Background on Managing Risk on Important Projects
In the context of any strategic initiative involving a significant evolution in systems, process, or organization, risk is the chance that the effort will be less than a complete success … that it will be late, over budget, perform unacceptably when completed, fail to realize the expected business benefits, or even never be completed.
There are so many factors that can contribute to a less-than-successful project. How is a project manager to decide which to focus on and how to address them?
Milt Hess, in his paper Reducing Risk on Projects, presents a strategy for deciding which risk factors deserve attention and for integrating risk reduction into the project holistically instead of treating it as a separate activity. This strategy turns the traditional approach to risk management on its head. Instead of thinking about all the things that can wrong, it focuses on what has to go right.
The strategy requires that a project first establish a clear definition of success – its success targets. The paper describes concrete steps that the project can take to increase the likelihood of meeting the targets and the questions that senior management and sponsors should ask to ensure that the project stays on track.
Here are a few of the key elements of the approach:
- Periodically develop a forecast of the expected outcomes for the success targets. If the forecast for a target is ‘I don’t know’, the project is at risk. Include resources in the project plan to reduce uncertainty about the outcome.
- Dependency on external events and agents introduces risk. Explicitly identify dependencies during the planning process, document assumptions, and monitor them regularly. Include resources in the project plan to reduce uncertainty about the dependencies.
- The biggest single source of risk on mega-projects is a leadership and communication breakdown in the project’s ecosystem … concurrent related projects, conflicting interests in the sponsor’s organization, and the project’s own chain of command. Identify and document all of the interfaces between the project and its ecosystem – concurrent projects, affected sponsor interests, internal support groups. Decide on a strategy for communicating and coordinating with them so that your project always is aware of changes in the ecosystem and so that changes you need are reflected in it.
Follow this link to see Milt’s complete Reducing Risk on Projects paper which is available to IntelliVen students, clients, subscribers, followers, and visitors.
By Milt Hess: Decisions: It’s a trade-off
Tools and Templates for growing organizations
Curated articles for growing organizations
About the author
During his 25-year career with American Management Systems, Inc., a management consulting and systems development firm, Dr. Milt Hess grew from early roles as a technical specialist on projects to become a senior consultant to international clients.
Among his accomplishments, he served as Technical Director for the AMS’s Defense Systems Group for ten years, and for six years he supervised the implementation of ISO 9001 in AMS’s European operations. Milt developed a number of innovative approaches to systems analysis, software development, and project management during this time. His Best Practices papers were widely distributed and used within the company, and he has rewritten several of them so they can now be made available publicly.
Milt earned his Bachelor of Engineering Science degree at The Johns Hopkins University and his Masters and Doctorate in the same field at Columbia University. His early work at Bell Laboratories involved analysis of mechanical failure in electronic devices. A career switch to computer technology led to roles at Bell Labs in computer center management and software development and testing.
He joined AMS after ten years at Bell Labs and retired in 2002 as a Vice-President. Now living in Santa Barbara, California, he is a volunteer computer coach at the public library, member of his neighborhood association board, member of the Library Board, and venue manager for the Santa Barbara International Film Festival.