Different levels of management are appropriate for different projects. The hard part is knowing how much is enough. Many project managers believe that the amount of management effort, and type and scale of management techniques, is a function of project size, duration, cost, or complexity. While this is partly true, the real issue is, “How important is it to achieve the project objectives?”
For example, if the schedule absolutely must be met, then a high level of management effort and use of sophisticated techniques are warranted irrespective of project size, duration, cost or complexity; in order to maximize the probability of timely completion. An example of this would be nighttime replacement of a water main that requires trenching across a busy street. Although the project is small and routine, careful control is needed to assure that the roadway will be open by the time morning commute starts.
One of the key ways that project managers keep projects on track is to effectively manage risk and change. As for any other process, the project manager must decide how much risk management is appropriate. Again, the decision rests on how important it is to achieve one or more of the project objectives (schedule, budget, quality, etc.).
The following matrix is a guide to deciding the level of risk management that is commensurate with the importance of achieving project objectives. This one is used in the Managing Project Risk training offered by the League of Oregon Cities’ Local Leadership Institute. It addresses projects ranging from unimportant to those where failure to achieve one or more project objects is not a viable option.
Ideally, every project should have some level of risk management. But, the matrix allows for a situation where achieving the project objectives is rated “unimportant” (a score of 0-15). The matrix is purposefully constructed this way. It may be that such an unimportant project almost never exists, but inexperienced project managers are not convinced that most projects warrant taking a structured approach to risk management. The matrix allows these project managers to discover that it would be exceedingly rare to have a project that does not require at least a rudimentary level of risk management.
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DECIDING THE APPROPRIATE LEVEL OF PROJECT RISK MANAGEMENT |
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| Every project management process and tool takes time and effort. The question is always how much effort is justified by the project and the situation. For risk management, this decision revolves around how important it is to meet one or more project objectives. The more important it is to keep a project under control, the more robust the risk management process needs to be. While ignoring management of project risks is not a viable option in any situation, the depth of effort and detail depends on the unique circumstances of each particular project. | ||||||
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VERY LOW |
LOW |
MEDIUM |
HIGH |
VERY HIGH |
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Not important |
Nice to achieve; but not critical |
Conse-quences of failure are low to mod. |
Conse-quences of failure significant |
Critical; failure is not an option |
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| How important is it to |
(circle your rating) |
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| Complete on budget |
1 |
10 |
25 |
50 |
100 |
|
| Complete on schedule |
1 |
10 |
25 |
50 |
100 |
|
| Fulfill all the requirements of the scope |
1 |
10 |
25 |
50 |
100 |
|
| Meet the quality expectation |
1 |
10 |
25 |
50 |
100 |
|
| Have a fully functional finished product |
1 |
10 |
25 |
50 |
100 |
|
| Have a satisfied Owner |
1 |
10 |
25 |
50 |
100 |
|
| Know if a “high” risk is unreasonably high |
1 |
10 |
25 |
50 |
100 |
|
| Understand the probability of completing on schedule |
1 |
10 |
25 |
50 |
100 |
|
| Understand the probability of completing on budget |
1 |
10 |
25 |
50 |
100 |
|
| Know which tasks impose the greatest risk on the overall project |
1 |
10 |
25 |
50 |
100 |
|
| Communicate the probability of success/failure to others |
1 |
10 |
25 |
50 |
100 |
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| Demonstrate that a tight schedule is actually inadequate |
1 |
10 |
25 |
50 |
100 |
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| Demonstrate that a tight budget is actually inadequate |
1 |
10 |
25 |
50 |
100 |
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| Avoid damaging your reputation |
1 |
10 |
25 |
50 |
100 |
|
| Avoid damaging your organization’s reputation |
1 |
10 |
25 |
50 |
100 |
|
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TOTAL RATING |
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Level of Project Risk Management |
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| 0 – 15 Risk Management not required. The most basic project control techniques are adequate.16 – 150 Minimal effort to manage risks is warranted. Project Manager should think about what might go wrong and how to avoid the consequences, devising a response for the high probability and high severity risks.151 – 375 A small team of knowledgeable individuals, including the Project Manager, should implement all of the Risk Management processes. Rely on Qualitative analysis.375 – 750 Implement all of the Risk Management processes. Use a team that is well qualified in each key area of risk or technology. Update the risk analysis periodically and each time there is a fundamental project change. Elevate the importance of managing risks in accordance with the plan in the minds of team members. Consider using Quantitative Analysis.751 – 950 In-depth Risk Management is needed using robust processes. High level of effort is justified. Quantitative analysis is recommended.>950 Same as 751-950, except that Quantitative analysis is required. | ||||||
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© 2006 HW Crisp LLC. Unrestricted permission to reprint granted by H. Wynnlee Crisp, April 3, 2006, as long as this copyright notice and license is included. hwcrisp@aol.com (425) 681-7887 |
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Bio:
H. Wynnlee Crisp has more than 30 years of experience in managing projects around the world. He also assists organizations in developing project delivery systems and teaches project management for the University of Washington, League of Oregon Cities, and Association of Washington Cities as well as for agencies and businesses. His short-courses include Managing Scope, Schedule and Budget; Project Leadership; Managing Project Risk, Measuring Project Performance; Managing Consultants; Negotiation Skills and others. He can be reached at hwcrisp@aol.com, (425) 681-7887.