When is risk exposure greatest in a project? In the beginning, in the middle, or at the end of the project? It's actually highest in the beginning. Let's look at how to reduce risk exposure early in your projects.
Why Risk Exposure Is Greatest in the Beginning
So, why is your risk exposure greatest in the beginning? Project managers have the least amount of information. Uncertainty is the greatest. We know very little about the:
- Goals of the project
- Success criteria
- Availability of resources
Here are five activities that you can undertake to reduce the risk exposure early.
Reduce Your Risk Exposure Early
Determine Which Stakeholders to Engage
Have you ever seen a project manager or project sponsor purposely keep a stakeholder in the dark? The stakeholder discovers the project later and exerts their power and influence. This often results in rework and adverse impacts to schedule and budget. Identify your stakeholders early and seek to understand their concerns and interest.
Get Everyone on the Same Page
If you ask two people to explain the purpose of a new project, you may get completely different answers. Work with the project sponsor, project team, and stakeholders to draft the initial project charter. Project charters include but are not limited to:
- Project Title
- Project Goals
- Assumptions and Constraints
- Success Criteria
- Summary Milestones
- Summary Budget
- High-Level Requirements
- High-Level Risks (Threats & Opportunities)
These elements can greatly improve focus, understanding, and alignment of your team and stakeholders.
Clarify Your Project Goals
Early in projects, goals are often loosely defined leading to misunderstandings. Work with your project sponsor to define, clarify, and communicate the goals.
Here is a suggested syntax for goals: Verb -> Focus -> Target -> Deadline. For example: "Increase profits by 5% before the end of the year." Using this syntax ensures consistency in your goals and helps to ensure that your goals are specific and measurable.
Objective. Something toward which work is to be directed, a strategic position to be attained, a purpose to be achieved, a result to be obtained, a product to be produced, or a service to be performed. —PMBOK 6th Edition
In the early stages of a project, we have yet to discover the risks. There are numerous tools and techniques that can help you, your project team, and your stakeholders identify risks such as:
- Information Gathering Techniques (e.g., brainstorming, interviews, Delphi Technique)
- Diagramming Techniques (e.g., context diagrams, flowcharts)
- SWOT (i.e., Strengths, Weaknesses, Opportunities, and Threats)
- Pre-Mortem. Describe a hypothetical failed or challenged project to your project team. Have your team identify the risks and determine risk responses.
- Assumption Analysis. Ensure that assumptions are reviewed, understood, and documented.
- Prompt List. This is a list of categories that prompts stakeholders to identify additional risks in each category.
- Checklist Analysis. This is a list of potential risks used to help identify additional risks.
- Document Reviews. Review documents for the project and related projects.
Furthermore, you may use a combination of techniques. For example, you might do a brainstorming exercise and follow up with a review of a checklist or prompt list.
Clarify Stakeholder Expectations
Some people think that you can read their minds. As you interact with executives, project team members, and stakeholders, ask about their expectations.
What do they desire from the project? What do they expect will happen during the project? What expectations have not been expressed by them or others?
Are you starting a project? Take some time to review your project in light of these five principles. Save yourself some headaches downstream by reducing your risk exposure now.
7 Ways to Identify Project Risks
Ninety percent of all project risks can be greatly reduced by simply identifying the risks. Grab this checklist and start identifying your project risks.
Bonus: I will send you a sequence of emails where I describe each of the seven risk identification techniques in detail. You will also receive my weekly blog updates.