Many project managers are simply thrown into their work or the rapid start of a project before they have a chance to have a moment to consider what the project looks like from a risk perspective. One of the best things that a PM can do for his/herself is to take inventory of the early-stage project risk components and project outlook from a risk management perspective. Doing this will help in performing better planning and taking a steadier stance towards their efforts with risk management on the project. Let me explain and guide you through this simple pre-retrospective by looking at seven key risk components, including risk level, risk exposure, and risk tolerance (attitude), through a risk lens.
There are a lot of efforts made, early in the project planning and ensuring that we have a viable baseline for scope, time, and cost. A great portion of our efforts are devoted to building this strong foundation, which is then followed by filling our knowledge gaps with information from various sources such as procurement, human resources, quality, and overall resourcing, not to mention using stakeholder analysis and communication to ensure everyone is on board when we begin.
An additional activity should be to have a closer look at our project and how it looks from the perspective of risk management. We often jump right into planning at this stage and start with our risk management plan, tailoring then on to identification and having interviews, focus groups, or other sessions with our stakeholders to uncover potential risk events. Before you know it, the plan is approved, the risk register is ready to go, and we are executing or monitoring the risks as time goes by.
This next key step, I call pre-retrospective (By the way, that’s the term that I use not certain if it is widely known in the literature on project or risk management), is done as you gather information from lessons learned to feed into your knowledge of the project to come. This is where you will take the pulse of the organization and look at its preparedness for your project to be successful, considering the risks that might be involved. You are simply shifting your perspective to get a better view through a risk lens. I have seen some clients use this as part of their go/no go decision point at the start of a project with very little effort, expense, or complexity added to the whole process.
7 Early-stage Project Risk Components to Consider
It requires the PM, the sponsor, and the team to have a look at seven key reflection components with a set of risk lenses on. Let’s review them now:
1. The overall risk level of the project.
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- Not every project is created equally, and none are the same when it comes to overall risk levels. Some projects will generate a risk burden that is heavier for an organization than others. The question for this exercise is to find out if we actually have a clear understanding of the amount or types of risks involved. Only then can the overall risk level be quantified.
2. The strategic importance of the project.
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- Once we’ve figured out how much/how many, we need to look at the connectedness of these risks in terms of achieving the organization’s strategy. Do we have too many of these risks in the “pot” at the same time? What if a project on this list was to fail or not deliver as intended? What would be the impact?
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3. The risk tolerance (attitude) of the senior managers and other key stakeholders.
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- Our projects all impact different stakeholders at every level of the organization in different ways. Part of understanding the impact of the project is to also understand risk tolerance or the reaction or perspective of the stakeholders towards them. Risk tolerance often cannot be fixed easily but can provide us with a better view on which to make decisions.
4. The relative risk exposure of this and other projects in the organization.
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- How much more risk exposure can the organization extend itself by taking on this project with other projects already underway or coming down the pipe? Are the risk levels potentially putting the entire organization at risk or in danger? Risk exposure is a tricky balance of taking risks and keeping them at bay.
5. The degree of pressure to create a risk-balanced portfolio.
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- A lot of organizations have invested in a Portfolio Management structure to ensure that we are creating a balanced way of operating as well as delivering projects within the organization. It is important to strive to keep this all balanced, but some return on investment or other factors might push executives to make a decision that will upset that balance. Can the portfolio remain steady if more risks are added? Look at it through a risk lens.
6. The maturity and capability of the organization in managing risks.
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- We cannot forget to have a close look at our ability to deliver when risks are high or potentially determinantal to a project’s health. Is the organization capable, willing, and mature in its delivery system to support the risks involved? Have we done this work before, and are we familiar with what it will mean to get it done?
7. The availability of resources.
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- Finally, and not least, our discussion should be around having available to us the resources (that would be Resources with a big R: people, materials, facilities, money, time, etc.) needed to accomplish this project. Most of our focus is often on the personnel with the proper expertise to handle the situations generated by risks.
As you can see, this is not a large exercise to do, but it does put some perspective on the work to come. This exercise might make a team rethink the undertaking of a project at a specific time, for example, if others already underway are in critical shape. There is no lying here; we must be clear as our project and its successful completion involves us clearly understanding all the layers and connected pieces of the organization in and out of projects.
Some organizations use a Project Management Office (PMO) or even Portfolio Management to do this pre-retrospective as part of the selection process, while others without such a luxury or entity would need an experienced PM and his/her team to do this evaluation as early as possible in planning before too much effort, time or money have been spent. As I mentioned, some organizations use this and other benchmarking data as a go/no-go decision point, while others put it as part of a feasibility study that would precede a design or development phase. Regardless of where this is positioned, it should be thought of as a good means of getting those “spidey senses” aligned with the organization’s goals.
So, the next time you start a project, have a risk pre-retrospective and get your risk senses in order. Look at risk level, risk exposure, and risk tolerance (attitude) through a risk lens through a risk lens.
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