Tuesday, 02 October 2018 07:32

The Project Manager’s personal risk dilemma

Written by

Have you ever found yourself in the situation where you’ve been handed a project, and after the initial warm glow of personal pride has subsided, you wake up to the realization that you’ve been handed a potentially poisoned chalice?

Somehow the executive and/or the stakeholders have got the idea that despite the obvious flaws and mutually exclusive objectives, you can pull it off!

These conflicting objectives can arise from many sources including:

  • Unrealistic time and/or cost expectations;
  • Minimal or ambiguous scope and requirements;
  • Exaggerated expectations of the project benefits; and
  • Unresolved stakeholder, regulatory, organizational or political issues.

And if the project involves major procurement, the conflicting objectives can extend to unrealistic expectations in:

  • seeking a lump sum tender price with little scope description or incomplete investigations; and/or
  • anticipating a tender price that will come in below a poorly conceived budget estimate; and/or
  • shifting all the risk to the appointed contractor; and/or
  • expecting a highly competitive price when the contract risk environment is very high.

In accepting a project with one or more of these conflicts, you are effectively accepting personal risk that rightly should have already been squared away with the project owner….. and you will almost certainly accept the project despite these conflicts!

Most project managers carry a healthy optimism bias, or else they wouldn’t be project managers! [For more on optimism bias, read author Tali Sharot].


Advertisement

So how is it that these risks and conflicts have been palmed off to you, rather than residing with the project owner/sponsor or executive? The answer probably includes one or more of:

  • they are more streetwise than you;
  • they are individually or collectively ill-informed;
  • they don’t understand the nuances of the project;
  • they find it inconvenient to acknowledge the risks.

Of course, if the project is successful, the executive will share the credit for that success with you. But if the project is unsuccessful........?

Paraphrasing the Abrahamson principle: “the party most able to manage and control a risk should also bear that risk”.

So, knowing that you have accepted the project despite the potential risks, I suggest you take a deep breath, step back, and consider the context and background that led to the creation of the project. Take time to understand the politics of the project and the personal agendas of the key players. Then I suggest that you carefully develop and gain approval for the classic project management planning outputs. These early deliverables should include:

  • Thorough documentation of the project context, the corporate project objectives that are being addressed, the agreed project objectives, and the expected outcomes and benefits;
  • A review of the Business Case (hopefully there is one!) to ensure that the backroom guys that created it have not crafted unrealistic cost estimates, budgets, expectations and benefits, that will come back to haunt you;
  • A project risk analysis that properly identifies the key risks, the real consequences of failure, the practical control measures, and proposed mitigation actions, and most importantly, the risk owners;
  • A risk register that is not just an end in itself, (an enormous spreadsheet of relatively inconsequential risks and meaningless scores), but the dynamic means of sheeting home key risk accountability, [read Douglas W Hubbard];
  • A Project Development Plan, or similar, that highlights the key risks, identifies the risk owners, and what steps are being actively taken to mitigate those risks, including thorough documentation of the accountabilities, roles, and responsibilities of all the identified players in the project, including the owner, sponsor, executive and stakeholders;
  • The agreed process for the sign-off of each project stage, and escalation when things go wrong;
  • A Procurement Plan that actively addresses any key risks that impact procurement, and the real controls and practices that are proposed to mitigate those risks;
  • A Stakeholder Management Plan that identifies key internal and external stakeholders, the constituency and issues they represent, their impact on the project, and the form of engagement that is proposed for each;
  • A key stakeholder value “contract” that sets out their value for money expectations, agreed project outcomes in terms of success, assessed value for money, assessed benefits realization, and acknowledgment of the inherent risks of pursuing these outcomes; and
  • Most importantly, formal sign-off and registering of each of these documents.

It’s important to remember that the PM’s role is to deliver the project successfully, and not to invent project content or make arbitrary scoping and specification decisions. Accountability and decisions regarding the governance framework, project funding, scope, and specifications are the sole responsibility of the sponsoring organization.

You may have to assist the project sponsor to develop an effective project governance framework, identifying the ultimate accountability chain, and the key corporate players who have legitimate accountability for funding, scoping, legal support, communication, and technical compliance.

While undertaking these important preliminary steps, you may be pressured to “get on with something useful”, or “get something we can see on the ground”, or “start spending the budget before the end of the year”, or something similar.

Please take another deep breath, (even while possibly starting some project delivery actions in parallel), and ensure that you have adequately secured the project planning documentation and covered off all the key risks and accountabilities.

Read 3081 times
Paul Taplin

As Director of Utilibiz, Paul has been actively involved in strategic project and procurement planning and the pioneering development of collaborative contracts with infrastructure owners, including Project Alliances, Program Alliances, Early Contractor Involvement (ECI) contracts, Long Term Service Arrangements and a range of customised hybrids.
Email paul.taplin@utilibiz.com.au

© ProjectTimes.com 2017

macgregor logo white web