Wednesday, December 10, 2008

Common Causes of Project Risk

Marina is a project manager for Outback Retailers. Her current project involves the development of a new type of high-speed racing bike. She has learned that there are several identified risks that have the potential to negatively impact her project objectives.

As a result, Marina is trying to develop risk responses that will eliminate or reduce the impact of these identified risks. Do you think it is possible for Marina to address two or more of her project risks with the same response?

Yes! By addressing more than one project risk with the same response, Marina will be able to deal with risk threats and risk opportunities more quickly, which will maximize the likelihood of a successful project completion.

Every project will encounter numerous risks. Many of these risks will be driven by a common risk cause. A common risk cause is an event or situation that produces more than one project risk.

As a project manager, you can identify common risk causes during the risk identification and risk analysis processes. It is important to take advantage of these opportunities whenever and wherever possible.

It is important to remember that every project is unique. Therefore, you cannot expect to identify the same common risk causes in every project that you manage. However, there are some causes that may occur more frequently than others. These common risk causes include:
  • unavailability of resources
  • inadequate quality standards
  • lack of communication
  • inadequate tools or technology
One common risk cause that may threaten the successful completion of your project is unavailability of resources. These resources may be people or materials. During the life cycle of your project, many risks may arise if you do not have sufficient personnel or supplies available to complete the project as planned. Such things as excessive cost and schedule overruns are only two of the risks that you may encounter if your project is threatened by a lack of available workers or materials.

Another common risk cause is inadequate quality standards. Identifying this common risk cause early in the course of a project is especially valuable because this risk cause has the potential to create several project risks that can adversely affect the promised consumer deliverable.

As a project manager, it is important to remember that if quality standards are not properly set or are not specific enough, your project will either fall below the expected standard or aim for a standard not required by the client.

Marina, from Outback Retailers, is beginning the risk response planning process for her current project. After studying the results from her project's other risk management processes, she finds that some of the quality procedures that concern the new product are not clearly detailed. In addition, phase three may be short by two people due to a recent staff reduction. Marina hopes that the identification of these two common risk causes up front will help make her risk response planning process more efficient.

A lack of communication is another example of a common risk cause. In daily life, whether at home or at the office, people often suffer the unpleasant consequences of not giving or receiving adequate or accurate information. This is especially true in project management. If clear and open lines of communication are not firmly established, a project may be put in serious jeopardy. Such things as change requests and project plan modifications may not be properly carried out if there is a break in communication.

Inadequate tools or technology is a common risk cause that can severely impact the outcome of a project. It is difficult to develop a product efficiently or according to its established standards if you do not have the adequate tools or technology to complete the product as specified in the project plan.

It is also possible that a project may suffer a complete failure if critical tools are not readily at hand when needed. This common risk cause may also result in project deliverables not meeting widely accepted industry standards.

As a project manager, it is important to remember that some of your project risks may be driven by a common risk cause. As a result, the identification of these common risk causes is a valuable input to risk response planning because it may allow you to address more than one project risk with a single response. This will help eliminate the creation of redundant risk responses and make your risk response planning process more efficient.

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