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Risk Management is Critical to the Success of a Project

We were working on a project that came to a screeching halt due to a two-week partial shutdown of the Federal Aviation Administration (FAA). FAA’s funding bill expired, causing 74K+ employees/contractors to stop work. While our team had no influence on whether the FAA would receive funding, we developed contingency plans, outlining actions we would take if the shutdown occurred. The plans kept us organized, allowing us to move forward with the project quickly, once the shutdown ended.

When managing a project, failure to establish clear risk management processes often leads to unexpected issues. According to the Project Management Institute (PMBOK, 2017), a risk is defined as an uncertain event that can have a positive or negative effect on project objectives. An issue is an event that has already happened and is negatively impacting project objectives. Issues can cause schedule delays, budget overruns, and loss of trust from stakeholders.

Project Managers play a key role in establishing risk management processes and must take a proactive approach. Risk management should be deep-rooted within project teams so potential problems can be identified before they occur, allowing the team to take actions to reduce the probability/impact of a risk to an acceptable level.

Five steps that a risk management process should include:

1. Identify Risks:

Document all possible project risks (e.g., technical, financial, etc.). Think worst case scenario! Accomplish this through brainstorming sessions with the project team and stakeholders; receiving input from Subject Matter Experts; and reviewing Lessons Learned from past projects.

2. Analyze Risks:

Determine the probability of the risk occurrence and the impact on the project schedule, cost, scope, and performance. Categorize risks so resources can be focused on the most critical first. Risks may be displayed on scorecards or heat maps to provide a visual for easier interpretation.

3. Develop Plans:

Mitigation plans outline the actions that will be taken to reduce the probability/impact of a risk. Contingency plans outline what will be done in response to the risk, should it occur. Clearly outline resources required to execute the plans.

4. Execute Plans:

Execute actions outlined in the mitigation plans; contingency plans are only executed if the risk turns into an issue.

5. Monitor/Track:

Identify an owner for monitoring/tracking each risk and issue. A risk/issue register should be routinely updated and made available to the project team for review/input. Communicate progress to stakeholders.

Don’t let unexpected issues derail your project! Risk management is an iterative process that should take place throughout the project life cycle.

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