Effective Risk Response Plans

Effective Risk Response Plans

In my last blog I discussed the three essential layers to a strong project management environment that lend to better communication and higher levels of collaboration, problem solving and ingenuity. This is the perfect environment for open discussions of risk and ambiguity in project scope and the establishment of realistic measures and risk response plans.

In this blog I would like to build on this idea of effective risk response plans. Assuming that we have a strong environment of open communication and collaboration, lets focus on the specific details applicable to establishing risk response plans.

Now, when you look into the PMBOK (Project Management Body of Knowledge), from the Project Management Institute, they’ll tell you that you need to develop plans for positive risks and negative risks. There are four common approaches to each that are clearly mapped out in any formal project management training programs. I would like to talk about the stuff that exists in the gray areas of project management between the lines of these four common approaches.

In order to “transfer” risk to others and reduce the potential risk that we have to deal with, there are several things that are commonly done: outsourcing, fixed price contracts and a reduction in time and material work. Lets take a look at each of these and the implications therein.

First, outsourcing. Outsourcing is a vey common approach used to reduce exposure to risk. We contract part or all of a project to an external entity that has the appropriate skills, experience and manpower to do the necessary work. Perfect, or is it? In reality, outsourcing has many complications. First of all, it requires a great deal of pre-planning, ongoing management of work performed, and an effective way to monitor quality, progress and completion of scope. Books have been written on these topics alone. In addition, something that few people talk about is that if and when the outsourcing entity fails, all of the accessed risk returns to you like a boomerang. This is something that most organizations neglect to plan for until it’s too late.

Second, fixed price contracts. We use them for many reasons, but one reason in particular is the intent to transfer risk from us to someone else. We take some project work and ask XYZ Corp to give us a fixed price quote to perform all the work detailed in our well-defined scope documents. Once we approve their contract, we no longer care whether it costs them more or less than the agreed amount. True or false? Our contracts protect us, right? The truth is that contracts give us something to fight with in the court of law, but never guarantee the completion of a project. There is a specific difference between these two outcomes that needs to be understood by project management. When your contracts are compromised, you are left with incomplete work that may be more difficult to complete than what you started with.

Third, time and material. In most cases formal training suggests that “time and material” incurs greater risk for us. Although this is true at times, there are times when the use of T & M can save you a great deal of time and money. I know many senior project managers that prefer to use T & M on a regular basis. They have more than enough experience to effectively manage T & M on an ongoing basis. When used properly, this can save the organization anywhere from 10-20% in overall project budget. Something worth thinking about.

So the next time you’re planning your risk response plans and considering whether to outsource, leverage fixed price contracts, and reduce T & M, perhaps you should reconsider what risks you’re really taking.

Keep in touch with Larry at:

http://larrytbarnard.com

Training Value Proposition – Part 2

Part 2
In my last blog I discussed four common “training value propositions.” I suggested that organizations tend to see training and development as either a way to police, maintain power, leverage currency or sustain ongoing personal development. I encouraged you to support a culture that builds people, rather than focusing primarily on policing, rules, blame, cutting costs and maintaining political power. I claimed that when you give people freedom to perform they give back in return. In this blog I’ll give examples of the potential benefits of applying this new “training value proposition.”

The value proposition that supports this sees training and learning as a component of personal development that helps build people and a strong organization. This type of organization benefits by being flexible, quick to change when needed, supportive, mature and willing to take risks to achieve goals and objectives.

Flexible:
Ongoing training and development requires people to continually digest new information, concepts tools and techniques. Over time, people become very good at “learning” in general. They begin to open up to opportunities for new ideas, ways to improve and alternative approaches to working. This creates flexibility over time. In the same way that a yoga instructor is used to stretching their body, a professional student has a flexible mind that is quick to digest new information and decompose value therein.

Quick to change:
This mental flexibility leads to another benefit: ability to change when needed. Constant learning and adapting keeps the mind malleable. Paradigm shifts are not seen as life threatening. Change is simply another thing to learn and adapt to. In fact, a professional learner is constantly purveying their surroundings for new ideas and ways to reduce waste and increase their abilities and professional competencies. This person is quick to change and adjust to new challenges.

Supportive and mature:
Building a professional learning environment requires ongoing coaching, mentoring and support. Over time, people are given more and more freedom to grow and develop. This leads to maturity in development and character and the ability to give back to the community with coaching and mentoring to help others.

Risk taking:
As people are given more and more freedom to grow and develop, they are also given more and more freedom to try new things, challenge the status quo and take risks. In the end, students become leaders and leaders create new ways of doing things.

My only question to you is, can you afford not to develop a learning organization that is flexible, quick to change when needed, supportive, mature and willing to take risks to achieve goals and objectives. What challenges are you facing in the coming years and months? What kind of staff will enable you to succeed? How can you aid in their development?

Larry Barnard

Managing Project Risk: Using the Art of Communication

Communication is integral to almost every aspect of a project life cycle. Communication problems are one of the number one risks to the success of projects worldwide. What can a project manager do to reduce this overwhelming risk?  The use of formal risk management processes provides a way to increase the odds of success by requiring risk identification analysis and risk response planning.

 A good place to begin risk identification is by asking, “What obstacles are created by the risk of communication breakdown?” Typically, there are problems like general confusion about the intent of the project, a lack of buy-in from the stakeholders, errors in requirements development, and possibly even design flaws, but some of the more complex risks associated with project failure are a direct result of inadequate communication and interpersonal skills on the part of the project manager. This White Paper addresses these issues and provides insight into how to go about resolving them.

 Starting off with a Communication Top 10 To-Do List, this White Paper I recently wrote for Learning Tree addresses these issues and provides insight into how to go about resolving them.  Download your copy here and let me know what you think!

Larry Barnard