Risk management is often the aspect most neglected by a project manager. However, it is of capital importance. Overview of the process of managing the risks of a project and the keys for success.
In project management, there’s no such thing as “zero risks”. However, knowing this, project managers often leave risk management behind, focusing on other aspects of the project. “Project managers tend to be reluctant to spend time on this part, because they say, why work on it because the risk has not yet happened,” explains Pierre Ethier, training consultant, project manager and collaborator at the ÉTS. “But this mistake can be very expensive.”
If the danger happens, it can lead to several repercussions: on deadlines, the problems will lead to missing the project’s deadlines; on safety, an accident could have an effect on costs and the quality of the work. Anticipating and limiting the risks as much as possible lets their potential effects on the project be reduced…
Determining the tolerance for risk
The first step for this type of plan is to determine the company’s level of risk tolerance. “A manufacturer of cheap ball point pens will have a fairly high tolerance,” Pierre Ethier gives as an example. When an incident occurs, it can afford to drop behind in production because the costs of proactivity are higher. However, a manufacturer of deluxe pens whose product quality and scarcity are their trademark will have a lower tolerance for risk. It cannot afford to lose the excellence of its product, and its low production could suffer heavily from a delay.”
The project manager must then list and prioritize potential threats. By analyzing each of them, he can estimate their impact on deadlines and costs. With this grid, he will be able to set up action plans.
Not relieving the pressure
For the project manager, the challenge is to keep this risk management up to date. “The pressure on this aspect must not be let go,” the consultant advises. “At the beginning of the project this part gets focused on, but as time goes on there is a tendency to let it slip.”
The manager must also be able to retain the interest of stakeholders on this aspect. “For upper management, risk management is important, but for the workforce it is less so, because it is not concrete,” conceded Pierre Ethier. “But the project manager has to show leadership, since risk management is his responsibility.”
With his long professional experience in the field, Pierre Ethier advises project managers to arrange monthly meetings to address this issue. “They should not be combined with those for monitoring the project, as is commonly practised,” he says. On the one hand, it’s not the same people who have to be present, and on the other hand, by attending combined meetings participants risk losing interest over the long term.”
The consultant also recommends keeping risk management simple. “There are templates and dashboards that facilitate the flow of information,” he explains. “The manager does not need to reinvent the wheel each time.”
Even if the threats are hypothetical, their management must not be put aside at the risk of jeopardizing the project. Prevention is better than cure!