CIO Tools: Managing Project Risk
Each year thousands of articles are written, countless books are published and as many hours as it took to create these works are spent in classrooms teaching people how to manage projects. Yet the end result of all this effort still leaves most businesses with a large void in effective project management capabilities.
Part of the problem is due to the hubris associated with project management. It is assumed that a great project manager can take any project and make it successful. If the project manager follows the proper procedures, documents risks and addresses them one by one, the project team should be able to mitigate the risks to an acceptable level.
In reality, however, even the finest project managers can’t patch enough holes to salvage a sinking ship.
What great project managers will do, however, is be the first ones to spot the sinking ships and never set foot on them.
So the important lesson here is to understand the unwritten rules, or heuristics, that the experienced project managers use to size up a project and assess the odds of success.
An Ounce of Prevention
It never ceases to amaze me how much time and energy people can exert trying to treat symptoms and cure problems that could have been avoided with an ounce of prevention.
Project management, for all that is written about it, is as much about knowing when to throw in the towel as it is about making every attempt a success. There is undoubtedly success in recognizing a poor project as early as possible.
Over the years several of us at PSC who have been in the consulting business for a very long time have developed a knack for spotting the ‘troubled’ project at a very early stage. What we never did, however, was document the types of questions we asked ourselves when trying to spot the ‘sinking ship’. In retrospect, as a long-time consultant, we tend to forget that our exposure to vast quantities of projects gives us some insight that is hard to obtain otherwise.
Aside from the sheer number of projects we have visibility to, there are several aspects of full-service consulting that provide exposure to different organizational cultures, project sizes, project types, budgeting methods, political climates, leadership types, etc. Another useful aspect of our experience is that we are often involved from the early stages of a project idea all the way through to completion.
Although it is impractical to create an absolute pass/fail test for projects, we did feel as though it was possible to create a profiling tool to raise risk awareness and facilitate practical comparative analyses within a project portfolio in an organization.
The Project Risk Profiler
This simple tool can help you quantify the risk profile of a given project. It is not intended to be used as an absolute scoring mechanism – if it is it will not work for you. What this tool can be used for - very effectively - is the evaluation of incremental or comparative risk between your project alternatives.
In time, this tool can also be used to see if your average risk profile is migrating lower or higher. This can be indicative of changing business conditions that are favorable or require attention from a political perspective.
Perhaps the most useful application of this tool is how it can be used to verify that you are entering each project having considered the fundamentals. In this way, you can ensure that you are having the proper business dialogue at the onset of each investment.