5 Ways to Better Manage Risk in Any Project

5 Ways to Better Manage Risk in Any Project

Risk comes with any project, no matter the size or scope. But there are ways to not only minimize the risk, but to benefit from it, experts say.

If you feel like you need to issue nonflammable suits to your entire team because they always seem to be fighting fires when it comes to projects, it’s time to step back and reassess why the risk is always so high.

As Tom Kendrick points out in his book, “Identifying and Managing Project Risk,” there is always risk involved in any project, and some level of uncertainty. In fact, high-tech projects are particularly risky, he points out, because of the number of variables. In addition, such projects are often pushed to move faster than others even when budget, staff and time are scarce.

But projects that succeed, Kendrick argues, do so because their leaders do two things well.

“First, leaders recognize that much of the work on any project, even a high-tech project, is not new. For this work, the notes, records and lessons learned on earlier projects can be a road map for identifying, and in many cases avoiding, many potential problems,” he explains. “Second, they plan project work thoroughly, especially the portions that require innovation, to understand the challenges ahead and to anticipate many of the risks.”

If you’re ready to retire the daily use of flame-retardant suits for your team, here are some ways to effectively manage the risk in projects:

  1. Embed risk management into projects.  Charles Bosler, a risk management expert, says that risk is “simple” because it is “anything that requires you to make choices about the future.” While risk can never be entirely eliminated from projects, Kendrick contends, it can be reduced – often with “minor incremental effort.” Michael Taylor, an experienced project risk manager with more than 30 years of experience, suggests that the best way to manage risk is to adopt a process that systemically deals with the overall problem of uncertain events and conditions.
  2. Be specific. Don’t allow “fuzzy” or poorly defined deliverables, because that can lead to failure, Kendrick explains. “If you do not know enough to define everything, convert the project in a sequence of smaller efforts that you can define, one after the other, and perform reviews and testing,” he suggests. Taylor suggests using process flowcharts, work breakdown structures and even brainstorming to identify risks.
  3.  Communicate. Bart Jutte, a business analyst and project risk management expert, explains that project managers who experienced failure “were frequently unaware of the big hammer that was about to hit them.” The unsettling reality, he adds, it that someone did see the hammer but failed to tell the project manager. That’s why risk communication must be consistent, he argues. “If you have a team meeting, make project risks part of the default agenda (and not the final item on the list!),” he explains. “This shows risks are important to the project manager and gives team members a ‘natural moment’ to discuss them and report new ones.”
  4. Identify bottlenecks. Kendrick explains that when reviewing past projects and problems, look for the bumps in the road likely to occur again and then develop plans to avoid them. For example, budget and staffing shortfalls can often cause problems, so negotiate a budget reserve or extra bodies.
  5. Analyze.  Taylor explains that a qualitative analysis should look at the probability of a risk condition, along with the impact from that risk. Once that is done, then the magnitude of those risks can be assessed. This “weighted risk factor” technique is calculated as: WRF=W1*RFTECH+W2*RFSCHED+W3*RFCOST
  • “RF” means Risk Factor = (P+C) – (P x C).
  • The value for weight (W) is dependent upon its project priority within the triple constraint.
  • W1, W2, and W3 are valued 0 through 1.0 depending on the priorities of the project, and together must sum to 1.0.

Jutte notes that when project managers are examining the entire project, they can do a simulation “to show your project sponsor how likely it is that you finish on a given date or within a certain time frame,” along with a similar exercise for project costs.

Finally, risk experts advise that when assessing risks in the project, managers should also keep an eye out for opportunities.

“Make sure you create some time to deal with the opportunities in your project, even if it is only half an hour. Chances are that you see a couple of opportunities with a high pay-off that don’t require a big investment in time or resources,” Jutte suggests.

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