Risk and contingency management is one piece of the puzzle when managing a complex project. One of the first steps towards success is assessing the risks associated with a project—it’s vital to identify and track, the potential pitfalls prior to the project start date, as well as throughout the project schedule. Projects and plans evolve, thus project managers must effectively account for margin and change.
Any project manager will suggest one of the first steps to starting a project is to assess the risks. Before moving forward, it’s vital to identify the potential pitfalls and losses of a given idea or plan. Yet it is also necessary to track the risks and contingencies as the project progresses. This is where many organisations fall short and find themselves scrambling to create makeshift solutions for problems that could have been avoided, if properly identified and managed. Many companies will spend time and money assessing risks, but rarely revisit or update their plans accordingly. In order to best maintain a project with potential risks and outcomes, it’s best to procure a risk and contingency management plan.
The benefits of project risk management are huge. Effective quantitative risk management is an essential component to delivering projects successfully—on time, within budget, and with high-quality results. By following these guidelines, you are one step closer to mitigating risks and managing a successful project.
Many companies try to do schedule risk analysis calculations within their existing, limited set of tools like the scheduling tool or Excel, rather than in a dedicated risk tool. This is because, historically, a scheduling tool is what schedulers have been trained in. They understand scheduling but risk, however, is typically owned by someone else in the organization—possibly in project controls or even higher up in the organization as part dedicated group responsible for managing enterprise risk where knowing how mitigating risks across their organization directly affects ROI. Even though they understand this connection exists between risk and business, many leaders overlook the main way that risk affects the execution of their business—which is through projects.
The primary challenge that many companies in asset and project intensive industries have is that, when you start with a project, what you’re really starting with is a plan for what you intend to do. Every project is full of assumptions. You’re assuming you will start on a certain day, assuming funding, and assuming resources. You’re assuming weather will cooperate and allow you to do certain things. The probability of those assumptions not holding true becomes a risk.