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Manage Risks Early or They Manage You

June 25, 2013

I read an interesting article last week (Curbing Risks in Complex Projects) that touches on what can bite you.  It has to do with risk management in projects, which really means identifying and managing emerging problems… to keep them from being a full blown disaster.  If you manage projects and people, read this short blog, a couple of key concepts presented in this article are definitely worth knowing, and while reviewing them I also added a couple of suggestions from my consulting work this past month that I know will help you… if you use them 😉

First key concept in the article: #1 “Expect what others don’t anticipate” (note the impact of the unanticipated being greatest in complex projects.)   Aside from being an optimist or a pessimist, as a general world view, how often do unanticipated risky things really happen; you know, stuff that can threaten the whole project?  Is it common place, rare, happens once or twice every project… what would you guess?

The magic number, according to this research spanning 35 studied projects, is 6-7.  That is, 6-7 times a project, some unplanned interruption is going to raise its head and present a varying degrees of risk to the project.  61% (how did they get that number?) of the time, they cause a major or negative impact on the project.

To summarize, in the average complex project, you’re going to have 4 (unanticipated) problems emerge that aren’t in the plan and will get destructively big if you don’t manage them early and correctly.

Second key concept: #2 Where will those “unanticipated” problems or risks come from? As you can imagine, it’s not that helpful to expect the unexpected unless you know where to look, as the risk can came from hundreds of different situations.  In this study, they identified 600 different risk contingencies, and even after that they grouped them into 13 groups.  From there they wrote the common areas from which unplanned damaging types of risks or problems are most like to emerge,  these are:  1) Changing requirements for the project,  2)  Shifting customer needs, and  3) Communication breakdowns.

Ok, so now you are informed.  You even know the number.  You know the three categories… but on the other hand, big deal.   Besides quoting that bit of research at the next meeting and looking knowledgeable, how will you use that information?   It doesn’t look definitive enough to stay on top of, and you might be thinking, “It doesn’t matter all that much that the problem is expected or not, I still have to fix it.”

So let’s rethink this.  Given that if you manage a complex project you’re going to have on average  4 unforeseen situations emerge that threaten the project, what can you do to get ahead of the process?

Well it turns out, you can do a couple of things that are really helpful.  In the article they suggest creating an early warning system using performance management and contingency planning.

OK, still with me?  Tell me what your first thoughts are when you read “performance management and contingency planning.”  I can’t hear you, but honestly are you going to manage projects different tomorrow, based upon what you just read?  Probably not.  Just sounds like more conceptual stuff.  But what if I could give a way to apply this… starting tomorrow?  Here goes.

If you are managing projects and people, you can create a very effective early warning system.  Yes, you may not be able to predict where unplanned problems are going to come from, but you’re way ahead of the game if you catch it early.  And one simple performance measurement is one of the best early warning systems.  What am I referring to?

Here’s a simple way to think of performance measurement as an early warning system.  You simply are going to track if people, teams, departments… “get done what they say they are going to accomplish”.  That’s it.  See I told you it was simple… but incredibly revealing.

Try borrowing from the software development world and the agile methodology and use their weekly sprint model.  Just have key individuals, teams, etc., define what they are going to accomplish each week that will create the most value… and then have them document whether they completed each item and turn around and measure their level of success each week.

It turns out that almost any emerging problem, whether its changes in requirements or a vendor under-performing, or internal political conflict, interrupts people’s ability to get done what’s most valuable each week.  So you pick up the problem very early in lower performance (success at completing each week what’s valuable) scores.

But don’t stop there.  Here’s the very important second step When people miss their commitments, or their deadlines, you want to use that as a cue to look “under the hood” and ask/identify “why.”  Some issue or collection of issues is causing them to be less than 100% successful, and that’s the tip to identifying emerging stresses and strains in the system.

Looking at the strain that people are under to hit their deadlines is the way to really leverage the value of your early warning system.  Sometimes strain comes from the quality of the product or its availability, sometimes strain comes from the limited capability of the tools being used, sometimes strain comes from people and politics, the lack of cooperation and support, or dependency issues.  Regardless of where the strain is coming from, it’s a direct line to identifying risks in their infancy.

So you set up a simple weekly performance measurement system, and then if and when scores drop, you shift into second gear and and ask “Why?”    That process gets you out in front in both identifying the cause of emerging risks and also  resolving or proactively update your plans.

Bottom Line: So let’s recap.  For any project that’s complex, you’ll be well served by establishing metrics on key individuals or departments and track their ability to hit their deadlines, their commitments.  Beyond tracking, and to get ahead of the risk curve, you want to uncover and address the cause behind any lowering of performance scores.  This gives you an exceptional early warning tool. It’s part of what we call the Results Pump.

One final thing.  No actually two.  Let’s make this a PS.

1. Recognize that people don’t easily offer that they are in trouble.  In general we are all reluctant to declare an emergency, which then can both hide the problem until it’s a raging fire, as well as make you slow to respond with enough resources.  Either way it’s not good.  So I don’t rely solely on the lead person or a project managers’ assessment of the status of  a project, or their sense of the level of risk.  Instead I strongly suggest you are best served by knowing the performance numbers and the “Why” behind the numbers.
2. The review of progress scores is an absolutely great chance to give positive feedback, plus coach and refine on what creates value.  It’s not directly tied into risk management, but I’d be amiss if I omitted it here.

Make sense?  So when are you going to get this done by? 😐

Call us if you need help in setting this up.  (707 487-3000)  You’ll be glad you did.

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