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Optimize Resource Utilization Through Project Risk Management

FEATURE nov6thThose of us who have drunk the proverbial Kool-Aid don’t need to be sold on the benefits of project risk management. The challenge comes when we need to convince others, especially senior stakeholders such as project sponsors of the criticality of risk management practices.

If you are managing projects in a company which operates at a high degree of organizational project management maturity you might wonder why such marketing might be required. Your senior stakeholders likely possess the foresight and experience to understand the value of risk management, and if so, I envy you.

Unfortunately, most of us work for organizations where the perceived financial and behavioral costs of following consistent risk management practices outweigh the benefits. Usually these perceptions stem from one or more of the following causes:

  • A fundamental lack of understanding of the rationale behind project management and its benefits. If your leadership team thinks that the triple constraint is a new weight-loss gimmick and scope is something that a doctor uses during their annual physical exams, it’s little wonder that risk would be treated like a four-letter word.
  • The leadership team wears rose-colored glasses. Implementing risk management practices requires acknowledgement and transparency of uncertainties and their impacts to projects. In many organizations, project sponsors are simply unwilling to hear about what could go wrong. Some of them might be concerned that if negative risks are presented about their projects that it might provide governance committees with the “ammunition” needed to cancel these initiatives.
  • Fool me once, shame on you. Some organizations lose their appetite for risk management after experiencing the downsides of a poor implementation of risk management practices. As I wrote in a previous article, it is extremely difficult to secure commitment from stakeholders to participate in risk management activities, and it is very easy to lose this trust.
  • No pain, no gain. Organizations like most people rarely apply good practices until they have experienced the significant pains of not doing so. What’s interesting to note is that even those companies which have experienced catastrophic project failures are prone to search for scapegoats or to focus on short term Band-Aids to avoid similar future outcomes, but as time passes, these tactical measures are pushed aside and the organizations become ripe for more spectacular failures.

Based on these challenges an organizational risk management maturity model could be proposed:

  • Denial – Not only is risk management not practiced, but those who attempt to practice it are likely to be marginalized or discredited.
  • Lip service – Risk management practices exist! To clarify, project managers can point to the Managing Project Risks section within their project management methodology guide and might even be able to locate an out of date, highly generic risk register for their projects. Risk responses, when defined, are occasionally executed, but more often than not, project managers are like Cassandra – prophesizing issues with no one wishing to believe.
  • Light at the end of the tunnel – risk management gets consistently practiced across all projects, and there is an organization-level appreciation for its benefits, however project selection and prioritization decisions continue to be made without incorporating risk into the decision-making process.
  • Enlightenment – risk management is practiced at portfolio, program & project levels and the organization might even have staffed risk management consultants to help project teams reap the maximum rewards from risk management practices.

I’d previously felt that auto insurance might serve as an appropriate, familiar analogy to educate people on the merits of risk management. Since then I’ve witnessed too many stakeholders who wouldn’t dream of driving their cars without insurance coverage refuse to invest any effort in supporting risk management activities on the projects they are supposed to be championing.

Since most senior stakeholders are also people managers, an alternate approach might be to focus on explaining how risk management practices can reduce the project and operational impacts of reduced resource availability.

Without risk management, team members will spend a significant percentage of their time in troubleshooting and resolving issues which had not been previously identified or responded to as risks. As project estimates for resource utilization rarely include an allowance for issue resolution, time spent in firefighting will correspondingly reduce resource capacity for delivering agreed-to scope. While this results in an increased likelihood of missing timelines, it also reduces overall staff throughput.

Risk management (and project management as a whole) improves predictability of project outcomes, but positioning it as a means of reducing impacts to staff productivity might help to convert your senior stakeholders into believers.

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