Risk Management Process - A Practical and Effective Approach

It is said that a strong risk management process can decrease problems on a project by as much as 80 or 90 percent. In combination with solid project management practices having a well-defined scope, incorporating input from the appropriate stakeholders, following a good change management process, and keeping open the lines of communication a good risk management process is critical in cutting down on surprises, or unexpected project risks. Today, one cannot deny from the fact that such risk management process can help in problem resolution.

However, there are certain steps whose absence can affect project risk management process. Here are seven-step risk management processes that can be effectively utilized to accomplish desired project result.

Step 1: Each person involved in the planning process individually list at least ten potential risk items. Often with this step, team members will assume that certain project risks are already known, and therefore do not need to be listed. For example, scope creep is a typical problem on most projects. Yet it still must be listed because even with the best practice management processes in place, it could still occur and cause problems on a project over time. Therefore it should be addressed rather than ignored.

Step 2: Collect the lists of project risks and compile them into a single list with the duplicates removed.

Step 3: Assess the probability, the consequence and the detect-ability of each item on the master list. This can be done by assigning each item on the list a numerical rating such as on a scale from 1 to 4 or a subjective term such as high, medium, or low. Detect-ability is optional, but it can be simple to assess if a risk is harder to see, such as with scope creep, then it's a riskier item. If it's easier to catch early, such as loss of management support or loss of a key resource, then it's lower risk.

Step 4: Break the planning team into subgroups and to give a portion of the master list to each subgroup. Each subgroup can then identify the triggers warning signs for its assigned list of project risks.

Step 5: Subgroups must be able to identify possible preventive actions for the threats and enhancement actions for the opportunities.

Step 6: At this stage the subgroups must create a contingency plan that should includes the actions one would take if a trigger or a risk were to occur. This plan has to be created for those risks scoring above a certain cut-off point, which are determined after looking at the total scores for all risks.

Step 7: Determine the owner of each risk on the list. The owner is the person who is responsible for watching out for triggers and then for responding appropriately if the triggers do in fact occur by implementing the pre-approved and now established contingency plan. Often, the owner of the risk is the project manager, but it is always in the best interest of the project for all team members to watch for triggers while working on the project.

Often, the steps in which triggers and preventive actions are identified are overlooked. However, these are vital to the entire risk management process. After a team has completed this exercise once, the members will be better conditioned on what to pay attention to while managing the project so they are more proactive in catching changes or issues early. If these steps in the risk management process are skipped, the team can find themselves in constant reaction mode, simply implementing a contingency plan for each risk after that risk catches them by surprise.

A risk management process does not have to be complicated or time consuming to be effective. By following a simple, tested, and proven approach that involves seven steps taken at the beginning of each project the project team can prepare itself for whatever may occur.

Transparent Project Management

Building effective partnership is closely connected with one of the basic and well known rules of business: you should learn what your clients really need (or help them determine their need) – and do your best to follow their interests and expectations when offering them corresponding products or services. Of course, understanding your customers is of vital significance at the stage of pre project negotiations. But aren't we often loosing this perspective once the deal gets to the implementation phase? The key requirements remain essentially the same: you should be able to listen to your vis-􀀂-vis and really understand them, as well as to be open and responsive when you have already started co-operating.Thus, the magic word of constructive communication between service provider and customer is TRANSPARENCY. So, what does transparency actually mean in terms of modern project management? 1. Tasks setting and estimation (a) Clear scope: correspondence to Company's skills and competencies (b) Structure: hierarchy and links (c) Timeline: fixed, realistic, but flexible – within evaluated amount of work hours (according to risk estimation) 2. Completeness and wholeness (a) The complete project management process includes post-project support and analysis – as well as updates or debugging, if necessary. (b) Wholeness means that the project has no “black holes” Avoid gathering all documents and data in a stressful manner on the stage of the final report (unfortunately it still often happens so in practice). In the perfect case scenario your communication program will save all the project communication for you, so that it is all documented on the spot and you can trace it easily. 3. Visibility of all project activities Meaning that for knowing what page you are on, a project manager should see and control the tasks progress as well as the group (or an individual participant) progress. 4. Daily / weekly project reports for each task Let's imagine the usual situation: you set the project plan, and defined the milestones and assigned the tasks within the project team. Now, you can wait for the interim reports.or ask about the progress every day. Or you can start using the system, where all project participants have to report their job every day, and where you can track the progress daily. The last option is the way to go. The issue of progress and efficiency tracking we emphasize as especially important for the project transparency. 5. Efficiency and workload tracking per each project participant Those help you determine if you need additional resources for each particular task, or if you could re-allocate some project participants to different tasks. Efficiency tracking also let's a manager see if project participants are on track with the tasks assigned, and if the project time-line is observed. 6.Openness. It is the real result of all transparency-oriented measures. Frank and as a result cooperative project atmosphere could be named one of the key factors for effective and constructive team work. It makes real value for topexecutives and managers in charge at the customer side. Discussed components are of even greater significance in the case of big projects, where participation of several teams (and remote coordination of their work) is expected.

Importance of project management

Why is project management important and what awesome power exists with project management in today’s business environment? The first reasons that come to my mind about why project management is important are tighter budgets, diminishing resources, more and more time constraints, and competition to improve the ways we do business. Project management is applicable to many industries and organizations. Some key industries that use project management include: telecommunication, construction, information technology, software development, banking, manufacturing, professional engineering and architecture, computers, etc. Project management is very important in today’s business environment when one considers the consequences of the absence of good project management. Here are some of the consequences that can be experienced with the lack of or poor project management: missed deadlines, cost overruns, poor workmanship, conflicts among team members, redoing work to correct errors, unclear directions for the project, continuous changes in project scope, forgotten key tasks, poor morale of team, duplication of effort, etc. Because of these potential consequences, project management is critical to a project’s success. Today, one cannot deny from the fact that an effective project management can help in meeting or exceding customer expectations, maximize the use of your resources (time, people, money, space, etc.). Looking at the current prospective, one can actually bring the project to a successful conclusion on time and within budget and build confidence in his or her team for future projects.