There are no guarantees on any project and even the most well planned project can run into unexpected problems. However; if a project needs to be put back on track, it means that either that the potential risks weren’t managed properly or that new risks are impacting the project. Only proper risk management might have secured the project against the unknown.
What’s a risk?
The definition of project risk given in the PMBOK Guide is: ‘an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project’s objectives’. This definition includes two key dimensions; probability (uncertainty) and impact (effect). Negative risks which occur are then called ‘Problems’ or ‘Issues’.
When a risk occurs, it loses one dimension (Probability) and ceases to become uncertain. The probability of the happening is 100%. That’s no longer a ‘Risk’, that’s a ‘Problem’. It’s already happened, it has an (effect) on the project, and it needs to be solved.
How to manage risks?
Risk Management is the process of identifying, analyzing and responding to the risk factors throughout the life of a project in order to ensure that the scope deliverables are successfully achieved. Essentially, the purpose of risk management is to:
- Identify possible risks.
- Reduce or allocate risks impact.
- Provide a rational basis for better decision making.
- Plan appropriate responses to the eventual outcome of a risk.
When planning a project, risks haven’t happened yet and are still uncertain. But sooner or later, some of these risks will happen, and that’s when they need to be handled. Basically, there are four ways to respond to a potential risk: Avoid Mitigate, Transfer or Accept.
Since a ‘problem’ was basically a ‘risk’, why not handle it the same?
Proper risk management implies that all possible future events can be managed. This is practically impossible, but it allows us to consider al possible factors that might prevent success, and consequently, what can be done to reduce the magnitude of their impact, should it occur. There will always be some things that will occur, however; through sound risk management, most of these can be managed.
The analogy is this: in the course of leading a project there is risk. With that risk, there will be change orders, scope creep, schedule slips and changes in the plan. In some cases, projects will become so far off course that they will be on the brink of failure. In such situations, the project manager needs to take the following steps to get their projects back on track:
Step 1: Identify and assess the problem
It is necessary to implement a risk management process and issue management process. These processes will help identify risks early on, and take the steps needed to mitigate them. They will also provide procedures for identifying and resolving project issues, before they impact on the project delivery.
If applying the practices of Risk Management to a project reveals a scope creep, or that it is behind schedule or over budget, then an objective assessment must be made of how the project ended up off track. The project manager might start by asking similar questions to the following:
- Where problems are occurring
- When did the project go off track in the first place?
- How critical is the problem/issue?
- Is there a contingency plan documented in the risk register?
- Who is the risk owner?
- What will it take to get the project back on track?
- What’s the feasibility of applying changes to scope/schedule/budget?
- Are the stakeholders willing to proceed with the contingency actions?
Step 2: Respond to the Cause
No matter how hard we try, planning is not perfect, and sometimes plans fail. A project may be operating within the original scope, budget and schedule, but new risks and issues may prevent a successful delivery. Could these problems have been foreseen and were they managed quickly as soon as they were identified? Why do these situations occur, and who should be responsible?
Step 3: Minimize the Effect
Although the risk management plan can probably provide potential responses for potential risks, there’s no amount of planning that can prevent the effect of a problem that has happened. There’s no sense in trying to take preventive actions, because there’s no way to prevent it. Other than that, all options should be evaluated using the same tools of risk management, and the best one gets chosen. The options for handling issues should fall into the following categories:
- Acceptance: Being aware of the possible consequences and accepting its impact.
- Mitigation: Taking the necessary measures required to control this issue and minimize its effect.
- Transfer: transfer it to a third party that is better positioned to address it.
The evaluators who assess risk should begin the process by identifying risks and developing handling options and approaches to propose to the project manager, who selects the appropriate one(s) for implementation.
Step 4: Implement Project Management Recovery Plan
A recovery plan includes specific methods and techniques to deal with certain issues, identifies who is responsible for the issue, and provides an estimate of the cost and time associated with reducing the effect, if any. It involves planning and execution with the objective of reducing any other risks to an acceptable level.
The plan should also describe procedures to closely monitor and control performance for the remainder of the project. Ensure that performance measurement process and progress reviews are frequent enough. Some necessary actions might include:
- Track performance daily and apply macro management.
- Report to stakeholders on the project’s progress to secure their support.
- Never stop looking for new risks and adapting new strategies to deal with them.
- Promptly manage all identified risks.
- Document lessons learned.
- Update the project management plan as required.