Within project management, RISK is a four-letter word. Successful project management includes risk management – and risk management comprises identifying, analyzing, monitoring and mitigating risk. It doesn’t need to be another paperwork nightmare. Using the right tools makes this job easy. Using tracking software such as RiskMP, SupersList and ProjectAddin will streamline much of this work.
Session 1 in Project Management is Scheduling and Cost Control. Session 2 is Risk Management. Why? Because any project, from the moment it is conceived to final completion, is defined by change and risk.
Risk is an unforeseen circumstance that will impact the construction project (in a good or bad way). Changes, and risks come from and happen to the design, the building process, the schedule, equipment, suppliers, subs, architects, consultants, the site, mother nature, government regulation, etc. The list is extensive.
Anticipating risks and changes, mitigating their impact and preparing a plan B are essential to good project management and getting you home, occasionally, at a reasonable hour. From experience you know that the earlier you anticipate a problem, the more options you have, meaning more control and lower costs.
The first thing to do is to have a risk assessment & mitigation plan that will provide you with more of a grasp on what types of risks you might be facing as well as the potential consequences of those risks and finally, what steps will be necessary to mitigate the risks.
Here’s the plan:
- Identify as many potential risks as you can think of.
- Determine the probability of each of those risks occurring.
- Determine the impact of each risk should it occur.
- Consider what steps you can take to mitigate each potential risk.
Sound like a lot of work, planning and prediction? It is. That’s why RiskMP software can be your saving grace. RiskMP is the latest innovation in risk management software that can save you a lot of time, money and frustration. Here’s more information on how RiskMP works. And if you need help navigating the software and a complete risk management plan, Risk Management workshops are available to walk you through the most productive means of putting your Risk action plan into effect before your next project.
What if I told you that you could plan for risk, better your chances of knowing what types of risk to expect, mitigate risk and even circumvent risk with one piece of software? Sound impossible? I knew you’d think that! But I’m here to tell you that it’s not…
Every project plan carries with it some uncertainty and risk. Addressing and managing that uncertainty or risk is made easy with RiskMP. Built specifically for the construction industry, RiskMP software leads you through the steps of creating a risk management plan. RiskMP makes executing and managing that plan easy throughout the execution of the entire project.
Risk management is about being proactive – not firefighting. By anticipating, planning and addressing risk you can reduce the magnitude of its impact and keep the project on track. Managing risk is essential to delivering projects on time and on budget.
Project management best practises include a solid risk management plan.
Since project management requires constant communication, RiskMP makes your project plan accessible to you any time and anywhere that you have Internet or cell phone access.
Effective risk management requires dialogue; with the project management team, with remote sites, owners and consultants. RiskMP allows you to share project plans and risk management plans with any number of users, at your discretion.
RiskMP integrates seamlessly with Microsoft Project to facilitate a continuous risk management process. Reports on top priority risks, most imminent risks and severe risks are available at the press of a button along with mitigation plans and costing information. Graphs convey the important details of the risk profile through the course of the project. And because the status of a project can change from day to day, RiskMP makes it easy to synchronize and update with the project plan. RiskMP, a user-friendly software, is a complete risk management system and innovative communication tool. For more information – www.riskmp.com
Why do project delays and related issues crop up over and over again? The company has project managers with experience and knowledge, but it also has project team members whose knowledge isn’t so extensive. And most of all, once the project is underway, no one seems to have time to plan, look ahead and strategize. As a consequence, the project manager ends up putting out fires yet again. ‘
Risk management is essential before the project is in full swing – early on – in the planning stages.
And where are the sources of crucial information concerning risk? That’s easy – just take a look at previous projects and talk to experienced project managers!
And how exactly do you garner the information?
The first method is the formalized “Grampa Simpson” method, or the Expert Interview. Create a series of questions like those below. Ask PMs, site supers and foremen with experience in these projects, to talk about it – and record that info. Then review and synthesize. With the “Grampa Simpson” method – tongue in cheek – you end up with the biggest, noisiest problems, but not necessarily the most costly. And yes, sometimes you’ll have to sit through the whole story – including how Gerry, that knucklehead engineer or consultant, said this or that and so on.
To get this to work, create a standard set of open questions, keep good records and synthesize the information. Simply examining the project plan in isolation is often insufficient. Risk deals with uncertainty and unknowns. Mitigation of risk encompasses every bit of information that is available. In identifying risk, the following tools or techniques can been used:
- Expert interviews: Your company employs people with experience. The company that contracted you for this project has experience. Typical interview questions are:
- Did anything go off schedule or not as planned in the last project?
- What were the biggest issues faced in terms of meeting the deadlines? Costs? Scope?
- Were there any significant shortcomings?
- Were there any significant areas of uncertainty?
- What drove the project off course?
The interview questions will not give you a risk analysis. They will point you in a direction of inquiry.
- Brainstorming: Everyone has been to meetings where the open ended question has been asked. The markers, white boards and flip charts are out and a lot of random thoughts are expressed. Sometimes good ideas come out of brainstorming, but this technique has a few flaws:
- It is very hard to keep a meeting on-topic.
- The strongest personalities usually dominate, and definitely, the management hierarchy will influence whether a good idea is voiced or not. Everyone censors when the boss is in the room.
So to make brainstorming work, we suggest conducting surveys outside of meetings. Ask the questions, but ask them electronically. Gather the results and synthesize. This methodology has been formalized and is typically referred to as the ‘Delphi Technique’. The anonymity of the responses ensures that respondents will not be worried about what the boss will say, or what their co-workers will think. People can get more creative at no risk. There is expertise in the field and in the office that can be tapped into.
Questions similar to those asked in the expert interviews can be asked, but the questions should be framed in a future tense:
- Is XYZ likely to happen?
- What is the impact?
- How do we mitigate this impact?
- How do we prevent XYZ from occurring?
- Delphi Technique : The essence of the Delphi Technique is:
- Coordinator formulates problem and distributes it to experts (site people, consultants, PMs, trades, anyone with an interest)
- Experts send written response.
- Coordinator sends out position papers and experts have a chance to reconsider and resubmit.
- Resubmissions are reviewed and a finalized list of risks is placed on the risk listing form.
Because this is a more structured methodology, and because the questions are revisited and re-examined, reliable results can be achieved.
“The Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts. The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgements. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the “correct” answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, and stability of results) and the mean or median scores of the final rounds determine the results. Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups. Delphi has been widely used for business.” 
Key characteristics of this methodology include
- Anonymity of the participants. The identity of participants is not revealed even after final completion. This eliminates bias (a key feature of groupthink) as well as the bandwagon effect.
- Information is structured by the facilitator to eliminate irrelevant comments.
- Participants can provide as much feedback as they wish and modify their own answers.
- The facilitator sends out questionnaires, collects and analyzes responses, identifies common and conflicting views and provides these views for re-evaluation by the participants. This round continues until consensus is reached.
Were you aware that March 11th is World Plumbing Day? I sure as hell wasn’t until this morning, while on my way to work, I tuned into two radio personalities discussing it and, yep, turns out that March 11th of every year is World Plumbing Day. And it’s (as the name suggests) global. I have to admit, I snickered a bit and thought to myself, “Seriously??”. But yes, turns out it has its own website – http://www.worldplumbingday.org/ – and even has a Facebook page dedicated to it: https://www.facebook.com/WorldPlumbingDay
So, what exactly is World Plumbing Day you ask? (So did I.)
Here’s a brief explanation I found on Days of the Year.com:
“World Plumbing Day is an international event, initiated by the World Plumbing Council, held on 11 March each year to recognise the important role plumbing plays in societal health and amenity.
The WPC, through its member countries and its partnerships with bodies like the World Health Organisation, works all year round to promote the benefits of safe plumbing, but in 2010 it decided to launch the concept of embedding a single day on the world’s calendar dedicated to plumbing. The idea was that on March 11 each year people all over the world would pause to reflect on the vital role plumbing plays in preserving their health and way of life – in the case of countries like ours – or in building sustainable disease free futures for millions in the developing world.”
Who knew?? But, if you think about it, plumbing certainly is a trade well deserving of it’s own special day, isn’t it? I mean, what in the world would we do without plumbing? Ever gone camping? And I don’t mean camping at a designated campsite, complete with toilets, showers and a nearby restaurant – I mean really “roughing it” in unassumed territory deep in the woods! I have. And I’m not afraid to admit I hated it. Why? Two reasons: 1. No electricity; and 2. (You guessed it!) No plumbing. And yes, I realize that we’re “spoiled” here in the developed western world where things like running water (aka hot showers!) are the expected norm, but that doesn’t make plumbing any less a ” bare necessity” – and for that very reason – because we are used to living with it on a daily basis. Lucky, aren’t we?
So, here’s to World Plumbing Day! Keep the water flowing and our environment healthy! (And tonight when I’m taking a nice, warm shower, I will vow to not snicker ever again at the relevance of such an important day!)
Happy World Plumbing Day!!
Every project manager wants to reduce ‘management by crisis’, overtime costs for employees and contractors, and late nights at the office. —– Risk management allows you to minimize the number and impact of these surprises. A comprehensive risk management plan allows you to improve your construction processes and thereby gain a competitive advantage. It increases the probability of project success, most importantly profitability.
What are the potential impacts of not having a Risk Management Plan and Process in place? Consider the
- Cost of not meeting a commitment
- Embarrassment to the company and loss of good will in the marketplace due to not meeting a commitment
- The appearance of not knowing what you are doing to a customer. This can decrease the customer’s trust in you and create openings for your competition.
On the other hand, the positive impact of effective risk management is
- increased profitability
- less overtime
- fewer deficiencies and
- a competitive advantage.
Risk Management is a tool to prevent problems from occurring or escalating and facilitates a focus on the right results the first time.
Every project plan, every estimate, carries embedded within it elements of risk. Risk is uncertainty. To address this uncertainty, we use expert estimators, past experience and best guesses. MS Project and most project management tools provide us with the means to record these best guesses. But what really happens, as every project manager knows, is not always what is on the project plan. The best guesses are often just guesses. Risk Management is a vehicle for looking at the uncertainty in these guesses, measuring it, examining the consequences and deciding what to do about them. It is the next step in PROACTIVE Project Management.
“It’s what you don’t know or understand that comes back to bite you.”