Tag Archives: risk management

Risk Management is All in YOUR Head

Everything in life has some risk, and what you have to actually learn to do is how to navigate It. – Reid Hoffman

No project is without risks. It is all in how you handle those risks. And the place to start is at the very beginning. The minute that a project idea is discussed is when you and your team should start thinking, “What could happen?” You are not shooting down an idea, you are thinking strategically. In fact, you are helping to ensure the success of this new project. The better prepared that you can be, the more likely you are to be able to navigate those unknown and unplanned events. Yes, you can prepare for the unknown.

Risk management begins in your imagination and in the imaginations of your team members. You could say it is all in your head. YOU and your team want to walk around thinking, “What could happen?” This should be followed closely by, “And what will we do about it and who needs to know?”

In this way you develop the risk management mindset. Risk management is always important. You don’t stop thinking about project risks until the project ends. Of course there are several project risk management tools and techniques to help you. You can look at your Work Breakdown Structure (WBS), you can look at lessons learned from past projects and you can conduct brainstorming sessions.

The good news is that there is a new pmStudent course dedicated to this topic and covering all of the basics.

Now you can get into that mindset and also master Project Risk Management.

If you are new to risk management, or you work in an environment that does not really employ risk management or you would like a refresher, then this new course from pmStudent is just for you.

Be sure to check out www.learn.pmstudent.com/the-project-risk-management-course

Project Management is Risk Management, No Wait it is Communications Management

What is the most important body of knowledge? That is a question someone could ask you on a job interview. I know because I have asked the question when I have interviewed candidates and I have been on the receiving end of the question as a job candidate. It may seem like a trick question but it does not have to be. Someone who asks you this question probably wants to know if YOU know the knowledge areas from the PMBOK ? Guide. This is actually a good thing because it means that person is expecting you to be a project manager and draw from the best practices that were created for all of us by the PMI ?. Before we talk about how you should answer this question let’s take a look at risk management versus communications management.

When I teach project management and I’m talking about risk management with my class I tell them that project management is risk management. When I talk to them about communication management I tell them that project management is really focused around communications. Of course after I have told them both of these things I have to joke with them about being schizophrenic. I don’t think I am. (Would I know if I were?) The truth is I want everyone to consider walking around with a mindset of thinking ?What could happen?? When your team member tells you they’re going to finish an activity early don’t just thank them and move on, think ?What does that mean, what could happen because this piece of work is completed early?? If it’s on the critical path of course it means we have the potential to complete early. If it is not on the critical path you have the opportunity to take that resource and perhaps place them on a critical path activity or have them help someone else who’s having a difficult time. In that way you are practicing risk management because you are recognizing an opportunity. In the same way if a team member approaches you to tell you that it looks like some materials that have been ordered are going to be late you want to think to yourself ?What could happen because these materials are going to be late, what can be done about this?? I really am asking you to develop a proactive mindset.

Another way that I say this is when you have a colleague who is managing projects and it looks like her projects always go very smoothly, you might be tempted to think that she always gets the easy projects to manage. That is probably not the case. Your colleague is probably very good at risk management and she walks around with a proactive mindset. She makes it look easy because she has identified and determined responses for many threats and opportunities that her project team will face.

Now what does any of this have to do with communications management? What good is a completed risk register if nobody sees it? Not only do you want to walk around with a proactive mindset you also want to add to that phrase, so that the full sentence is, ?What could happen and who needs to know about it??

Let?s return to the interview. Your potential future employer looks across at you and asks you what is the most important Body of Knowledge? You can say all of them. But this person is really looking for you to make a decision. Go ahead and start out by saying that the PMBOK? Guide has many important processes and that all of them should be considered when running a project. Then you can narrow your focus and pick just one. If you could only use one Body of Knowledge on your project which one would it be and why? Make a strong case for your Body of Knowledge. Many times the interviewer has a preconceived notion as to what they want you to say. Often someone is looking for you to say either risk management or communications management. You can try to second-guess the interviewer and give the answer you think that they want. Or you can just do an excellent job with your answer. It’s best to just give your answer, that’s where you will be the most convincing and authentic.

I still remember an interview where I was asked which Body of Knowledge I thought was the most important. I responded with communications management because I felt that so many projects suffered communication breakdowns. My interviewer listened to me carefully. When I finished he told me that he thought risk management was the most important and he told me why. We talked a little bit more and the interview ended. On the way home I told myself ?Well there’s one job I won’t be getting.? Guess what? I did get the job. I got the job because that particular manager needed someone to balance him out. He needed someone who came with more of a communications perspective, to balance out his more scientific risk-based approach. Now you see why it’s so important to just tell the truth. As much as you may want that job offer, you really don’t want to work someplace where you don’t fit in.

Risk Management on Small Projects

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.


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?

Risk Management in the Snow

We had a LOT of snow over the Christmas holiday.? A LOT.

NOT the vehicle I drove around in!

Having barely made it out to my in-laws for my birthday celebration (and even more Christmas presents for my 3 spoiled sons) 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.


No, I didn’t get stuck or slide into the ditch.? Fooled you!

I started thinking about the heightened level of risk all around me.? Looking at it from a project manager’s eyes who has always taken risk management seriously, I started to notice some things that were important to me in this risky situation.


  • Before I left in the first place, I checked my city’s website to check the status of our fleet of snow plows.? It enabled me to plan a route that was longer, but less risky.
  • I also checked Twitter.? Unfortunately the references to “my street” were not helpful.? Sometimes data is unreliable for use in risk management decisions.

Equipment and Materials

In an area that gets a lot of snow, you have to be prepared.? Some years we don’t get a big blizzard at all.? Other years it can get pretty bad.

How do we mitigate this risk using equipment and materials?

  • We own 4×4 trucks, snow blowers, shovels, and of course warm clothes.
  • We own small cars too, but we don’t drive them when it’s like this out!
  • We pack winter survival gear in our vehicles so that if we get stuck somewhere we don’t freeze to death.
  • We throw shovels and chains when it’s bad just in case we get stuck or need to help someone else who is stuck in the snow.
  • We make sure our cell phones are fully charged and the gas tank is full.


As I was driving home, I made sure to leave a decent amount of space between me and the car to the front and side of me.? In case the vehicle on my side started to slide, I wanted to have plenty of room to react.? If possible I would speed up or slow down slightly so we were staggered and not directly across from each other.

The space in front of me was for 2 reasons.

  • I wanted to have plenty of room so that if I started sliding when trying to stop, I would have extra room to gain control and not crash into the vehicle in front of me.
  • I wanted plenty of room so that if a vehicle coming up behind me started to slide I could gently move forward into the buffer and prevent a collision from behind.

Attention & Feedback

All that buffer wouldn’t have done much for me if I wasn’t vigilant.? I had to be sure the channels of information flow were open so I knew immediately if something bad was going down, what it was, and in many cases respond with an action I had already pre-planned.

  • All my windows and mirrors were well cleared of ice and snow so I could see what was going on around me.
  • I kept the defroster on to prevent the wind shield and side windows from fogging up.
  • When coming to a stop, I kept a constant eye out for cars coming up behind me so if they started sliding I could use that buffer in front of me.
  • I paid attention to the cars beside me too so I could react if they started sliding or decided at the last minute to change lanes while they had poor visibility due to being too lazy to clear their windows properly (yeah, that one happened)

Method of Operations

Finally I drove the truck in such a way to mitigate my risk of being on the road at such a lousy time.

  • I drove slow and deliberately.
  • When stopping it was gradual so as to not start sliding.
  • Looking ahead more than usual to see upcoming obstacles, etc.
  • On 2-lane roads I stayed in the left lane.? This got me out of the way of crazy people who were turning on to the main street in little golf cart-like cars by gunning it through a 3-foot pile of snow the plows left. (yeah, that one happened too.? Several times.? Some got stuck, some made it through and careened out into the middle turning lane.)
  • I used 4×4 low gear on unplowed residential streets and 4×4 high gear on the plowed streets.

There’s probably more that I just can’t think of right now.? (How about “not living in South Dakota” as a mitigation plan!)

So how does this relate to risk management on your projects?? How do you use data, equipment and materials, contingency, attention & feedback, and your method of operations to perform what I always like to call CONTINUOUS risk management?

Leave your comment below!

Common Language is the Key to Project Management

Imagine being asked to work on a project, only you don?t speak the language in the country in which it will be conducted. You wouldn?t get very far, and you?d most likely experience a lot of raised eyebrows because all you could do is point and smile. Sharing a common language is not the same thing as speaking the same mother tongue. But, as project managers will tell you, project-speak has a dialect all its own. Whether in Singapore or Stockholm, communicating what you mean in business is critical to completing a project on budget and time.

An emerging global business culture has brought with it an ever-expanding language of ‘project-speak’ that you hear in boardrooms around the world. My advice is to learn the lingo in your field as quickly as possible to maintain your competitive edge.

The more diverse the field, the more terms are needed to operate within it. With over three decades of experience with project managers from Shanghai to Stuttgart to Salt Lake City, I have witnessed an explosion of new terminology in project management first-hand (from just over 1,600 terms in the 90’s to over 3,400 today). As globalization broadens markets, the language required to keep up grows with it. What you say is as important as how you say it.

Let?s take the term ?drill down?. In the oil industry, you might think it refers to the act of seeking oil under the Earth?s surface. In project-speak, it actually means the act of moving from a summarized view of data into a lower level of detail. While on an oil rig in the North Sea, you would want to know the difference.

Or consider ?unk-unks?. No, it?s not a Bali starling mating call, but a risk management term that stands for unknown unknowns (risks that are unknowable). ?Pound of flesh? is another favorite, eliciting scenes from your favorite horror movie. In project management, however, it really means you’re going to have to pay someone back in a huge way for doing something for you. Aside from the obvious hard skills, language is key in project management. After all, projects are people.

There exists an international business culture that has emerged as a result of globalization and cross-border and cross-functional project activity. Managers worldwide tend to be a highly educated, well-credentialed body of professionals who are apt to read the same business books and who listen to the same lecturers and pundits on various topics. It’s best to learn the language so, when you attend meetings, collaborate on projects or are involved in any business activity, you understand what people are saying. And, perhaps more importantly, when it?s your turn to speak up, they understand you, too.

PM Lectures – Project Management Training

Attribution: leonbidon

Keep on Learning - Attribution: leonbidon

I recently went through a course from PMLectures called “Dealing with Difficult People” by Margaret Meloni. I’m earning some PDU’s with it but I also learned a lot of techniques to help me deal better with people I work with every day.

In short, the video presentation goes through tips and techniques for recognizing types of behaviors in others and yourself, methods for dealing with those behaviors, and in cases where you are unable to have an impact on the behaviors, applying risk management to the situation.? (AKA, Cover Your Butt)

I found it very helpful.? It comes in a zip file and I started watching the video, but then found that the .mp3 files were all nicely organized in a folder for me.? I mostly have time for these things when I’m commuting, so I popped those audio files on my MP3 player and listened driving to and from work.

Great job on this training course Margaret!

Link:? PMLectures

Irrational Loss Aversion

Recent events allowed me to catch up on some reading and I found myself going through “Sway – The Irreresitable Pull of Irrational Behavior” by Ori and Rom Brafman. The book is a generally enjoyable light read, but it delved into one topic I found very fascinating: irrational loss aversion.

The authors first introduced the topic with a simple economic study, the impact the changing price of eggs had on sales. The researchers found that consumers were more sensitive to prices increasing than decreasing. The impact of a loss – in this case due to price increases – was 2.5 times more profound than the impact of a gain (Putler, 1992) . Quite simply, people do not rationally weight losses properly and as such this leads to irrational behavior.

This concept was then applied to numerous examples such as one of KLM’s premier captains flying his 747 down a foggy runway into another plane because he was facing a flight delay and didn’t yet have tower clearance or a financial adviser explaining how many of his clients are unwilling to sell a poor performing stocks once it is below the price they bought it at, even if the most likely outcome is that the given stock will continue to drop (Brafman, 2008). Individuals fear of REALIZING a loss that has already occurred causes them to take on additional risks that are not rational. Perhaps the best, example offered was the $20 bill auction conducted by professor Bazerman at Harvard. At the beginning of each semester he offers an auction for a $20 bill starting at $1. There is a twist; the 2nd highest bidder must honor their bid, but gets nothing. As the price moves closer to $20, two bidders will become locked into a bidding war as each person hopes to outbid the other, thereby avoiding the $20 loss. Professor Bazerman has indicated that the bidding has gone as high as $204. This idea of risking more to make up a loss is not uncommon. In your own life, think of the last time you were driving somewhere and were running late. Did you drive faster or more aggressively than you would normally?

While the authors did not explicitly apply this dynamic to large projects, I can certainly see how this dysfunction has played out in projects I’ve been on. In fact, it seems the nature of a traditional waterfall project would be quite prone to this irrational loss aversion. Imagine for a moment a project broken evenly into three major toll gates for requirements/design, construction and testing. Now imagine for a moment that the first phase is coming to a conclusion, but the design is not quite nailed down, or an extra week is required. Traditional project management would say that one would communicate the schedule slippage and move the date out. My own real-life experience has been that people will say, “we’ll just make up the time!”

One of my friends in QA has frequently pointed out that the nature of his job as a QA professional means that he’s “the last one to go and the first one to be cut” implying that that traditional projects generally run longer through their earlier phases, in turn placing extreme pressure on QA to make an original date. I would like to say that when I used to work on waterfall projects I was strong enough to resist this dynamic, but sadly I was not. On several occasions, the siren call of “making the date” lured me too close to the treacherous rocks that have shipwrecked many vessels.

Somewhere deep in our psyche is a fear of loss, and with the modern large-scale waterfall development projects we have put together a system for delivering projects that basically plays to this fear. Is it any wonder we see massive projects go way over budget and yet continue to go forward? Like the ambitious MBA student looking to avoid the $20 loss, there are too many examples of companies throwing good money after bad to avoid ending what has already become a disastrous project. One client I recently worked with had just concluded a massive, two and a half year project only to realize that the cost to maintain this newly developed product was so high it could never be sold at a profitable margin.

The iterative nature and value of frequently delivering production ready code certainly help to mitigate this dynamic in an Agile environment, but I would not pretend that the same pressures don’t exist. I know I have seen business executives simply assert, “we must get everything done by this date”, expecting the team to find a way. Just because one works in an iterative way, doesn’t mean we are really open to evaluating our progress and make adjustments. From a project management point of view, we can refer to the triple constraint and inquire what is the lowest priority: cost, schedule or scope? In the unfortunate case where project sponsors are not willing to entertain such a trade off, then one must move to a discussion about risk – or reduced quality – and how much the program is willing to take. The best course of action is to surface these subconscious tensions that may be playing out. While we may not want to be the bearers of bad news, it is far better to escalate an issue when people still have options than when it is too late to do anything. Also, if we accept people are inherently adverse to realizing a loss, the team may be much more willing to walk away from a small train wreck of a project, rather than a larger one they would be even more invested in. Unfortunately my experience has shown that the most likely, and worst, possible option is to shoulder the risk oneself and subscribe to the fallacy that it is our job as project managers to manage risks like this. Of course, now the stakes become higher as we continue to bid more and more for that $20 bill.

This entry was originally posted on BigVisible.com

The Need for a New Knowledge Area

Is the Sky the Limit?

Is the Sky the Limit?

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. Primarily, 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.

Gold plating. What is it? To me, it’s when you add features or functionality without going through the change process. It’s unapproved scope creep….usually created by the project team themselves when it comes to the term “gold plating”.

Why does gold plating happen? Here is a theory.

  • A project team member comes up with an idea that will clearly add value
  • The thought of elevating it to the project manager, sponsor, or customer and going through the change management process is too painful to comprehend
  • This kind of thing is usually thought of as scope creep, and therefore it is bad
  • It usually never occurs to the team member that this is a “risk”
  • If it did occur to them, the word “risk” attached to it would give it a snowball’s chance – even more painful to bring with the project manager
  • so the team member finds a way to “squeeze it in”
  • This may mean that other tasks don’t get as much attention as they deserved

In the above scenario, there’s no checks and balances on what adds value or not. So what gets gold plated? Usually only things the team member finds “cool” and enjoys working on. To them, it adds value. Does it add value to the project? No one knows in this underground way of doing it. What if the team member decides to just forget about it? No scope creep, no gold plating. That’s good right?

Wrong! If the team member just forgets about it, the project just lost information about a potentially valuable opportunity.

We need Opportunity Management

In the PMBoK guide, opportunities on a project are dealt with as positive risks within the risk management knowledge area. I believe this is the wrong approach.

  • In practice, when people hear the word “risk” they immediately think negative
  • expertise and processes that need to come into play with opportunities versus risks can be very different, although there is definitely overlap with risk management also
  • A whole range of communication and practices dealing with the rest of the business come into play when you are looking for opportunities
  • Tools and techniques around quantifying the ROI of a potential opportunity and then seeking additional funding for it come into play
  • Lessons learned documentation specifically geared towards discovered opportunities
  • Increased focus and transparency in the process of discovering, evaluating, and executing on opportunities all stakeholders identify while planning, executing, and closing a project.

I mentioned this to Greg Balestrero, CEO of PMI when the New Media Council met with him recently in Denver, CO. He was discussing the need to make positive environmental and social impacts through project management, and I responded with this point. I’m not sure what he thought of the idea, or if that’s even a concern of his. I’m sticking to my guns so far in the call to add Opportunity Management as a new knowledge area in the PMBoK. Maybe it will make the 5th edition.

Think about your own project(s), current or in the past.

  • Did you or someone else come up with an idea that would have added a lot of value for the customer or business?
  • Did it get shut down or never communicated because it would have resulted in a change to the project scope?
  • Do people thus have a fear of speaking up about opportunities they think of while executing projects?

Leave a comment and let’s have a good discussion!