What Can Go Wrong: Managing Project Risk

What Can Go Wrong: Managing Project RiskProject managers can set themselves up for failure by not properly planning for risk. Overly optimistic proposals run over budget, past deadlines and through resources if there isn’t a comprehensive plan for mitigating and responding to expected risk.

John Juzbasich, D.Ed., a risk management expert who has taught courses both in the U.S. and internationally, says that too many project managers underestimate risk because they don’t think about what can go wrong at each step. They don’t recognize the variety, number or prevalence of risk.

For example, Juzbasich recalls an exceptional project leader in one of his courses. This woman, who had an M.D. and Ph.D. worked in the pharmaceutical industry and was in charge of a project with 50 steps. Juzbasich told her that even if she was 99 percent effective at completing the earliest steps, she would have an increasingly higher risk of failure with each ensuing one. With so many balls in the air and so many more potential risks, her effectiveness would decrease. In fact, after completing all 50 steps, her effectiveness had dropped to about 60 percent.

Why Risk Management Training is Important

To be successful in the face of numerous unknown and unpredictable risks, project leaders need to plan for emergencies and unexpected disruptions within their budgets and timelines. Juzbasich explains that there are a variety of techniques and methods that project leaders can use for risk management.

For example, the fishbone—or Ishikawa—diagram helps determine risk by analyzing a problem and pinpointing possible causes. Breaking each possible problem down to its most preventable and actionable sources, the diagram can be used for dealing with current challenges or discovering potential causes of a feared issue.

Juzbasich also uses scenario planning, the Socratic method and seven other techniques for teaching risk management. Although these techniques are familiar to most project leaders, Juzbasich finds that few people actually employ them or fully understand how they can be beneficial. So, he only spends part of the first day of his course explaining the techniques. The rest of the time is used for putting these techniques into practice.

Real World Applications

The purpose of Juzbasich’s course isn’t to learn the techniques—it’s to practice them for future real-world use on actual projects. Risk management techniques are useless if project leaders aren’t able to take them to their team or upper management and present a solution.

Juzbasich points to an example from one of his courses: The class broke into small groups and each worked on one class attendee’s actual project issue. From there, the entire class tackled this issue and employed Juzbasich’s techniques to find solutions. That group member then took the information to her upper management. Her superiors adopted the solution, saving the large project and benefiting her company.

“What we had done during class, and as a team, worked on her situation. She was then immediately able to apply it to a work environment,” Juzbasich explains. “It isn’t theoretical at all. It’s truly hands-on learning. It benefited the overall company as well as her team because of the work we did that day. It was cool to make a difference in one day. That told me we were doing something right.”