Risk Management, we have all heard those words, but why do some organizations appear to either ignore or not care about the cost that can be associated with risk management? In my opinion, risk management is an important part of any project framework, whether using traditional frameworks such as waterfall or agile approaches.
The cycle is usually very simple: first there is a risk which is something that may occur. Once that occurs it becomes an issue. Once it becomes an issue that means that something is going to change. These changes can add cost and those costs can be quite high.
Consider a project that has an issue of resource constraints. One would think this is not such a big deal. However, consider this scenario: A high-profile project is experiencing resource constraints in the development and testing areas of the project. Depending on the skills sets needed, resources with that same skill set just might not be readily available. If you tie in an unrealistic deployment schedule this just adds to the risk. So now, even though the resources an organization has assigned to the project are 100% allocated, there still isn’t enough time to complete the required tasks to meet the timeline, even with the resources working longer hours. Now, this means that several things could occur:
- The organization could pay for additional contract resources to fill the void
- Doing this will add additional cost, plus some additional time onboarding the new resources
- The organization could move the deployment date out
- Doing this will also add additional cost, potentially impacting other projects that may also be dependent on those same resources
- If there are compliance issues to be considered, depending on the factors involved could potentially lead to a fine
I find it surprising when interviewing potential candidates, how many answer the question of what comes first a risk or an issue, and the number of candidates that respond with issue. This tells me they have no understanding of basic risk management.
If the majority of your projects find themselves going over budget, or over schedule, look at your risk management approach. Start by identifying why these projects went over schedule or over budget. This can provide you a glimpse at risks that possibly could have been mitigated, or at least should have had a contingency plan in place.
When I was managing projects, every project started out with 20 risks automatically as these are inherent to every project type. Just a few of these included resource constraints, unknown unknowns, business partner involvement, and even stakeholder support. If your organization is not doing any risk management, then I would suggest at least putting some kind of risk management in place, even the basics.
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Tell me your thoughts in the comments and let’s open a dialog. I would be excited to hear other opinions on this topic.
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Over 20 years project management experience with a passion for helping organizations grow their PMO, their project managers, and their teams. My passion has taken me to the pursuit of a Doctor of Education, as I enjoy seeing the proverbial light bulb come on. I am a believer in continuous growth and improvement, and believe that an organizations culture and environment is what drives the growth of PMOs and all areas, and not the other way around.