5 Causes of Risk
From the The Money Files Blog
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
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Risks get logged on our spreadsheets or in our tools, but it’s often the identification part that people find difficult.
Below are 5 causes of risk. You can use these as a jumping off point for your own risk identification. What would happen on your project if one of these causes created a situation for you?
1. Equipment failure
On projects in the past, we’ve had the local council cut through power lines while doing work digging up the road outside one of our locations.
We’ve had internet outages. We’ve had component failure. And once one of my colleagues had their laptop stolen from out of the back of their car – not exactly a failure, but it caused the same kind of situation. If you’ve ever lost a piece of tech you’ll know the headache that comes with getting a new one and all the governance paperwork to fill in too.
What risks could you have on your project around equipment failure?
2. Planning errors
Incorrect estimates, incorrect assumptions… these all lead to the potential for your plans to be wrong.
Even missing out someone’s annual leave or scheduling over a bank holiday because you didn’t have it on your calendar can cause a delay.
You might have risks related to the accuracy of your planning and scheduling.
3. People problems
A lot of project risks are created by people! For example, in one situation I heard of, a project team hired the wrong person for the job. The candidate said they could do the work, it sounded like they could do the work and when they showed up, they couldn’t.
Other risks could be the risk of someone not turning up (as has just happened in our house with contractors due to fit the new floor), refusing to do the work, changing their daily rate or is otherwise demonstrating difficult behaviour.
Even if you can resolve the problem, sorting out challenges like this takes time and energy, and often we don’t have much of that on projects.
What people-related risks can you foresee on your project, and what can you do about them?
4. Watermelon projects
Another risk is that people don’t report the true status to you so you end up with a watermelon project: green on the outside and red in the middle.
You can deal with that risk by making sure you have processes for adequate reporting and are able to understand the current situation. If you don’t have visibility, you can’t control the project.
Could one or more strands of your project be at risk of going watermelon?
5. Miscommunication
Finally – and this can happen on any project – miscommunication. Team members do things wrong because they don’t understand or they haven’t had complete instructions.
In theory, this one should be easy enough to resolve, so much so that you might not even think it is worth putting on the risk register at all. However, if you work with a cross-cultural team, different time zones or remote teams then it is probably a higher risk factor for you.
Would your project be at risk of communication challenges?
Posted on: August 16, 2023 08:00 AM |
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Comments (10)
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Luis Branco
CEO| Business Insight, Consultores de Gestão, Ldª
Carcavelos, Lisboa, Portugal
Dear Elizabeth
Very interesting the theme that brought to our reflection and debate
Thank you for sharing and for the risks you mentioned
Backups of information are supposed to be systematically made.
Today the cloud helps a lot in this process
It is possible and likely that this risk will happen.
What preventive actions could be considered?
Planning mistakes are very common.
That's why critical thinking, decision-making process and problem solving and the tools used are very important.
Is avoiding these mistakes and, above all, their implications a matter of culture or governance?
When recruitment and selection processes and the formation and/or integration into teams are poorly designed and/or poorly implemented, the most likely result is problems with people.
There are companies that, in their databases, have a list of possible people to carry out certain jobs
Should the Project Manager go to the gemba?
Does this practice minimize watermelon projects?
I am convinced that communication failures are the most frequent.
The main responsibility for these failures lies with the Project Manager (the issuer)
It is also a subject that has been studied a lot, as well as the most appropriate solutions to avoid these failures.
Thanks for sharing. This brief overview looks like a great starting point.
Epistemic risk is caused by reducible uncertainty and can be handled by taking CAPA.
Aleatory risk is caused by irreducible uncertainty and can be handled by having margins.
Sujit Supekar
Project Manager | PMP | Agile | Payment | Product Development| WorldLine
Mh, India
Thanks for sharing..
Watermelon Projects - Sometimes people don't even bother to ask or validate the true status of the project.
Reshma Rizvi
Scientific Project Manager| University Of Saskatchewn
Saskatoon, Saskatchewan, Canada
Thanks- - for highlighting the major types of risks.
As a Project Manager we have to be prepared and ready to address these.
Risks 2-5 are very Critical, Very Risky Risks.
AACE estimates contingency reserve using systemic risks project-specific events escalation.
Thanks for the recommendation of AACE.
Oala Rarua
Manager Geology and Exploration| Ok Tedi Mining Ltd
Papua New Guinea
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