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Managing Project Risks Not Fighting Fires

Managing project risks is a touchy subject with project sponsors. The majority of executives who sponsor projects are hesitant to authorize risk management efforts. This is because in the past many executives have gotten burned by risk management efforts that cost a great deal of time and money and produced little or no results. So it’s hard to get the sponsor’s approval to do risk management. Often executives will say, “Start work and we will put out fires when they occur.” But firefighting is not the way to succeed on projects. Project Risk Management Main Page

Dick Billows, PMP

Dick Billows, PMP
CEO 4pm.com
Dick’s Books on Amazon

There is an unfortunate emphasis in many organizations on firefighting as opposed to careful planning. This includes planning for the risks the project faces. Many project sponsors like the idea of not committing to highly detailed project plans. They think, and rightly so, that this limits their ability to “be flexible” and make changes whenever they want. Project managers who buy into this thinking have happy sponsors in the beginning of the project because they can start work fast. In this situation, the team puts little effort into project planning and there certainly is no project risk management. Unfortunately, the same project managers are routinely surprised by risk events that easily could have been anticipated during the planning phase. Because there was no risk management, the team has to stop work and figure out what to do about the risk(s) that smacked them in the face.

Managing Project Risks The Wrong Way

Let’s think about what happens when a project manager and team rely on firefighting instead of having a well thought out risk response plan. Let’s talk about a specific example. A project manager is relying on an outside contractor to produce a “super tech” deliverable that is required by three major project deliverables. In other words the super tech is an input to three other deliverables. There had been discussion among the project team and the organization’s legal staff about the contract with this vendor. But the team had worked with him before and assumed the super tech deliverable would be exactly what they need.
The project has started fairly quickly because no detail plan is being formulated. Over the first month everything goes well but then the vendor calls and says, “Super tech is going to be delayed because four of my best people have just walked off the job to go to work for a competitor in California. I don’t know where the heck I’m going to find people to do your super tech work. But I’ll get to work on it right now and keep you posted.” The project manager tries to find out how much of a delay they’re facing and the vendor says there’s no way to tell at this point.” The project manager also reminds the vendor that there’s a contract requirement to deliver super tech by the end of June. The vendor says, “That’s a long way away. I’m sure we’ll get it worked out by then.”
The project team is stuck because they gave no thought to the possibility of the vendor being unable to produce the deliverable by the end of June. They had done no risk analysis or planning about this critical project deliverable. There was no contingency plan and no money to pay for hiring another contractor to do the work. They also hadn’t planned for the option of buying a pre-built or “canned” deliverable as a substitute for super tech. So the project team must stop work on other project activities while they and the project manager try to find other options for super tech. Even if they find a substitute, the project will be significantly late because of the delay.
This type of risk event occurs all the time.  People who try to respond to this type of risk with firefighting fail to recognize one thing. All the thinking that they’re going to do in this firefight should have been done as part of the risk management process.  Then they would have had a contingency plan approved by the sponsor which they could implement the moment the contractor called with bad news.

When the project is late and over budget because of a couple of these risk events the sponsor’s not happy. Project managers need to remind executives of these failed projects to “sell” them on the need for rimanaging project riskssk management on future projects. Presenting Your Risk Plan

Managing Project Risks The Right Way

A risk management process can pay big dividends, particularly when it is scaled to fit each project. In fact, the entire risk management effort for a small project can take place during lunch with the sponsor. The sponsor and project manager spend one hour to identify the risks, analyze them and plan ways to avoid or mitigate the significant ones. There are bare-bone risk management techniques that don’t require a lot of paper work. Small Project Risk Management 

To learn more how to manage project risks,  consider our online project management courses. You work privately with a expert project manager. You control the schedule and pace and have as many phone calls and live video conferences as you wish.  Take a look at the courses in your specialty.

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