Risk Management is a process by which uncertain events (risks) that may affect a project are identified, analysed, planned for, monitored (controlled) and, in the event that they are realised, dealt with.
However despite the conventional wisdom that Risk Management will prevent project failure from a cost, time, quality perspective or whatever other criteria has been established for successful delivery, projects continue to fail.
FAILED PROJECTS
Most organisations have some form of risk management process and purport to deal with the risks that affect them. However the number of failed projects would seem to counter this belief that we can actually managing risk.
There have been some major and well documented incidents related to risks being realised and these include; Barings Bank, NASA’s Challenger & Columbia, Piper Alpha, Chernobyl, Fukushima, Heathrow’s Terminal 5, Nicoll Highway, Bhopal, and BP’s Deep Water Horizon. All of these high profile organisations had credible risk management processes but why did they suffer high profile failures?
HUMAN FACTORS
People make projects and it is the human factor in risk management that is perhaps the greatest uncertainty. As human beings, we are not good at managing risk. After all risk is something that happens to other people and oftentimes we forget that Murphy’s Law is not selective as to who or what it governs.
How often are risk assessments based on a register from a previous ‘successful’ project and reworded to suit and then declared as the risk register for the project. This may enable some administrator to place the relevant ‘tick’ in the appropriate ‘box’ but what are the chances that the last project was ‘lucky’ and risks were not realised?
Risk techniques can also assign a cost to a certain event/risk through an estimate of cost and likelihood but what about value and project success. Perhaps we need to be more focussed on cause and effects on project delivery rather than a list of perceived events and becoming wrapped up in many risks that are not necessarily important to delivery or are ‘business as usual’.
IS THERE A REAL RISK?
If a major risk is identified and mitigated that nobody had the chance to see… was there a real risk? If a risk is identified and realised and then resolved (rather than covered up) a hero has been made. The latter is more likely as it is easier to let the risk happen and fix it because people can see the problem. Justifying the cost and time of effective risk mitigation can be more difficult than ‘going with the flow’ like a dead fish and dealing with the actual ramifications.
Risk Management practice follows current conventional wisdom but just applying Risk Management will not make risks go away or guarantee project success. The application of the tools and techniques to identify and analyse risks needs to be reinforced with the moral fortitude of the Project Manager and relevant Stakeholders…unless of course the “powers that be” wish to take a chance, allow risks to occur, and be heroes at the stakeholders’ expense.
Bio:
MBA, MSc DIC, BSc; Chartered Engineer, Chartered Geologist, PMP
Over thirty years’ experience on large multidisciplinary infrastructure projects including rail, metro systems, airports, roads, marine works and reclamation, hydropower, tunnels and underground excavations.
Project management; design & construction management; and contract administrative in all project phases from feasibility, planning & design, procurement, implementation, execution and completion on Engineer’s Design and Design & Build schemes.