Now that you know what the risks are, what can you do about them? First, you analyze each risk associated with the project. Take all the internal risks, anything that could stand in the way of successfully completing the project(on time and under budget), and prioritize them. Which risks need the most attention because they could shut down the project completely? Consider these your top priorities — risks that, if not addressed, will spell disaster. Next, look at risks that can be monitored closely and managed with some adjustments. Finally, look at low-level risks that can easily be fixed, eliminated, or ignored with no impact on the overall project.
You will then need to respond in one of three manners, as discussed in the following sections.
Contingency Planning
Have plan B, your backup or contingency plan, in place just in case. Contingency planning is an important safeguard. It can range from a less favored, but perhaps more cost-effective, manner of handling a situation to a backup parachute, which can save the life of the project. The more critical a task or resource is to the outcome of the project, the more you need a backup plan.
If you are prepared with viable contingency plans, you will have already minimized the level of risk. In fact, you may even be able to take greater positive risks. One project manager, knowing that for a yearlong project he had a backup plan that would still keep the project under budget, got management’s permission and moved some surplus funding into a CD account. Thus, the funding actually grew during the duration of the project. This was a calculated risk, since he was earning money that had not been earmarked for a specific task or resource. If anything had gone wrong, he might have needed this surplus funding, but his plan B scenario did not utilize the extra funds.
Establish a backup plan for your team members should they become ill or leave the project. Even the President of the United States has a backup, in the form of the Vice President. Cross training your team will enable a current team member to fill in temporarily and keep the project moving.
No one is saying that you need to take such risks. Risk management does not necessarily mean that you have to make proactive decisions in favor of the project. Just be aware that being closed to innovative ideas may limit your opportunity for growth.
Of course, there are also contingency plans that are not simply another way of reaching your project’s goal, but are a way of saving anything from a project to a life. Plans that you hope you’ll never need must be in place for the safety of individuals first, and the project second. These types of plans aren’t usually specific to the typical business or personal project, however. Often, such emergency procedures are already in place, in the form of smoke detectors or alarm systems. Unless you are working with chemicals or dangerous materials, such emergency situations are usually outside of the project scope. The larger safety plan of the environment in which you are working (i.e., the office building, school, community center, etc.) already has procedures for dealing with emergencies.
Risk Mitigation
When you act in advance — spend the time and money to implement methods of reducing or eliminating the risk ahead of time — you’re mitigating risk. This approach requires you to make a judgment call based on the probability that a risk will interfere with the success of the project. Much of the feasibility study, used when you started the project, touches upon risk management or potential risk management. You don’t want to start a project that isn’t cost effective, nor do you want to start one that is too high risk, unless you have ways of managing that risk.
Sometimes, a degree of risk mitigation is built into the plans by outside forces — such as registering your project with a particular governmental body or taking safety precautions as mandated by government or policy makers. Risk mitigation that comes under your jurisdiction is similar, only you have to make the decisions. How prevalent is the risk? What would happen in the worst-case scenario? Loss of money? Loss of time? Loss of manpower? Before starting out on the project, perhaps you need to settle a labor dispute to avoid a slowdown or work stoppage. You might have to scale down an aspect of the project to mitigate a high-level risk. You will then need to address this mitigation to see the potential effect on various other aspects of the project, as well as on the project overall. Make sure that:
- Other tasks are not adversely affected by mitigating a risk in one area
- The project is still cost effective
- The project will still produce the same quality results
If a potential risk is discovered after the project has already begun, you can still mitigate that risk. Once again, you will have to look at other areas of the project.
Risk Monitoring
To monitor risks effectively, you must have an adequate system of tracking the probability of a risk occurring, based on reevaluating that probability at various times throughout the project. A long-lasting or complex project will obviously require more monitoring. If there is a delay in starting the project, this will also mean you will need to monitor the project more closely once it gets started. Often, project managers are forced to put a project on hold. They then start it later than expected, changing the due dates, but do not take into account all the added risks that may exist because of the change in starting date. From personnel no longer being able to meet the necessary time commitment to changes in policy or government regulations, risks have to be reevaluated every time a project is delayed.
Monitoring also means knowing when you can accept a level of variance from your original plan. Remember, you should anticipate variance from the start, since very little, if anything, in your original plan is set in stone. Costs, labor hours, and numerous other factors will probably not be the same as what you anticipated in your original plan. As you monitor the project, ask yourself what level of variance is acceptable and what variance between the intended and the actual numbers shows high risk for potential problems. You’ll need to make this determination carefully and then act or not. If, for instance, you are looking at the date by which deliverables are due, you need to determine whether or not you can afford a delay from the standpoint of time and money. If you cannot afford such a delay, you may need to pay more money to get the deliverables in your hands on time. Monitoring will keep you abreast of this situation so you can best prepare. A poorly monitored project is in danger of undetected risks that may present you with many unwelcome surprises. (See Chapter 13 for much more on monitoring.)
If you worried about every risk in life, you would probably never leave the house, and certainly not start a project. Risk is inherent in everything. Every time you take on a project, you risk failure. Therefore, it is important not to dwell on risk to the point of being immobilized.
If you had a dollar for every time someone managing a project said, “I don’t even want to think about that,” you’d be richer than Bill Gates. Most people don’t want to face potentially negative risks. This is true in many aspects of life. We’ve all sidestepped a problem by pretending it wasn’t there, but failure to address an issue regarding your project won’t make it go away. You must be realistic about potential problems. Of course, on the other hand, if you focus on every little risk, you’ll never start the project. You must be ready to take some risks to begin the project. The bottom line is that you need to address all risks and weigh them — not ignore them — then decide what actions you’ll take next.
