Project Management (PM) generally covers the management of the tools and resources, including talent, skills, techniques and knowledge, that a project requires. It involves the planning and management of all matters relating to the project in order that the project is successfully completed, or attains its stated objectives. Project managers usually look at the initiation, planning, execution and closure of a project, which will involve the management of resources such as budgeting, coordination of the project execution team, and the dissemination of information of the various aspects of the project as they develop, to the various stakeholder groups.
Project Risk Management (PRM), on the other hand, is the process applied by project managers when they need to manage the risks associated with the project. Risks exist in any project, so the goal of PRM is to anticipate and minimise the impact of these risks. Any unexpected events – involving, amongst others, procedures, processes, people, technology or resources – can throw a project off schedule. Incidents like these almost always happen without warning and may have serious consequences that affect both the project and the organisation in the short and long terms.It is worthwhile anticipating such occurrences, and trying to put mitigative measures in place.
The extent of complexity of projects should never be underestimated. “If something can go wrong, it will” is the rule of thumb to apply when it comes to projects. There is no telling where, when or what kind of barriers will arise that could slow down, thwart or stunt the progress of the project, forcing it into overtime or utilising more resources than the organisation can spare. This is a common experience across industries and organisations. While no particular type of PM is recommended for optimum effectiveness, research has shown that any PM methodology, applied correctly, usually helps the project keep within budget and schedule.
PRM, because it deep-dives into what can go wrong during project implementation, forces organisations to confront reality and the challenges they face right at the outset of the project. Many organisations begin optimistically, and tend to overestimate or underestimate their abilities to meet deadlines, stay within budgets and maintain standards based on available resources. They also tend to be a bit short-sighted, often failing to consider the wider environment and developments outside their immediate circle of influence. This is one of the most crucial aspects of both PM and PRM.
What PM and PRM have in common is that they both incorporate proactive processes that are intended to bring the elements of projects together as seamlessly as possible, and align them with the organisation’s aims and objectives. Without clear, definitive PM, the team will find itself reacting to incidents that occur as the project progresses, rather than planning ahead to circumvent or mitigate such instances. The application of PRM helps to identify where these are likely to happen, and what measures should be in place to lessen negative impacts on the project.
Project leaders or managers are not always aware of all the risks that their projects may be exposed to, and how their projects will be affected by these. The most common risks are those associated with cost, scheduling and project performance. But project managers also need to be on the lookout for operational, strategy, market and legal risks, in addition to those related to adverse weather conditions, civil unrest, terrorism or even political uncertainty. There are also internal risks to be aware of, like sabotage and fraud. PM is not to be undertaken lightly; it really requires a team of individuals with sets of different skills.
Any one of these risks could delay or impair the project, cause cost overruns or even damage the firm’s reputation in the long run. The seriousness of the risk depends on both its short and long-term consequences. PRM is imperative to any project because it looks at the ultimate value of the project, which will have an effect on the value of the organisation. The team which undertakes it therefore will need to have enough experience and expertise to be able to focus on minimising the impacts of the risks. Risks inevitably carry a high degree of uncertainty; mitigation requires a correspondingly high degree of anticipation and analysis.
Project risk management should be integrated with project management from the outset; risk identification, analysis, assessment, management and monitoring should be part of PM, and develop in parallel with the project. When the risks are identified, appropriate measures can be put in place. It may be necessary for the PM team to undergo appropriate training to increase their understanding of the impact of the risks on project objectives and outcomes. This will enable them to address issues proactively. Close and constant monitoring is also important as risks and their severity – and subsequent impact(s) – can change during the course of the project.
Risks and issues logs or risk registers should carry clear, concise details together with the appropriate/agreed-upon (or tried-and-tested) mitigative measures, and be always kept up to date. Accurate documentation will be a boon to future projects and PM teams, as this could help them anticipate and avoid pitfalls and potholes. It is also worth noting that identifying project risks could also identify possible future opportunities, as risk and opportunity often happen in tandem. Not all risk is bad, and careful analysis of a project’s risks may turn up lucrative niches which could increase a firm’s value and competitiveness.
What else can project managers and risk managers do, to be more effective in their jobs? They could focus on being proactive, and enhance their responsive agility in the face of increasing challenges in the environment. PM and PRM skills are best honed on the job, but practitioners have to keep themselves abreast of market trends, industry developments and new technology that will support them in their efforts to create value for their organisations.
