Be careful! By attempting to read this article you’re taking a risk. Will it be worth the time you spend reading this article? Is it the first time you read this author’s article? How are you sure you’ll gain benefit from this article?
It’s for sure that we live in a world of unknowns. We’re aware of some of these unknowns, which we may call “known unknowns” whereas some of the unknowns are out of sight and called “unknown unknowns.” As our projects are kicked off, we start with these unknowns which may affect our projects’ success in a positive or negative way. That’s why to be able to manage unknowns is crucial for our project success which makes risk management one of the most important knowledge areas of project management.
Risks can be identified within the set of known unknowns. Identification of risks should be a continuous process throughout the project lifecycle since the uncertainty never ends. So if you do not gather your project team periodically just for the purpose of identifying new risks or eliminating risks that are no longer a threat to the project or that will not create an opportunity for the project, you are not managing risks.
Takeaway #1: Gather the team periodically to assess your risks in order to identify new ones and eliminate the ones that are out of date.
Having identified the risks to your project will help you to be proactive. You can prevent or decrease either the probability or the effect of the risks before they happen. This is important because the cost of change increases as the project progresses. Any risk event which happens at the end of the project will cause more damage to the project.
Take away #2: The time spent managing risks is worth it.
Try to eliminate the uncertainty That is; collect as much information as possible from various resources to increase the certainty level so, that you eliminate the surprises for the project. Yes, this would be great but very costly. But wouldn’t it be also costly to deal with all the risks being identified? Again yes, and moreover you’ll have limited time and resource and, hence you’ll not be able to deal with all the risks being identified. That’s why you’ll need a prioritization of risks and only spend time on the critical ones. As you decide on which risks are crucial for your project, determine the appropriate responses; that is, what to do with these risks in order to completely or partially eliminate either their probability or effect.
Take away #3: Decide on the critical risks and have response plans for them.
Managing the risks will help you to deal with the surprises as long as you know the unknowns. What about the unknown unknowns? You cannot take proactive action if you’re not even aware of the unknowns. A reserve – generally called management reserve – can be used for this type of unknown, and only top management may have the right to plan and use this reserve. Are all of these enough to deal with uncertainties?
Mustafa Hafizoglu, PMP, BS, M.Sc., is the co-founder and previous President of the PMI Chapter in Turkey, Program Director at Space & Defence Technologies Co., a part-time instructor at Middle East Technical University. He has 20 years of experience in hardware and software development projects, in the aerospace and defense industry. Mustafa established the PMO at SDT Space and Defense Tech and co-authored the book: Project Management Analytical Approaches. He’s also a speaker atPMI Global Congress and various international seminars. Mustafa writes about program management and risk management.