CAN WE LINK RISK MANAGEMENT TO PROJECT SUCCESS?
Ask any project manager and they will tell you that managing risk plays a significant role in successful project delivery. It’s widely accepted that risk management strategies enable you to identify project strengths and weaknesses, together with threats and opportunities. By expecting and planning for the ‘unexpected’, you can be ready to respond rapidly should events arise. Strategic project goals are achieved through careful planning, evaluation, and working to minimize risk potential. That’s why for project managers, risk management processes and software can make a significant contribution to positive project outcomes.
PREPARATION IS EVERYTHING
In a research paper entitled ‘The Impact of Effective Risk Management on Project Success’* it is suggested that, ‘many projects fail because organizations assume that all the projects would succeed and they, therefore, do not identify, analyse, and provide mitigation or contingencies for the risk elements involved in the project.’
Planning for success involves the early identification of internal and external risks that could jeopardize the success of a project. Risk management plans typically include identified risks, probability of occurrence, potential impact, and proposed actions. It is usually the case that there will be little impact on project cost, schedule, or performance from low-risk events and it follows that moderate-risk and high-risk events will cause increases in these areas. At the upper end of the scale, high-risk events, unmanaged and unprepared for, are likely to result in projects that exceed budgets, overrun timeframes, and fail to meet strategic goals.
To help manage the expectations of those affected by the project outcome, it’s important that project managers communicate plans to team members and project stakeholders early on and throughout the project lifecycle. This helps establish clarity and understanding when it comes to avoiding or mitigating the impacts of risk events should challenges arise, or rolling out contingency plans.
MEETING SUCCESS CRITERIA
With defined risk management processes in place, the likelihood of and impact of negative risks can be reduced, making it more likely that projects to be completed on time, within budget, and achieving objectives.
“Effective risk management software helps keep projects on track and minimizes vulnerability,” says Sword GRC’s Marketing Manager, Jenny Ritson-Smith. “Risk management best practice enables project managers to maximize profitability and reduce costs lost on activities that don’t deliver ROI. Risk analysis and evaluation, from project start right through to completion, can help project managers to map the best route forward, avoiding obstacles where possible or implementing contingency plans where necessary to reduce downtime.”
ACCENTUATE THE POSITIVES
It can be worth remembering that not every risk poses threat – some of your project success criteria can rely upon taking positive risks that present opportunities worth exploiting. “It seems that the same risk analysis and risk management processes that can be applied to negative risks can be applied to positive ones,” says Ritson-Smith. “And positive risk-taking, underpinned by software can contribute to project success, through proactive planning and strategizing and helping inform decision-making.”
So, is risk management a factor in project success? According to the research paper previously cited:
“To increase the chances of a proposed project succeeding, it is necessary for the organization to have an understanding of potential risks, to systematically and quantitatively assess these risks, anticipating possible causes and effects, and then choose appropriate methods of dealing with them (Mobey & Parker). To ensure that any potential risks are managed effectively, the risk process needs to be explicitly built into the decision-making process.”