Challenges In Project Risk Management: How To Overcome Them
Even the best laid plans can go wrong; there is never absolute certainty about the outcome of a project. Project risk management should be applied from the very beginning of a project for a variety of reasons. Every project is unique, even if they are undertaken by the same team, and have the same objectives. But what will work for one project, may fail miserably when applied to another. Project team members may find that all the elements that were working perfectly in synch together initially, are now suddenly completely at odds with each other. Project risk management addresses the issues that have the potential to prevent a project from achieving its objectives.
There is no common template when it comes to project risk management, but there are some common challenges. Research has shown that many projects fail because goals – both short- and long-term – have not been clearly defined. Another major barrier is the lack of communication, which sometimes causes poorly-defined goals. Project costs may be underestimated, leading to budget overruns and cash flow problems. Experts also point to poor risk management in projects, and unrealistic deadlines which further stunt project development. Project management teams may not have the right skills to cope with the demands of the project, and may feel overwhelmed, leading to a lack of accountability.
Faced with these formidable challenges, what should a project manager do? Project team members – not just the manager – should be constantly on the lookout for possible risks threatening the project. They can do this only if they are all on the same page, and clued in to what project risk management entails. One of the first things to do when the team is assembled, is to identify problems in project management through risk analysis. This means members need to thoroughly understand the project’s goals, and their own roles and responsibilities in relation to it. Communication is central to this; miscommunication is particularly dangerous for project teams because of the conflict it may cause.
Another “must-do” in project risk management is the setting of milestones to measure progress as the project moves towards the realisation of its objectives. This has multiple purposes, as it also helps the project manager keep track of project costs and deadlines, among other things. Regular team meetings are necessary to ensure that team members are up to speed. Despite keeping track of project costs and deadlines, estimating a project’s expenses is still a major challenge. Project managers may need the help of project management tools that will support decision-making through timely provision of information, thus helping the project avoid unanticipated expenses.
Keeping track of projects doesn’t guarantee deadlines will be met, however. Delays are normal, but project managers should apply careful monitoring and set project management key risk indicators so that the project can be quickly brought back on track. When it comes to project team members, careful selection is key. The project’s success depends on their skill – but every project manager knows that the necessary talents are not always available. Faced with this challenge, the project manager should, ideally, be able to match the organisation’s existing talent with the skills required, but if that is not possible, skills upgrades or retraining may be an option.
It takes a project manager with exceptional foresight and experience, to determine the competencies required, and assess the talent available, to properly fill project team positions. Similarly, the application of project risk management requires certain levels of professionalism and skill for it to be effective. Risk professionals dealing with projects are aware that the numerous elements of any project mean that the possibilities of risk are virtually unlimited. A suitable project risk management framework may be applied for this task but the project manager still has the unenviable task of drawing up alternative or contingency plans and mitigative measures for faltering projects.
When it comes to contingency plans, project managers can go through different scenarios that would have been documented in previous projects to determine how much to set aside to deal with such issues. A risk like a natural disaster may be unavoidable; or a workers’ strike may disrupt delivery of certain parts, delaying production. Project costs may be at risk in cases like these. A project manager can foresee such issues and set plans in place to mitigate them, investments can be repaid according to schedule or earlier, and profit margins maintained.
But it is also worth noting that not all risks that confront the project are negative. Some examples of risks which initially appear to have a negative impact, may have positive end results, such as staff in pivotal positions leaving in mid-project. If, for instance, all protocols have been followed, and team members are all up to speed and aware of their project risk management roles and responsibilities, it may not be difficult for other members to step in if one leaves. What then results is an expansion in the experience of the other team members, making them more valuable for future projects. It pays for project managers to involve everyone in project risk management plans from the beginning.
Input from as wide a range as possible, provides much-needed perspectives throughout the project life cycle. Project risk management includes risk assessment and mitigation; these have to be reviewed and revised throughout the project because it is continuously evolving. Understanding where risks could occur is therefore imperative to team members, who need to be clued in and up to speed on the latest project developments. Project risk management is therefore an ongoing activity, not a one-time action. Its successful implementation will determine how much value the project creates for the organisation.