Are you still making these risk management mistakes?
AirBus was the host of the event on 30 January 2019, which was focused on risk management and common mistakes that project managers make.
Our speaker, Bryan Barrow, has 20 years of experience working with teams that are struggling to deliver their projects and realise benefits.
Bryan started off with the story of Buddy, a dedicated project manager who would do everything to get his project back on track, including the endless black coffee and red bull diet, but is still running around like a headless chicken. He is in firefighting mode, trying to manage the consequences as risk after risk becomes reality.
As project managers we aim to keep within the target budget for time and cost, but reality is that cost and time targets are too often exceeded when risks knock us off course. So, what can we do to manage risk better?
Bryan cautioned against treating failed projects as the result of a ‘black swan’ event. These were described by author Nicholas Taleb as rare events, having low probability, extreme impact, and retrospective predictability. IT projects have an average overrun of 70%, and a cost overrun of 20%, and 17% of projects has a 200% cost overrun. On that basis they could seldom be called black swan events?
In Bryan’s view projects with the following three factors were almost guaranteed to fail. The first was poor planning, the second poor stakeholder management and the third poor risk management.
Top 10 mistakes include:
1. Not involving your team in risk management. Teams are much better at identifying risks as they can offer a more diverse perspective.
2. Ignoring the people risks! Stakeholder management is essential, and will identify many key risks. Are the end users trained and ready for change?
3. Assuming that worse cannot happen. Be wary of optimism bias.
4. Not identifying specific risks: if, then, what. Use clear language.
5. No contingency planning. Always have a plan B thought through before you need it.
6. Mistaking risks for issues. Managing risk will reduce the number of issues.
7. Not looking for new risks throughout the project. Risk management is not done once, it is an ongoing process and should be an integral part of project management.
Publicity Mistakes - Communication
8. Not publicising risk to stakeholders. Decision makers need to be fully aware of risk to make robust decisions, including whether to proceed with a project in the first place.
9. Excluding partners from risk reviews. 3rd part suppliers should be included and risks shared. A joint approach to risk management is needed for the supply chain to ensure all risk is managed.
10. Not having any risk management plans
The audience was challenged to think about their own projects and which mistakes they recognised.
Failure is infectious! Poor risk management spreads, it can cause knock on effects across an organisation’s portfolio of projects. It one project is failing, is late, is over budget, needs more resource to manage, then there is less money and resources to manage the other projects, which can result in them running into problems, or having to be cut or delayed.
It is important to identify bad apples early and throw them away. Projects which are not going to succeed, because risk cannot be managed and there is insufficient funding to manage risk should be stopped. It is important to ask whether a project is worth continuing, do the benefits justify the cost. Bryan uses a rule of 2: if a project costs twice as much, takes twice as long and only delivered half the benefits – is it worth continuing?
Good planning is essential to get a project off on the right track, to plan for success. Involving the stakeholders in planning is important to get a wide range of views and to get buy in and understanding. Bryan recommends a collaborative approach to planning with index cards. This approach allows the key subject matter experts to work together to create a joint plan based on a shared understanding of the project’s goal. Bryan facilitates workshops where it takes just 3-4 hours to create a detailed plan. This product-based plan is an ideal basis for identifying risks, particularly schedule, scope and resource risks.
Where possible risks should be quantified with real numbers, such as 10%, 50%, 90% probability, rather than L, M, H. Real numbers are easier to relate to for the team and decision makers.
Plan B, contingency plans, are essential to plan mitigation action in detail. If a risk happens, the team and stakeholders know what will be done and how much it will cost.
Planning allows robust decision making based on a full understanding of the project and the risks. Funding for risk, and how it will be accessed can be agreed at the start, which will minimise any delays during the project if risks materialise and enable them to be promptly managed.
In summary, risk management is an essential part of project management that should be fully integrated throughout the project life cycle. Understanding the common mistakes made will help ensure risk management is fully integrated and reduce the chance of project failure.
Bryan is very keen to promote good practice in project and risk management. This Link will take you to his web site where you can access more resources.
The presentation is also available on the APM Slideshare page.
SWWE branch Chairman