The Project Group, LLC
The Project Group, LLC Newsletter
Advancing Project Management July 2003

in this issue

The Project Group, LLC

What Is Risk?

Risk Happens

Impact

Probability

Next Month In The Newsletter



The Project Group, LLC

We specialize in assisting corporate and government clients in learning to improve their productivity while planning and executing projects.

Our three-phase approach yields faster, more efficient project initiation, planning and execution results.

Greetings,

Each month our newsletter delves into a specific step in the phases of Initiation, Planning and Execution of projects. Our methodology is applicable to any project in any industry. Our systematic approach to Project Management is designed to help your company's projects gain traction quickly, communicate clearly to all parties and keep them on track to reach a successful conclusion.

We facilitate workshops that jump-start your teams, making sure they know what they are going to do and validating they have the time and resources with which to do it.

This newsletter focuses on Process 10:

Risk



  • What Is Risk?


  • Life is a risky proposition. You could trip over your kid's toy fire engine on the way out the door and break your leg. On the way to the hospital, a real fire engine could run into the ambulance, because its siren cancelled out the oncoming noise. Once you are there the hospital could catch fire.

    The likelihood of any of these events is miniscule. While as a project manager you are ever optimistic you cannot be nave. Fire engines do happen and they could happen to your project.

    In addition to fire engines there is winning the lottery, holding on to that rare e-business stock that soars in 2003 and banner fishing days. All these events don't just "happen". You had to do something to set them up. The term risk, when applied to a project, can also mean something positive: an unexpected reward.

    Both "negative" and "positive" risks come under the banner of surprises. Remember! "No Surprises" is one of the project manager's mottos. You want your client or sponsor to bow down in awe of your ability to predict the future. When your predictions fail, have a plan in place to deal with that failure.

  • Risk Happens
  • Driving your car with bald tires, not wearing a seat belt, having just guzzled a six-pack is a risky condition. But as your teenager would say "Yeah, but Dad. Nothing happened."

    Risks, in a project environment, are quantifiable events. They are usually the result of conditions that lead to them. When you are trying to understand how to prevent or mitigate the impact of a risk, look to the actual event that may occur. That may give you some keys to deal with it.

  • Impact


  • The affect a risk has on a project is termed impact. Impact is usually measured in terms of time ("We lost three weeks") or money ("It cost us $5,000"). It could be also affect safety (Very Important) or morale (Less Important --in comparison with safety). When we define risks to our project and plan how we could prevent or lessen their effect on us, impact is one of the first things to examine.

  • Probability


  • Some project experts derive complex formulae to rate the probability of a particular risk occurring. Risk, however, is an emotional subject. You'll have a hard time getting your project stakeholders to respond to it with pure intellect.

    I'm highly perplexed how "risk experts" determine the mathematical probability of certain risk events. Projects by their very definition have never happened before. How is it possible to quantify the probability of a particular risk to this venture that has never happened before?

    We suggest stakeholders use a simple measure for risk probabilities such as "High, Medium or Low" without having to go into too much detailed definition. That's usually enough to begin determining on which risks to spend your time.

    Here's an example from Homeland Harbor Security (one of the Project Group's core competencies). When the first Homeland Security funds were released from Washington, they were distributed on a straight population basis. The Port of Baltimore, the largest harbor closest to our national capital and a major economic hub, received $400,000. North Dakota received $6 million. Without offending our North Dakotan neighbors we suspect we would all agree that the probability of terrorist attack on the Plains is remote. Of course, the impact would also be relatively low.

    To receive our newsletter, click here

  • Next Month In The Newsletter
  • Next month we'll talk about the process of identifying and quantifying risk.


    :: email us
    :: visit our site

    phone: 415-572-3084