The Project Notebook

Sources of Risk

[Note: Over the next few weeks, I’m going to focus on project risk.]

Growing up, I knew life was a risky business. In the early cartoons and comedies I watched, safes and pianos fell on hapless victims. Perhaps the most memorable though were the Road Runner cartoons where disaster befell Wile E. (Ethelbert) Coyote at every turn. Road Runner avoided precariously balanced boulders which always fell on Coyote. Then there were the numerous Acme product failures where rocket skates and simple bombs malfunctioned at the expense of the Coyote.

Our projects face many sources of risk too. Here are just a few:

Risks External to Projects:

  • Legislative
  • Legal (patents and lawsuits)
  • Changes in technology (does your software project need to support Windows Vista?)
  • Natural hazards and conditions (have you seen the latest volcano news?)
  • Environmental (does a protected or rare species lie in your freeway path?)
  • Corporate policy and procedural changes

Risks Internal to Projects

  • Client driven scope changes
  • Out of balance cost, schedule, or quality
  • Unplanned for events and change
  • Project selection (did we pick the best project to work on now?)
  • Resource issues
  • Design (did we specify something we can’t build?)

And on top of it all, there are those unknown unknowns — the things we never would have thought to identify and plan for. With all these sources, how can we make sure we capture all the possibilities? There are a few simple things to think through and do at the start of any project:

  1. Who are our stakeholders, including supporters and detractors? What is their influence?
  2. Are there steps we should add to the project to ensure success? For example, a feasibility study or expert review.
  3. Do we have a plan in place to manage scope and change effectively?
  4. Brainstorm the risk possibilities to determine main internal and external risk sources.
  5. Consult experts and those who monitor external conditions to determine risk (what’s the likelihood of rain during our construction project? will a new operating system derail our software project?).
  6. Examine risk sensibly (a process commensurate with the levels and impacts of risk) and statistically (did you know air travel is safer than travel by car?).

Next week we’ll take a look at a simple and sensible risk management process to steer your project clear of those pianos and safes! In the meantime, please come back and visit often — during September I’ll be announcing the plan to give away a complete PMP Exam Prep kit.

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© 2010-2012 Ray W. Frohnhoefer, MBA, PMP, CCP