Looking for ways to reduce deviations? The answer can be found in risk-based thinking. Risk management is one of the key knowledge areas that supports project managers for project success. The proactive nature of this project management helps project managers think and apply preventive measures that not only save on the cost of change but also save on schedules. The successful application of risk management has made this knowledge area an indispensable chapter not only in the PMI’s PMBOK Guides in all editions including the sixth edition but also in the latest quality management systems such as ISO 9001:2015, AS 9100 Rev D, etc.
Risk-based thinking in organizations enables organizations to determine the factors that could affect its processes, operations, projects and management systems such as quality and supply chain to deviate from the planned results. Moreover, this risk-based mindset puts preventive controls in place to minimize negative effects and make maximum use of opportunities as they arise. Then we can assert that the project success rate increases if the organization realizes this mindset and implement quality management systems?
My company recently completed the audit for AS 9100 quality management system, prepared by the International Aerospace Quality Group (IAQG). This system is designed “to ensure customer satisfaction, aviation, space, and defense organizations provide and continue to enhance, safe and reliable products and services that meet or exceed customer and applicable statutory and regulatory requirements” (ABCI Consultants, n.d.). During the implementation phase of this system in the last 1-5 years, the most stunning part was the focus on risk and opportunities, especially mentioned from the following perspectives:
- Product safety (whether the product is designed or used without causing an unacceptable risk of harm to persons or damage to property).
- Customer focus (the risks and opportunities that can affect the conformity of products and services which may result in customer satisfaction/dissatisfaction).
- Leadership (promoting the use of risk-based thinking).
- Operational risks (the organization is expected to plan, implement, and control a process for managing operational risks to the achievement of applicable requirements).
As risk-based thinking has emerged and spread throughout the organization, this mindset has strongly supported risk management in projects. Proactive measures have decreased the cost of change and increased compliance with due dates as well as compliance with scope. In summary, the success rate of projects has increased.
Risk-based thinking has also triggered an opportunistic perspective in employees. Organizations have supported the efforts to identify possible opportunities in an uncertain environment, and unexpected benefits have started to arise as projects and programs are executed. This transformation in mindset has already begun to show up in the financial performance of companies.
We cannot get rid of the uncertainty; it is the nature of our life, but we can reduce deviations. Healthy organizations are the ones who have come to terms with this reality and let their human talents act based on this reality. Risk-based thinking will boost your performance in this increasingly complex and uncertain environment.
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 at PMI Global Congress and various international seminars. Mustafa writes about program management and risk management.