Creating comprehensive project risks

I’ve often heard that creating risk plans can be a waste of time because the risks that occur aren’t in the risk plan. I totally disagree with this thinking. The real problem is that risks are rarely written properly, they aren’t comprehensive. Here are items to focus on to ensure your risks are properly structured and are likely to serve you throughout the project lifecycle.

Risks should detail the event(s) that introduces risk.? To explore this first focus item, let’s look at a risk whose risk record isn’t well written. I have done some contract work for Boeing and learned that, in the early hours of the day, they will occasionally close a highway to move massive components from one facility to another. So, a risk record might say, “The component is late arriving at the assembly line.” This isn’t adequate because it doesn’t address the EVENT that causes the risk. Without a description of the event, proper risk response strategies are impossible to derive. Here’s why…the component might arrive late because the police refused to close the road when needed, or because the vehicle moving the component broke down, or because the vehicle operators have gone on strike. Responding to these different events requires different response strategies. So, consider the events that can trigger a risk, not just the outcome of the risk. In the example I just shared, you might have three or more risk records, one for every event that might cause a risk impact.

Consider business impacts, not just impacts on the project. Project justification is typically based on financial benefits to the organization. As a result, if the project doesn’t satisfy those benefits by being late, costing more, or not fulfilling all the requirements, an impact is felt. This should be considered in your risk records. As the project budget is often augmented by funds to address risks, not including business impact risks means your budget for addressing business risks is underfunded. So, when calculating the impact of a risk, don’t just calculate the cost to the project itself if it means you are 4 months late. Include the cost of your organization missing out on the financial benefits for 4 months as well.

Include impacts from reduced quality. Issues or forced changes that reduce the quality of the products produced by the project can have significant impacts on the project. Of note are the impacts on organizational change management efforts. Product acceptance issues, training difficulties, and decreased staff productivity can be costly. While it may require guesswork to determine the cost of these impacts, even conservative estimations can demonstrate the severity of project risks, increasing the possibility they will receive appropriate attention from management.

Include impacts from increased complexity. Issues that result in increased complexity have similar impacts to quality reductions. Stakeholder acceptance and training issues become likely. Determining when complexity increases occur can be difficult, but focusing on key parameters makes it easier. Complexity increases when:

• Stakeholder groups are added to the scope of the project,
• Additional interfaces are required to create sound technical components,
• Business processes require additional decision points, and
• Additional skills need to be contracted to complete project products.

As with quality impacts, complexity increases might be difficult to quantify, but a conservative cost impact will make your risk records more accurate.

This article is based on my LinkedIn Learning course entitled “Project Management Foundations: Risk.”?

Coming Up

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As the leaves change colour this fall, they serve as a poignant reminder that change is both constant and inevitable. Join us for our Fall Virtual Book Discussion on "Intelligent Disobedience: The Difference between Good and Great Leaders" with the author, Bob McGannon . Explore the art of knowing How and When to Break The Rules to Improve Performance. Together, we'll delve into how the principle of intelligent disobedience can be applied effectively in leading change. We'll...?? Dive deep into narratives that shape change.?? Understand how to lead differently, effectively.?? Connect with fellow change leaders from various industries.Date: October 25thTime: 6pm ESTLocation: VirtualRSVP Now to hold your spot, and let's get reading!- https://lnkd.in/g3n4VwMa

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Additional thoughts can be found in my project management and outsourcing classes on LinkedIn Learning, including:?

• Project Management: Technical Projects
• Strategic Leadership: Deploying Intelligent Disobedience??
• Outsourcing Fundamentals, the first of six courses on outsourcing. This series of courses focuses on defining services, performing service-level?management, and helping figure out what is required to support a business in an outsourcing or service provider scenario.??

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This article is part of?Bob’s Reflections newsletter series, which discusses project management, outsourcing, and “intelligent disobedience”, a leadership approach. If you want more of this content, you can?subscribe?to receive notifications when a new article is posted.

Want to learn more about the topics I talk about in these newsletters? Watch?my courses?in the LinkedIn Learning Library or check out?https://intelligentdisobedience.com/

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