Project Risk Management Done Right

A strong project management methodology needs to encompass more than developing a timeline and scheduling individual tasks. The effort must also include a risk management function with an eye toward where and how potential issues might impact the project.

But project teams can run into difficulties if sponsors don’t understand (or don’t want to recognize) the need for a solid project risk management program. Adding to the trouble is that PMs are often under considerable pressure to begin executing tasks as soon as possible. This doesn’t leave time for a proper risk assessment and opens the organization up to the potential for a host of expensive—and sometimes show-stopping—challenges.

Your team may have an agreed-upon set of project deliverables on the table, but don’t just charge ahead. No good will come from putting money and other resources toward your goals if your efforts are doomed before you even begin. Instead, consider where project risk management can help you avoid trouble and achieve greater project success.

Planning risks
Begin by looking carefully at the organization’s project planning strategy. Significant risks exist for teams that don’t do their due diligence around the development of the project’s scope, charter, budget, and timeline. Is the project plan doable? Have potential issues been glossed over in favor of a quick launch or because there’s no easy solution? Don’t set yourself up for failure. Review your project management strategy now to ensure it’s sufficiently thorough, and will give your organization a solid foundation to move forward.

Supply chain risks
Dependability and predictability within the supply chain are important, even outside the confines of a defined project. But delayed material deliveries or an inability to procure necessary items are more than just nuisance issues for PMs. These problems could bring project progress to a halt and create havoc with the target completion date. By assessing where risks exist in the supply chain as part of the project development process, the team will be able to identify backup suppliers or specify alternate materials or equipment well in advance.

Regulatory or legal risks
A deep dive into the obligations your organization will need to meet on the regulatory and legal fronts is a key step in ensuring there are no unpleasant surprises once the project is underway. This becomes particularly important when a company is dealing with product development efforts in a new market sector, or when working on initiatives such as the purchase of a competitor, where legal ramifications may exist at the local, state, and federal levels. Everything from complying with data privacy laws to providing sufficient notice of layoffs could complicate your project. Knowing about these risks ahead of time will enable the team to forecast the impact they could have on the schedule. This will give you the background you need to develop workable contingency plans to keep the project’s progress moving forward.

Marketplace risks
What happens if your project is delayed and your new product or service isn’t available by the target date? Your company could lose revenue and market share, but there might also be much bigger issues to address as a result. Do you have a contract that obligates you to pay late fees or to cover a customer’s financial losses if your product isn’t delivered on time? Have you established partnerships that could trigger similar provisions, requiring you to pay collaborators for lost income? As you assess the project’s plan and scope, you’ll know that any potential delay points represent critical risks. You can then closely monitor key activities and be ready to take appropriate actions to avoid missed milestones.