Organisational risks within the project cycle

In an earlier musing (Project risks – Black Swans or Brown Cygnets?) I had a diagram showing a project’s risk profile over its lifecycle. The sloping line represented the number of risks. At the start of the project, when planning has only just started there are a lot of unknowns and hence a large number of risks. By contrast at the end of implementation there should not be any risks as the project is largely complete. (I realise there may be exceptions such as commissioning risks but go with the logic!)

However, what happens when our processes build in risk? Tendering for everything or changes in personnel when a project moves from one phase into the next are regular examples. They immediately build in risk so what should be done?

Although some of these risks may not be avoidable they do need good management if risks are to be minimised. As with most risk management there are two parts. First the risks have to be identified. This may need an external review as those within an organisation are often too close to the action to easily identify the problems. Once identified the focus changes to generating ideas for mitigating the risks.

Mitigation may include:

• A rigorous objective project/tender selection process.
• Improved handover between phase managers such as a well-structured meeting with plenty of time. Ongoing access to the upstream manager from the downstream manager to clarify detail.
• Enabling the downstream manager to be part of the upstream phase management team (not as a manager but as a contributor – say attending a risk workshop or input into the schedule).
• More appropriate KPIs (Key Performance Indicators). For example, sales managers with KPIs based on tenders won are not the answer – they need KPIs that ensure they have a vested interest in the project’s successful outcome (eg profitability).

Although such mitigation measures will add some costs they should be readily offset by lower risks.

There is also second component to address – namely processes and tools. This is quite a large topic so I will address it in my next insight. In the meantime it may be worthwhile reflecting on the risks your project management cycle introduces. What are they and how can they be mitigated?