Changes in project risks are inevitable. As a project progresses, the probability and impact of current risks change, new risks emerge, and residual risks may increase or decrease. How can project managers optimize their risk responses and get the results they are looking for?
Allow me to introduce you to two project managers—Tom and Susan. Tom started his project with a risk identification exercise with several stakeholders resulting in a list of 77 risks. He entered these risks into an Excel spreadsheet and stored the file in his project repository (and never looked at it again).
Susan, on the other hand, facilitated an early risk identification workshop. She periodically met with her team to review current risks and used additional techniques to identify new risks. In these risk review sessions, the team discussed the effectiveness of the risk responses and the risk management processes.
Which team do you think had the greatest chance of meeting their project objectives? Yes, Susan’s team wins the day, hands down.
Let’s look at six tools and techniques recommended in the Project Management Body of Knowledge (PMBOK) for controlling risks.
Some portfolio, program, and project managers make a big fuss over risk management. And others use lots of acronyms and big words to impress people. But at the end of the day, all that really matters is getting results.
For eighteen years, I worked for a property and casualty insurance company. Each year, our senior management team would meet with a credit rating agency to share our goals, strategies, and progress. The presentation included what we were doing for enterprise risk management.
One year, the rating analyst said that insurance companies can talk a good game. They have a risk management plan. They regularly identify, analyze, and respond to risks. And yet, some of these companies were floundering.
Then the analyst said, “All that really matters is that you are getting results.”
Project managers can be guilty of talking a good game too. We have a risk management plan. We perform all the risk management processes, but for some reason, we may fail to get the desired results.
So, let’s review the risk management processes, things within each process that may lead to lackluster results, and what we can do about each.
Is there a way to improve both project requirements and quality at the same time? Allow me to begin this discussion with an illustration.
I recently needed a television mounted on the wall of my office. A fairly simple requirement, right?
I told the handyman that I wanted the television to be head high. Imagine my surprise when I walked into the room and saw that the television had been installed a foot higher than I expected. The handyman did what I asked him to do but he used his head height, not mine. He was like the Jolly Green Giant – 6 foot 7 inches tall; I was 5 foot 6 inches tall.
Improve Project Requirements and Quality
Quality management is highly dependent on the clarity of the project requirements. Why?
Quality is the degree to which a project meets the requirements. This definition assumes that the requirements are defined and that there are varying degrees to which the requirements may be met.
If the truth were told, many projects lack SMART requirements: Specific, Measurable, Achievable, Realistic, and Timebound. They’re vague, and there are little to no standards by which to judge whether the requirement has been implemented properly. Furthermore, stakeholders may not be engaged adequately in the requirements process.
Ill-defined requirements — like “install the TV head high” — make it difficult, if not impossible, for designers, developers, and testers to do their jobs. When defining requirements, define the fit criteria: “a quantification of the requirement that demonstrates the standard the product must reach.” For example, I could have specified the precise vertical and horizontal location for the television. With this, we would have had a way to measure whether the requirement was met (and avoid the rework, time, and extra expense).
Additional Requirements and Quality Management Articles
Want to know more about project requirements and quality management? Check out these additional articles:
Last week, I talked about How to Develop a Quality Management Plan. Today, I’d like to share common quality management mistakes. Being aware of these failure points can help you and your project teams to identify and manage quality risks.
Quality Management Mistakes
1. Failure to Define Quality
Quality means different things to different people. One person may say that they own a high-quality diamond ring. A builder describes his quality homes.
What does quality mean to a project manager and the project team? Quality is the degree to which a project meets the requirements. This implies that the requirements are known and that the needs may be met partially or fully.
I received a Fitbit as a gift. “Fitbit tracks every part of your day — including activity, exercise, food, weight, and sleep — to help you find your fit, stay motivated, and see how small steps make a big impact.”
Keep Your Projects Financially Fit
After using the Fitbit for about three weeks, I’ve discovered it works. How?
First, I see my performance — the number of steps, activity levels, and sleep — throughout the day. Fitbit even offers notifications for when I’m not active for long periods of time. This alone keeps me motivated.
Second, the Fitbit syncs to my iPhone Fitbit app where I can monitor trends. I can see if I’m going to bed and getting up at a consistent time, how many calories I’m burning, and how many days in a row that I’ve exercised.
Third, I can track my progress against my personal goals (e.g., run three days per week and walk three days per week).
Fourth, you can (I haven’t yet) even add friends into your circle to track progress, receive encouragement, and have a friendly competition.
Think about it for a minute – what have you done in the last six months to improve your cost management?
Review the projects you’ve completed in the last year. How many of those projects came in over budget?
Consider John, a savvy project manager, who was asked to manage a project to replace a dated network system. The project sponsor told him that he had $100,000 for the project. When John asked the project sponsor how the $100,000 was estimated, but he never got a clear answer.
As John started the project, he checked the historical records of similar projects as well as some other companies. His early estimate — an analogous estimate — was $125,000 with a range of accuracy between -25 percent to +50 percent. John shared the estimate with the sponsor and said that he would provide a more detailed estimate after completing a work breakdown structure (WBS) with the project team.
The team used the WBS to complete a bottom-up estimate, estimating each project activity and rolling the individual estimates up to higher levels and ultimately to a project total. John reported the revised estimate of $120,000 with a range of accuracy of -5 percent to +10 percent. The sponsor increased the budget to $110,000.
John worked with the sponsor and the team to find ways to further decrease cost. What could be excluded? How could the team get discounts when purchasing the equipment, software, and wiring?
Cost management is rarely a straight shot. We zigzag, don’t we? We give and we take, and we attempt to find ways to deal with the budget constraints we face each day. (If you have a spouse and children, you probably already understand these principles, huh?) Let’s look at some ways to improve your cost management.
The Problems with Crashing, Fast Tracking, and other Schedule Compression Techniques
How do project managers unintentionally create schedule risks? As a result, perhaps you feel a cloud of uncertainty about your schedule.
Image courtesy of Adobe Stock.
Many times, it starts with pressure from a sponsor to deliver the goods early. For sure, project managers have a responsibility to work with their sponsors to understand the requirements and to complete the projects within the sponsor-imposed deadlines. Rather than wasting our time complaining about the deadlines, how can we work with our sponsors and team members to find solutions to schedule issues?
As we work to develop and compress our schedules, let’s be aware of the common causes of risk. We will be in a better position to manage the risk and deliver our projects on schedule.
5 Causes of Schedule Risk
Crashing the schedule. It’s always been funny to me that the Project Management Body of Knowledge uses the word “crashing” as a schedule compression technique. The term makes me think of an uninvited guest crashing a party, but with schedule management, the individuals are actually invited to the party. Project managers use crashing to shorten the schedule for the least incremental cost by adding resources, typically to the critical path. It can be a great technique — just be aware — crashing may increase your risk. Too many cooks in the kitchen spoil the broth.
Fast tracking. Here’s a technique to shorten the schedule by performing activities in parallel for at least a portion of their duration. For example, we might start work on a software design while the team is working on the requirements. Consequently, this technique may increase your risk and requires good communication and coordination; otherwise, it may be anything but fast.
Assigning the wrong resources. You ask a manager for a resource for your project. In return, you get the person who is least busy, not the skilled resource you need. Rather, Susan, an experienced project manager describes specific skills needed and uses her influencing skills to persuade the manager, greatly improving her chance for securing the queen resource. What’s a project manager to do when resources are preassigned?
Making sequence mistakes. John, an inexperienced project manager, failed to work with his team to sequence the project activities properly, resulting in issues which were discovered after the schedule was approved. As a result, John has learned to engage his team members when identifying and sequencing future project activities.
Failure to baseline your schedules. The project manager and team did a great job in breaking down the project, identifying activities, and creating the project schedule. However, the project manager failed to get approval for the schedule. What happened? Yes, the schedule changed. The team did not have a baseline for comparison resulting in significant uncertainty about the health of the project. Like building a house without a plumb line, who knows if the walls are straight?
Question: What other ways have you seen project managers unintentionally create schedule risks?
Why is scope management so difficult? What enemies cause us scope issues?
Let’s first consider the essence of scope management: “to ensure that the project includes all the work required, and only the work required, to complete the project successfully,” according to the Project Management Body of Knowledge (PMBOK). Let’s take a look at each part of this statement.
Enemy #1 – Not Including All the Work
Some project managers have a bad habit – they create their project plans with little input from the stakeholders. What’s the result? The project manager may miss key deliverables. They do not have ALL the work required in their project plan.
Some organizations lack clarity about who approves the project change requests. On one project, the sponsor tells the project manager to make the decisions. On other projects, the sponsor makes the decisions. And yet, in other cases, senior management gets involved.
Image courtesy of Adobe Stock
Your project may morph into a two-headed monster without an integrated change control process, resulting in adverse impacts to schedule, cost, and scope. It’s critical that you define how change requests will be reviewed, approved or declined.
So, who should approve project change requests? There’s no one right answer.
Several variables should be considered when determining who will approve change requests such as:
Size of project
Complexity of project
Number of external parties
Enterprise environmental factors
If your organization has a Project Management Office (PMO), consult this group for standards and change control processes. If not, you basically have three options.
Have you ever had a budget crisis due to the lack of a management reserve? Unforeseen work comes knocking at your door. You look at your budget, but you don’t have the funds to handle this work.
Image courtesy of Adobe Stock
There is a better way to handle the unexpected. You can — assuming that your organization supports the concept of reserves — create a management reserve when estimating the cost of your project. Let’s dig a little deeper.