| Most Project Managers know that it's essential to | | | | for more staff? |
| manage risks to their project, but not everyone is | | | | Mitigation |
| sure what constitutes a risk rather than an issue, nor | | | | Now we need to look at what we can do as a |
| how to effectively manage them. | | | | Project Manager to minimize both the probability that |
| Let's start with a definition first - what's the | | | | this risk will occur, as well as the impact to the |
| difference between an Issue and a Risk? | | | | project should the risk eventuate. |
| I have a fairly simple test I use - Do I have direct | | | | In the case above, we had mitigation strategies in |
| control over this problem? If I do have some control | | | | place both to minimize the likelihood of the risk |
| or influence, I class it as an issue - something that I | | | | eventuating, as well as minimizing the impact to the |
| can manage. | | | | project. |
| A risk on the other hand is something I have little | | | | To minimize the probability, we worked closely with |
| control over, all I can do is limit the impact to the | | | | the company lawyers to ensure that our assumptions |
| project. | | | | were well thought out, and, to the best of our |
| Let's take a real life example. | | | | knowledge, sound. We also worked with external |
| As Project Manager on a project to implement a | | | | lawyers, who lobbied the government on our behalf |
| new tax (a goods and services tax), due to the | | | | to clarify the legislation consistent with our |
| complexities involved, we were basically upgrading | | | | assumptions. We also raised queries directly with the |
| our systems to support the new tax whilst the | | | | people drafting the legislation, and advised them of |
| Legislation was being finalized. | | | | our interpretation of the law. |
| This project was in the financial services area, so the | | | | To minimize the impact we also lobbied the |
| legislation around the taxes on financial instruments | | | | government to consider allowing a transition period |
| was quite complex, and, even at a late stage, not | | | | for complex financial instruments, whilst at the same |
| fully fleshed out. | | | | time ensuring that our project was structured such |
| We were therefore in a position of having to | | | | that some parts could be implemented whilst others |
| proceed based on some well thought out | | | | were held back. |
| assumptions. | | | | Not all projects will face risks of this magnitude, |
| The problem was - what if the final legislation was | | | | however it is essential that all risks to a project be |
| different to our assumptions? | | | | identified at the start of a project, and be closely |
| I treated this problem as a Project Risk. I had little | | | | monitored throughout the project. Risk management |
| influence over the people drafting the legislation, and | | | | should be included in all status reporting, even at the |
| therefore the outcome was a risk to the project. | | | | Executive level, as, by definition, these are potential |
| With any Risk, you need to look at two key factors. | | | | issues which you, as Project Manager, cannot control. |
| Probability & Impact | | | | You can however, mitigate them. |
| The first factor is the probability that the risk will | | | | A simple way to include Risk reporting in your status |
| eventuate. How likely is it that the risk will occur? | | | | reports is to include a small table which basically lists, |
| The second factor is the impact to the project. If | | | | for each risk, the probability (ranked High, Medium or |
| the risk does eventuate, what will this do to the | | | | Low), the Impact (ranked the same) and then your |
| project? Will it mean a delay, a cost overrun, a need | | | | plans to mitigate both the probability and impact. |