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.
Noted project expert Arthur Davidson, Contract and Safety Manager at The Worldwide Turnaround Management Company, argues “You should start doing the risk analysis before the turnaround so you can have adequate time to mitigate the risks. But you also have to run risk analysis during the turnaround because you have to address the impact the added scope is bringing.” Risk and contingency management reaches beyond the initial risk analysis, providing real-time results and projections during while the project is being executed. A project becomes more complex as each moving piece starts to turn and take shape, and each employee achieves individual results. The variables, although accounted for at the initial assessment, are often too copious and sizable to control or predict perfectly.
As outlined in a previous post, many executives make decisions based on qualitative data from a probability scale, instead of real-time progress reports and analysis of risks that may or may not have been identified in the initial assessment. This is both dangerous and impractical.
Projects and plans evolve, thus project managers must account for margin and change. Risk and contingency management is fluid; it tracks progress, identifies new possibilities and enables companies to best prepare for each potential loss and outcome that surfaces as the project moves forward. In a case study performed by Purdue University, Human Resource Professor Maria Marshall explains that risk and contingency management “is a continuous and evolving process. It can be time consuming but it is the best process to assess the efficiency of your business operations and how well your business can recover from serious disruptions.”
Risk and contingency management plans are critical to long-term success. Although many outcomes and losses may have been identified in an initial assessment, circumstances are likely to change, which increases the possibility of different outcomes. It is vital to continue managing the variables in a project by creating a risk and contingency management plan.