By Kevin Korterud
I’m amazed at how often I receive requests for help creating an effective risk management process. These inquiries usually come from organizations with a risk management process that hardly anyone uses. Stakeholders, program managers, department heads and executives are mystified about why nobody is declaring risks on their projects, which can create the false perception that everything is going fine.
Why does this happen? One reason is that project managers believe making risks visible to leadership could impair their efforts. Another reason is an organizational culture that creates a negative perception of risks. For example, I have seen some highly entrepreneurial companies foster a mindset of rugged heroism, which causes project managers to think they have to fix everything themselves. In this project environment, project managers worry that escalation to leadership will be seen as a sign of weakness.
In fact, there’s no use pretending any project is risk-free. Risk management is an essential part of any project: Whether you’re climbing a mountain or changing a light bulb, there are always risks. For anyone who’s ever been leery about flagging risks, or is just looking for some new approaches, here are five tips.
1. Think of risk management as a way to get what you need, when you need it.
Project managers rarely have the financial or command authority to change schedules or release additional funding—that’s leadership’s job. For this basic reason, declaring and escalating risks enables leaders to provide risk mitigation assistance.
Making risks visible to your leadership gives them enough lead time to provide relief when it is needed, not weeks or months later when unmitigated risks turn into project problems.
2. Don’t forget: People can be risks, too.
I have seen many risk management plans focus entirely on things: systems that might not be ready, processes affected by outside regulatory bodies, estimates that were done in a hurry at year-end budget cycles, etc.
What project managers often fail to consider in their risk planning is that people can also be risks.
For example, let’s say your project sponsor is replaced by someone who has no experience in the subject areas of your project. This lack of experience initially will cause longer decision-making cycles as the new sponsor comes up to speed in the subject areas.
So be sure to include people risks in your risk register—they can affect your progress as much as more inanimate factors.
3. Create guiding principles for risk management.
While there may be a process in place for managing risks once they appear, quite often it is unclear to project managers when and how to escalate risks to higher levels in an organization based on their potential impact.
To create clarity and promote transparency around risk management, the best approach is to set guiding principles that govern the process. The rules should be simple and broadly communicated throughout an organization.
Examples of guiding principles include:
Declaring project risks demonstrates professional discipline that will be recognized by leadership.
A potential mitigation approach should be prepared for every identified risk.
Risks with greater potential impact need to be made visible at higher levels in the organization.
4. Use the 30/20/10 rule of thumb.
In my experience, the most frequent question asked by project managers is how many risks should be identified on a project. For example, a person might feel that a small project should have a small number of risks. But that’s not necessarily true, especially if a small project impacts a large population of people.
One risk management approach I recommend to project managers is the 30/20/10 rule, which starts with a broad slate of risks and narrows them down throughout the life of the project.
Here’s how it works: Identify risks at the beginning of the project that, if realized, would affect 30 percent of the schedule, budget or results. Midway through the project, the goal is to lower the potential impact of risks to 20 percent of the schedule, budget or results. By the end of the project, the project should carry risks containing no more than a 10 percent impact.
5. Don’t forget the bigger picture.
Project managers frequently tell me they would have finished a project on schedule, but team members were pulled into another project. Translation: another project was more important. And the strategic relevance of your project matters just as much as how you manage that project on a day-to-day basis.
To manage the risk of irrelevance, conduct an assessment on a recurring basis of how your project fits into your organization’s strategy and portfolio. Validate the relative priority of the project against other active and pending projects, and check on potential scheduling dependencies that may impact your plans, as well as any resource conflicts that may be triggered by other projects.
What techniques do you use to identify and mitigate risks on a project? If you’ve worked at an organization where flagging risks attracted negative attention from higher-ups, how did you deal with this challenge?
A legend on the basketball court and in the business world, Earvin “Magic” Johnson understands how to build all-star teams.
“You’ve got to know every teammate. I know the strengths and weaknesses of everybody that works with me — what they can and can’t handle,” said Mr. Johnson, who kicked off PMI® Global Congress — North America in Phoenix, Arizona, USA. “It’s about understanding how they can get to the next level. When they believe that you’re for them, then you can lead them.”
Mr. Johnson knows how to get teams to play at the top of their game: After leading the Los Angeles Lakers to five National Basketball Association championships, the Hall of Famer went on to become the most successful African-American businessman in the United States. As CEO of Magic Johnson Enterprises, he operates subsidiaries spanning the entertainment, foodservice and healthcare industries, among others.
Despite that track record, he never rests on his laurels. “I’m still learning, I’m still growing, I still have room for growth—and I know you do too,” Mr. Johnson told the 2,200 attendees gathered from 60 countries around the world.
Without that commitment to learning, project practitioners and their organizations risk being left in the dust.
“The marketplace is moving so fast. If you can’t adapt and adjust, it’s going to move right past you,” he said.
He urged audience members to conduct biannual SWOT (strengths, weaknesses, opportunities and threats) analyses — for themselves and their businesses.
And before they begin planning projects, organizations must understand the environment they operate in. When his company gets a new contract, Mr. Johnson said, “we have town hall meetings and listen to what people say. And then we deliver what they’re looking for.”
To get the right results, organizations must go in with the right strategy — and then make sure team members are on board and have the right skills to get the job done.
“You have to sell your team on the strategy so they can be successful,” he said. “The best basketball players I know made their teammates better. Ask yourself, how can you make the people you work with better?”
Congress attendees appreciated the “magic tricks.”
"There's a lot of truth in his approach to life — of the importance of hard work and relying on the right people for the job,” says Harold Mosley Jr., PMP, director, project management processes, Zachry Industrial Inc., San Antonio, Texas, USA. “You have to set high expectations and get the right people to fulfill them.”
Talk about project management in action: When an electrical fire sparked a mass evacuation of the Sheraton Hotel in Phoenix, Arizona, USA, the PMI team had just hours to relocate its Professional Awards Gala. “That’s the power of risk management!” said Ricardo Triana, PMP, chair, 2014 PMI board of directors.
Against a chaotic backdrop, the team executed an emergency move from the Sheraton Hotel to the Convention Center. They quickly coordinated catering, set up the room and notified all attendees of the new venue. Despite the shift, the awards ceremony was a success.
The evening celebrated the best of the best in project, program and portfolio management. In a world characterized by rapid change, innovation is becoming a necessity in the business world.
Rio Tinto Alcan took home the top prize for its AP60 Phase 1 project. In a large-scale plant, the company implemented a cutting-edge smelting technology that produces 40 percent more aluminum at lower costs and fewer emissions.
The project team not only came in on schedule and on budget, despite a scope increase, it dramatically overhauled the region’s poor safety culture.
“I think it’s quite an achievement. It’s something we’ll remember for a long time,” said Michel Charron, project director, Rio Tinto Alcan, a PMI Global Executive Council member. He credited the passion and rigor of the team—including senior project manager Andre Noël, PMP—with driving the project’s success.
Winner Rio Tinto Alcan was honored with two other finalists.
Energy Systems Integration Facility at the National Renewable Energy Laboratory, Golden, Colorado, USA: Smart risk management—including careful risk mitigation and a staggered release of contingency funds—allowed the project team to maximize the value of a US$135 million facility and supercomputer. Scientists at the facility now study the integration of renewable energy into the grid.
Access Health Connecticut, Hartford, Connecticut, USA: Despite fluctuating requirements and just 10 months to complete a project that would typically take three years, the project team built an online health exchange for Connecticut’s 365,000 uninsured citizens. The project exceeded federal enrollment goals by 245 percent.
Michel Charron credits the AP60 team's passion and rigor in winning PMI's Project of the Year Award.
Long-time Voices on Project Management blogger Conrado Morlan, PMP, PgMP shares how attaining a PMP certification helped his career.
Project management practitioners like me, with more than 20 years of experience, learned about PMI and the PMP® certification in ways much different from today.
My first exposure to PMI, A Guide to the Project Management Body of Knowledge (PMBOK® Guide) and PMP certification was in the late 1990s. It was during a training program to attain PMP certification -- and in Spanish, no less -- at the company I worked for in Puebla, Mexico.
My colleagues and I questioned the benefits of this certification, which at the time was not well known in Mexico. In addition, the written exam was in English. That did not make the PMP more attractive.
I left the company before taking the exam. Yet in my new job, I discovered that the knowledge I acquired in the training program was very helpful. Without prompting, I used some of the best practices in the PMBOK® Guide, especially those related to risk and project integration.
As I progressed professionally, I moved to the United States and learned more about PMI chapters and global congresses. I became a member and a regular at chapter meetings.
By this point -- even with eight years of practical experience in project management and applying best practices in my work -- I realized I needed to take it to the next level: earning PMP certification. Sure, professional experience and on-the-job-training are important -- but I was only recognized for that at my company. Attaining the PMP meant that the world's largest association for the profession would validate my professional experience.
In the lead-up to my exam, I was traveling intensively for my job, and the PMBOK® Guide became my travel companion. While abroad, I visited local PMI chapters and learned about running projects in different settings. The interaction with members of PMI chapters in other countries helped me tweak my project plan. The combination of studying and exchanging ideas with practitioners internationally were fundamental for my PMP exam preparation.
In December 2005, I attained my PMP -- and I have never regretted it. Achieving the certification brought me immediate benefits. After I notified my manager, he awarded me an incentive bonus. A week later, I was selected to lead one of the most challenging projects of the portfolio.
Over the years, I also became more involved in my community, volunteering at events such as PMI item-writing sessions. In 2011, I was honored with the 2011 PMI Distinguished Contribution Award. I'm not saying that getting my PMP awarded me recognition and experience overnight, but I needed it to get to the next stage in my career.
I still find project professionals who think the same as my colleagues and I did in the late 1990s. The most frequent questions I hear are: Why should I earn a certification or a credential, if I am a senior project manager with many years of experience? How does a certification or credential make me different?
To these, I respond with a question (Why not step out of your comfort zone?) and a thought (What made you successful in the past will not make you successful today).
The truth is that, just like doctors, project professionals need to update their knowledge to face the challenges in today's project world. PMP certification and PMI membership give you access to share and acquire project management knowledge, stay up to speed on new trends, and join a group of global volunteers contributing toward the advancement of the profession. Most importantly, certification helps you reach the next step in your professional life. At least that is what it has done for me.
How did getting a PMP help your career? Are you still considering getting one, and why?
|There are some stunning stories of success out there -- too many of which go unheralded. Here's your chance to change that with the 2012 PMI Professional Awards.|
You've got plenty of options -- from project and individual awards to research and literature awards.
Consider that peer you've seen contributing to the advancement of the project management profession or PMI. Now's the time to acknowledge all that hard work by nominating him or her for the PMI Distinguished Contribution Award. Nominee(s) don't have to be a PMI member and may work in any field.
Doing well should give project professionals more than just that "warm and fuzzy" feeling. Shine the spotlight on projects that improve the wellbeing of a community, or achievements that apply project management principles to the pro bono delivery of goods and services. The PMI Community Advancement Through Project Management Award is offered in Individual, Organizational and PMI Chapter categories.
Nominations for both awards must be submitted by 1 April 2012.
All awards are presented among your peers at the PMI Awards Ceremony, which is held in conjunction with PMI® Global Congress 2012 -- North America (20-23 October in Vancouver, British Columbia, Canada).
No one knows excellence in project management like you and your peers. So nominate a deserving colleague today.
Learn more, download applications, and watch videos of past award winners and nominees.
Read more about PMI awards.