Saturday, December 30, 2006

Risk Management is not hard, do it

This is another area where Software Project Managers are not very good at: Risk Management. Why not? I found 2 main things and both are typical of the SW industry:

  • There is no pressure on PMs and no expectation that they perform risk management. Most executives know about risk management but they don't realize that it's part of a PM's responsibilities.
  • Too many PMs in the SW industry just don't have hard skills, so even if they understand the importance of risk management, they don't know how to do it. So they just don't.
Interesting anecdote: I occasionally teach SW Project Management at the local community college. One of my ex-students asked me to come to his workplace and make a presentation to the PMs in the company. In order to decide the topic, he ran a poll among the PMs, asking them for the topic they would most be interested in. Interestingly, Risk Management came in first with 22 votes (second place had a much lower rank - Stakeholder Management with 16 votes). So, this was clearly at the top of their mind. Not big statistics but I was not surprised. I have not yet given the presentation (scheduled for late January) but I will try to understand why they were so concerned about Risk Management.

Anyway, just as I noted in Cost Management is not Optional, I think that Risk Management shouldn't be optional either. It's important for the project and for the PM as a skill. And, it's really pretty easy. I don't want to "teach" Risk Management here. As I noted before, text books can do it much better than a blog. But I do want to give some tips here:

  • It's not hard. Any basic book on project management gives the basics of Risk Management. Take a little time to learn it. It has a lot of overlap with Issue Management, which most PMs do regularly.
  • Use mitigation to avoid contingency. A lot of PMs forget that it's much better to get rid of the risk before the risk event happens, rather than execute the contingency plan after the risk event has happened. Why be the smart guy (or gal) if you can be the wise one?
  • Assign risk owners. You don't have to resolve all the risks all by yourself. You have a team. Let them help out. In fact, there will be risks which you are not the right person to own anyway.
  • Track regularly. Risks are like issues. You need to track them regularly to make sure they are being taken care of.
  • Find a risk log template . Templates make life so much easier. Don't waste time re-inventing the wheel. There are zillions of templates out there.
Once you start to do regular risk management on your projects, you will see that it's not hard and you'll enjoy the benefit of better project control and the appreciation of all of your stakeholders.

Let me know what you think.
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Pawel Brodzinski said...

Risk management is hard, not in theory you're writing about (yes, that's simple), but in practice.

Setting up a risk management process is the easy part. It's much harder to keep it going. And it's especially hard to convince people that this whole risk management thing is worth effort. Most people just doesn't believe in that. This is the reason why the risk management is one of the most difficult routines to implement.

I once wrote a bit more about the subject.

Moshe said...

Pawel, thanks for the good comment.
From the perspective you take, you are very right. You are talking about the human factor in the risk management work and I agree with you that it is often not easy to work with the team members. Your post above gives a very nice list of difficulties.
My perspective was the technical (hard skill) aspect. What I am saying (or tried to say) is that it is easy to learn the basic principles of risk management and that PMs should not be afraid to do it. Yes, when you add the human factor to the picture you may have a much bigger challenge.
BTW, the human factor problem is not unique to risk management. These problems appear in just about any area of project management. In your experience, is it easy to work with your team to manage the schedule? The scope? The budget? I would be curious to know what your experience is in these and other areas.

Thank you.

Pawel Brodzinski said...

All of the things you've mentioned has been actually easier with team I used to work with.

Schedules are always a tricky game, but once you know everyone's scheduling ability you can create a schedule, which is possible to make. You just add when you believe you shall add, and you cut when you believe you can cut.

Scope is quite easily managed when you have (or you are) a good moderator.

And budget... well... budget... It's really hard, but it's usually a task for a project manager (program manager, director, other decision-maker) alone. You have to chew through all the budget issues alone, because you can't even share your problems with the rest of the team usually.

I believe all areas of the project management are different. And all should be managed different. With the risk management the human factor is the most important factor. With other areas there's more.

mosgot said...

You have been lucky. If the team is not so good, everything is hard, not just risk management. But, as I noted before, I agree with you that I did not cover the human factor in risk management. I was trying to convey the message that project managers should not be afraid to try and practice risk management in their projects. At least from the skills perspective, it's not as hard as many fear.

Thank you.