Risk management – a springboard to smarter projects
The trend for projects to grow in size and complexity means there is a greater interest in systematic risk management. Some see risk management as a negative thing that puts spokes in the wheels of a project, but entrepreneur and researcher Henrik Szentes feels this is a misapprehension. Henrik is also the Program director for the program Risk management and project management, in which he explains how the right attitude and a structured approach can improve the way projects are carried out and the final result.
Risk management, business continuity… there are numerous ways of putting it. Working in project form has gained ground considerably over recent years, both in the form of purely project-based organizations but also in process organizations where projects are used, e.g. in conjunction with product development, business development or when implementing new systems. We are also seeing a trend towards more extensive and complex projects, and it is in these what are known as mega-projects in particular that systematic risk management is a powerful way of saving money, optimizing content and ensuring that the project is delivered on schedule.
In the educational program Risk management and project management (SWE), IFU and program director Henrik Szentes are seeking to foster reflection on how decisions are made in a project context, and encourage participants to recognize that decisions are ultimately about balancing risks and opportunities. The aim is to inspire participants and motivate them to apply what they have learned on the course in their own projects. Below we present some important aspects and practical advice for smarter risk management in projects for you and your business.
Respect the process – shortcuts can wind up taking longer
The project risk management process involves first identifying, then analyzing and finally tackling potential scenarios and events. And Henrik points out that it is important to properly complete all the steps.
There is a great deal of awareness about identifying risks at the start of the project, but many projects stop there and with general headings such as “delays” and “high costs” instead of defining clear actual undesirable events (risks). When you have well-defined risks, you can conduct an analysis and then produce and launch effective risk management plans. Furthermore, a systematic approach like this often leads to new solutions and methods being identified which in many cases are better than the original. Basically, risks turn into opportunities. One tip in this context is not to seize on the first solution that comes to mind. Instead, it is better to survey a number of different roads ahead and then make an informed choice of the best option.
All project organizations are made up of people
Project management is largely about making decisions, sometimes in consultation with a project management team and often in partnership with other stakeholders. For this reason, good decision-making demands an insight into how underlying drivers affect the way individuals draw conclusions, as well as an understanding of the impact group dynamics and communication have on the decisions made. One real pitfall is to assume that other people perceive risks and actions in the same way that we do, when they may take a completely different view, Henrik says. We have different frames of reference and different opinions on how to work in projects depending on earlier experiences and there are no absolute rights or wrongs. Communication is vital – allow time to talk through principles and forge consensus. What is important for this particular project? How can we help to make it work well for everyone involved?
Organizational structures may naturally both pose obstacles to and facilitate decision-making, and the decisions are also affected by the informal culture of the organization. Some organizations have a culture that allows people to reveal their uncertainties, accepts mistakes as long as people learn from them, and encourages seeking help from others. This kind of culture facilitates good preventive risk management work, while a pressure cooker culture that forces people to keep everything under wraps and curses anyone who has the audacity to bring up potential problems will probably be more preoccupied with costly problem solving.
Project management – create clarity and consensus
Reaching consensus on goals and approaches takes openness and conversation. In smaller internal projects in which everyone already knows each other, this phase may be completed quite quickly, but in larger projects with a large number of actors and stakeholders, a steering group should be appointed, and it should be ensured that the client (and users) and the project manager and project organization really are in agreement on the purpose and goals of the project, as well as how the project is to be run. Part of this work is about clearly setting out how the project is to be managed, i.e. how much authority is to be delegated to the project organization and which decisions have to have the backing of the steering group, but also the balance between control and flexibility that is to prevail in relationships with external suppliers.
Three quick tips for smarter risk management in projects
- Be concrete and clear: Remember to define the risks in sufficient detail to enable a good analysis of their probability and impact – knowledge which will then be crucial in effectively tackling risk and developing project plans.
- Don’t pick the first solution you come up with. Produce several alternative solutions before investing too much time and energy in one option.
- Focus on establishing good communication within the team and with other stakeholders and engage in discussion to reach consensus on goals and how the project is to be run.
Henrik Szentes, PhD, has run his own consultancy since 2010 with a focus on organizing and leading projects and project-based organizations. Henrik also carries out research in the same fields, with a particular focus on paradoxes and tensions. He has run courses in risk management and project management since 2001 and has recently published a book on project risk management: “Tio klassiska risker i projekt – och hur man vänder risk till möjlighet” (Ten classic project risks and how to turn them into opportunities) (Roos & Tegnér). Henrik is the program director for the IFU course on Risk management and project management.
We have produced the Risk management and project management program for people who lead large projects, who are clients or purchasers in a project context or who are on the management team/board of an operation that is highly dependent on project deliveries.
(You will be redirected to www.ifu.se and the program page on click. Please note that the landing page is in Swedish only)
