Project Risk Management 101

October 26, 2010

Risk is a future event that may have an impact on schedule, cost or scope.  It may happen or it may not.

Image Courtesy: Open Security Architecture

While Issue is a condition or problem already occurred (or will occur for sure) that impacts schedule, cost or scope.

When Risk is realized, it becomes an issue.  It should be handled accordingly using the money set aside called Management Reserve.  A governance process is usually established to authorize the use of Management Reserve.

Risk and Issues are recorded into Risk and Issue Logs (sometimes Excel spreadsheets).  Risks are identified prior to project startup and through out the project life-cycle.  Risks are communicated to Stakeholders.  Risks when recorded should be worded such that sentences are complete and specific identifying area of impact with its  probability. Issues are prioritized and assigned.  Assigned person develops the action plan to resolve the issue.

Risk must always be assigned to someone, with a target resolution date.  Assigned person has responsibility to provide mitigation/contingency plans on how to handle Risk, if it realizes.

Severity  determines how to react to the Risk.  It can be calculated:
Severity = Probability of occurring Risk x Impact on the Project
Probability and Impact are measured in High, Medium and Low.

Mitigation plan is proactive approach; it is focused on how to mitigate or reduce the severity.  You need mitigation plan for any risk that has severity either medium or high.

Contingency plan is relative approach; it is set of predefined/contingent actions that team will take if Risk event occurs.  For any risk with high severity, you must provide contingency plan.

Four ways to handle Risks – Watch, Accept, Transfer and Mitigate.

  1. Watch – Just keep an eye (monitor regularly) the Risk but no action.
  2. Accept – Accepting the full impact  and plan accordingly
  3. Transfer – Divert the impact to another party
  4. Mitigate – Plan on how can the impact be lessened on project

Action Plan is a plan of documented actions developed in order to resolve an issue that is adversely impacting the project.  Action steps should be clear and identify outcome and deliverables from the action.

Project Manager‘s responsibility is to review the feasibility of mitigation, contingency and action plans.  Then approval is sought for the plan from governance board and then communicated to the stakeholders.  Project work plan is updated to reflect these approved risk management related changes.

Closing Risk is little tricky, mostly when risk is realized it becomes issue and risk is appropriately closed.  You need to check if this risk could re-occur?  If yes, then keep risk open and review budget for management reserve amount.  Closing issue needs confirmation that issue is resolved.  A sign-off note from customer or impacted stakeholder is also required.

Note – These are some key points that I captured sometime ago during Risk Management Refresher, hope it will help

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How to spot opportunities or future trends

October 24, 2010

An idea or application of it to improve any process or thing is innovation. To innovate is through trial and error way. As a leader and manager, you have to innovate or else wilt.

I watched on YouTube Jeremy Gutsche, an excellent speaker on innovation and future trends. “Failure is experimentation.”, says Jermy Gutsche. A decent proportion of your creativity must fail; because id you don’t fail you become the best. He gives example of Smith Corona, a typewriter company that failed to innovate with the trend and is now obsolete after staying on the top for many years.

He further clarifies that successful organizations innovate to ‘optimize’ position on their hill of opportunity, but to later discover bigger hills of opportunities that it failed to envision. According to him the real problem being good keeps you on your hill of opportunity and stops you from seeing new ones. In order to see future big hills of opportunities, one must not fear of experimentation or failure in this process.

He also talks about how to package the message or product.  Example he uses is of Josh Bell who plays $3.5 million Stradivarius violin earning $1,000 per minute during concerts, and when performing at a railway station earns $35 only.  Jermy suggests to find out what specifically are we trying to do and describe in 7 words or less.  And  these should be simple, direct and supercharged.  You will certainly enjoy the talk and will learn from it.

How to spot opportunities or future trends?  I must say through innovation.  And innovation will happen through lots os  experimentation to improve processes, efficiency, productivity, quality, market share and human thinking.

For more info on Jermy and his work, please visit http://www.jeremygutsche.com  or http://www.trendhunter.com/


Focus on Outcome and Invest in Process

October 19, 2010

“What do you have to get in order to be happy?” is the question Dr. Srikumar asks.

I found this talk on TED where he asks to plug into our hard-wired happiness.  We spend most of our lives learning to be unhappy, even as we strive for happiness. The way we learn to be unhappy is because we buy into a mental model.  When we accept the universe as it is at that moment happiness occurs.  Listen to the talk where he answers the question that he use to open his speech. Dr. Srikumar stresses to focus on outcome and invest in process and not the vice versa which is prevalent.

Some time ago I read Dr. Srikumar S Rao’s ‘Are you ready to succeed?’.  It was one of the best book that had big impact on my thinking and living. I think you will enjoy it.

Here is the complete speech on TED : http://www.ted.com/talks/srikumar_rao_plug_into_your_hard_wired_happiness.html


Bill Clinton Says Project Managers Help Tackle Global Challenges – Voices on Project Management

October 13, 2010

Former U.S. president Bill Clinton sent out a powerful message: Project managers will play a significant role in taking on the toughest global challenges.

Bill Clinton Says Project Managers Help Tackle Global Challenges – Voices on Project Management.


U.S. CIO Vivek Kundra Says Process Continues to Trump Outcomes – Voices on Project Management

October 13, 2010

U.S. CIO Vivek Kundra Says Process Continues to Trump Outcomes – Voices on Project Management.


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