Companies are now more dependent on their ability to complete projects successfully than ever before, to the extent that project management is a strategic tool for company survival. Project managers are under ever greater pressure to deliver. Also under pressure are their bosses, typically the I.T. Directors, Finance Directors or (in some cases) the Managing Director. They all know that projects that come in late and over budget affect the whole company, not just the I.T. department. But successful projects are possible, if you use the right approach. I believe part of that approach is to use project risk management more than you do now. Here’s why.
Although your plan should list all of the activities that you need to complete, the reality is that all too often extra project tasks are only discovered once your project is well under way. But is it only possible to spot potential threats once a project is in progress? In most cases the answer is no.
You can build a better plan if you complete a thorough risk analysis at the outset of your project. By spotting these “hidden” risks you’re on the right path to success. Monitoring against risks is so much easier when you know what you should be looking out for.
Reduced cost overruns
Once you have revised your plan to include your mitigation activities you are still in danger. Your new plan is no guarantee that things won’t go wrong. If you don’t have an alternative approach ready to go when you need it then you’ll have to invent one. The chances are that this will be right at the moment when you least have time to do so.
A better approach is to develop a series of contingency plans. You’ll avoid going into delay while you come up with a “Plan B” and you’ll have the funds available. My view is that it’s better for you to have a plan that you don’t need than need a plan that you don’t have.
Better Return on Investment
Risk management provides the means by which companies can ensure a positive return on investment. By avoiding late delivery your project repays its investment earlier, profit margins are preserved and the full business benefits are achieved as expected. Any unused contingency funds can be used elsewhere. This may make the difference to the survival of other projects, which in turn means additional returns begin to flow.
In an increasingly complex world projects are becoming harder and harder to deliver. Project risk management offers you a means of not only reducing delays, slashing costs and increasing returns; it opens up new opportunities to transform your organisation’s fortunes.
“Why Risk Management?” © 2010 Bryan Barrow