan, as well as explaining what is contingency planning

Glen Alleman left a comment recommending several resources for me, one of which is the book “Effective Opportunity Management for Projects“.  I am reading it now and would like to share some of my initial insights thus far.

I’ve found the authors agree with me that standard risk management approaches mostly pay lip service to opportunity management without really addressing it.  In correlation (not necessarily causation) with that, most project managers and teams focus on threats as the primary target of risk management.

I’ve also revised my view of needing a seperate knowledge area for opportunity management.  Through the various articles, websites, and books I’ve reviewed thus far I believe it should be handled within risk management; but risk management approaches and project managers need to do more than just pay opportunity management the lip service they do today.

A citation from the book which states my view nicely:

“….both can be handled by the same process, although some modifications may be required to the standard risk management approach to enable it to deal effectively with opportunities.”

Another important insight is that opportunities are not merely the mirror-image of threats.  A chance that a threat will not occur is NOT an opportunity.

“Distinctive opportunities exist in their own right, presenting the chance to enhance project objectives, deliver early, cost less, increase customer satisfaction, improve competitiveness, enhance company reputation, etc.”

Thanks for tagging along with me on my journey through better understanding opportunity management.  More to come!

Glen B. Alleman left a great comment with a link to an article refuting the need for Opportunity Management (OM). I have reviewed the article and feel it is describing a version of OM that is not what I am proposing. I’m still formulating my thoughts on this, so please excuse me if it sounds like random babble!!!!

So I’m doing some PMP sample test questions today and ran into one where at the end, additional things were added and the customer is very happy. According to the answer, this project was unsuccessful because the additional features were “gold plating” which wastes time and probably cost. I got this wrong because I read “the project has added [this and that]” as the [this and that] = intended product of the project.

But there’s a deeper insight here.

Stress is all around us, on projects and elsewhere in daily life. It is important to have an understanding of the manner in which people on your project team perceive and deal with stresses they will encounter on your project.

As a part of managing the human resources on any project, it is a good idea to list the people on your project out and understand how they cope with stress. It may give you a good indication of where hidden risks may lay in waiting, and the people you may want to check with more often to make sure they are making good progress on their tasks. People who deal with stress using emotion-focused coping mechanisms would have a resulting lower quality and timeliness output on those tasks that cause them stress, or if they are exposed to stressors outside of the project. You may want to have a better understanding of what outside responsibilities these people have that will compete for their time on your project.

I listened to Cornelius Fichtner’s new PM Podcast episode today, How do risk attitudes affect your project?

As usual, Cornelius provides great content in this episode. The interview with Janice Preston was very insightful and helped me with the concept of risk management. In school, they teach you that risk management is almost like it’s own little module that you do while planning and insert into the project plan. Sometimes they talk about updating and reviewing it regularly. I’ve never heard them talk about it in the context of the risk attitudes of project stakeholders.

You really need to listen to this episode if you haven’t already, but one aspect I liked was the classification of 4 distinct risk attitudes:

1. Risk Seeker – enjoys and seeks uncertainty in search of greater opportunities, can be overly optimistic and not take possible negative consequences seriously.
2. Risk Averse – uncomfortable with uncertainty, doesn’t like risk
3. Risk Tolerant – reasonably comfortable with uncertainty, but usually sticks head in the sand and ignores them
4. Risk Neutral – analyzes risks and weighs negative/positive possible outcomes and probabilities objectively.

From my experiences with project managers, it appears to me that the majority are Risk Tolerant. I say that based on how little time and effort is usually put into analyzing and planning for risks. I can also identify with these classifications because of people I’ve worked with on project teams. Some people seem to have their heads in the clouds and look for risky solutions when a more proven approach would do (Risk Seeker), and others are conservative to the point of seeming cynical (Risk Averse).

Risk Neutral is the goal. Personally, I’d say I’m more of a Risk Seeker right now, but the knowledge and experience I’m gaining are directing me more towards the direction of Risk Neutral. The tools and techniques of risk management are doing that for me by forcing me to look at uncertainty in more of a formal SWOT analysis where my exuberant optimism can be subjected to some logical scrutiny.

Be sure you head over to The Project Management Podcast and check out this episode.