Project Management

Finally! A Use For Risk Management!

From the Game Theory in Management Blog
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Modelling Business Decisions and their Consequences

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Finally! A Use For Risk Management!

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As promised at the end of last week’s blog, I’ve finally found a purpose for risk management, though I still refuse to do initial caps when referring to it (for alert GTIM Nation members who would say “You just used initial caps in the title of this blog for “risk management,” my response is, I use initial caps for each word in my titles). Before I reveal this quirky and yet valid reason, let’s take a quick view of the epistemology of Management Information Systems, or MISs (note the initial caps).

The key valid Project Management information streams have the following things in common:

  1. They provide the actual decision-makers the data they need to make informed choices on their projects,
  2. They further support the creation of an audit trail, or the (truthful) narrative on how the project has been executed, and the circumstances behind that execution,
  3. …and they’re deserving of initial caps (e.g., Earned Value Management System, or Critical Path Methodology).

As I have previously pointed out in this blog, risk management utterly fails in number one, and therefore doesn’t qualify for number three. How do I know this? Because of the very definition of risk management offered up by some of their leading figures.

In a point-counterpoint article I contributed to in PMNetwork magazine many years ago, my risk management counterpart defined its purview as encompassing anything that might happen to a project, positive or negative, the latter being described as traditional risk management, the former belonging to “opportunity management.” Of course, management time is finite: the management information system that doesn’t accurately differentiate between where the project is in trouble and where it’s doing fine, and thereby pointing out where PM attention is needed is, well, useless. By their own admission, risk managers maintain that their specialty’s purview covers all things, positive or negative, needing of attention or not.

I’ve addressed many of the other reasons that risk management is such a disappointment in the delivering-relevant-information department in previous blogs, but a quick recap includes:

  • Risk analysis (MSWord forces the first letter in a bulleted list to have initial caps) reports tell the PM exactly what? That there’s an X% chance that something will go wrong, resulting in $Y in added costs, or Z days in delays? Is this helpful?
  • Especially when one considers that each of the parameters in the preceding bullet is little more than a wild-donkey guess.
  • Then there’s their insufferable tendency to couch everything in Gaussian curve terminology (Carl Friedrich Gauss was a person, so I had to use an initial cap there).

“Alright, already, we know your objections to risk management” I can hear the two or three risk manager members of GTIM Nation (note the initial caps) saying, “but you promised a valid use for us! What is it, already?” I’m glad you guys asked.

From the second numbered entry above, Project Management MISs (at this point I’m basically trolling the risk managers with the whole initial caps business) provide a type of audit trail. I would further divide this audit trail into two bins:

  • It generates the historical narrative, useful for future PMs to learn how best to tackle similar projects, and
  • It gives customers who have, shall we say, an exceptionally developed curiosity about the choices being made by the Project Team, their basis, sensibility, etc., a sense that they’re in the middle of the day-to-day decisions that execute the project.

It’s this second bullet where risk management may actually be indispensable. Think about it: if your customer is hovering over your project so closely that you have to process a Baseline Change Proposal just to go to the restroom, there’s no better way of getting them to ease up a bit than by showing them that you have not only considered all of their worries, but you have “quantified” them in Gaussian curve jargon, and run a series of statistical analyses that would induce granite statues’ eyes to glaze over.

“If everyone minded their business,” the Duchess said in a hoarse growl, “the world would go round a great deal faster than it does.” (Alice in Wonderland, 1865).  So, here are the risk managers, making the world go round a bit faster, and for this they deserve recognition, even in the GTIM blog. I would like to point out, though, that had the risk management community reached out to me and explained the real purpose behind their schtick being to thwart overly hoverish customers (think about it: what customer is going to needle the PM who’s just waiting for an opportunity to discuss the significance of the gap between the median and average time for a given task?), then much of the pixel ink I’ve spent making fun of them could have been saved.

On second thought, and upon reviewing some of the risk management hate e-mail I’ve received, nevermind analyzing what might have been. The odds wouldn’t be good that they would ever receive initial capitalization status.

 

Posted on: January 27, 2020 10:24 PM | Permalink

Comments (4)

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Dear Michael
Interesting this reflection on the theme: "Finally! A Use For Risk Management!"

Thanks for sharing

Dear Michael,

How to control and reduce risk is always a topic for discussion but how MIS system can be used to further reduce risk is a research area that has garnered a lot of attention recently.

Daire

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