Ask the Experts: Mike Clayton on managing project risk

Read Mike’s interview with Elizabeth Harrin (of “A Girl’s Guide to Project Management“) on the Gantthead website.

Mike talks to Elizabeth about managing the financial aspects of project risk, in her “Money Files” column: “a blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.”

In this “Ask the Experts” column, Elizabeth asks:

• What sort of budget-related risks might projects face?
• How can we better identify risk then, so that project managers don’t just stick with the force majeure items on their risk logs?
• Do you think Earned Value Analysis is a big help to project managers looking to manage financial risks on their projects?
• The delivery stage is a critical time, and that’s the point that conflicts arise between risk and return, when things are changing and stakeholders are keen to see progress. How can project managers handle that conflict?
• It sounds as if project managers need to spend more time thinking about project risk, to head off some of these problems and be better prepared to make these judgements.

Take a look at the full interview here.

Who Stole my People? Five Ways out of the Nightmare of Resource Theft

We have all been there.  By “all”, I mean any experienced Project or Programme Manager working in the real world of competing projects and territory-hungry sponsors and “C”-level executives.

Alpha and Zeta

Let me offer a basic scenario: your Project Alpha is one of several running within your organisation and, you are pleased to say, it’s running pretty well.  So what are the great rewards and honours that are coming your way as a result?  Well, not so fast!

Instead, when Project Zeta starts to run into problems due to bad planning, bad luck, bad leadership or some perfect storm of all three, its increasingly desperate sponsor comes knocking on your door.  Not for sage advice or the wisdom you have carefully accumulated.  No, what they want is your most precious resources: your people.

A Widespread problem

Organisations that juggle multiple projects (and which ones don’t) all face this problem.  There is a constant scramble for scarce resources with particular skills, experience or simply for those people in our organisations who just get things done.  This has a corrosive effect on your ability to deliver your projects effectively but, perhaps more important, it hits hard at the organisation’s long-term ability to deliver strategic change.

What, then, is to be done?

There are many components to a working solution to this and none is an easy or quick fix.  Implementing them all in conjunction with one another, however, will have a profound effect on your organisation’s ability to deliver strategic change and therefore to stay agile, retain value and build contribution.

Strategy 1: Selecting Well

Portfolio management and the ability to select a balanced set of programmes and projects that can be delivered within your resource constraints is the first and most strategic approach.  Select your initiatives well, not only to match them to your resources, but also to create a clear case for supporting them against other, operational, pressures.

Strategy 2: Planning

No surprises here but, truly, how many project and programme managers really invest the time and energy needed to develop a robust plan, with tested estimates and prudent contingencies, for their resource requirements.  I know you do, but if every PPM in your organisation did too, then there would be far fewer problems.

Strategy 3: Central Control and Governance

You want a resource: you come and see the top banana.  This is not about creating a bureaucracy, a power base or a roadblock.  It is about recognising that if people really are your most valuable resource, then like the gold at Fort Knox (is there still gold at Fort Knox?), it needs to have someone strong guarding access.  This is about good governance and the ability for one, suitably qualified and senior, person or group to make strategic judgements that give all of the projects and programmes their due weight.

Strategy 4: Contingency

I know that no organisation in its right mind will employ people to twiddle their thumbs until an emergency arises…  except, maybe, the fire service, or the ambulance service (they are separate in the UK), or the army, or the coast-guard, or…

Okay, so some would and we willingly, as a society, make those investments – and that’s what they are – to manage risk.  So aim to have some surplus resource available at times of pinch points in major programmes or projects.  Central planning of resource calls should allow this.  Think of it as an investment in risk management for your portfolio, rather than as an overhead on your salary bill.

Strategy 5: Change the Culture

One of the driving cultural norms is that senior executives are rewarded for delivering their projects or programmes to time, cost and quality.  This causes parochial behaviours and the development of neo-mediaeval fiefdoms within organisations.  Instead, create shared accountability across a whole portfolio.  In mediaeval France, kings stopped their Counts and Barons warring with each other by calling them all up to fight wars with other states.  Now, they need to negotiate with a war council for the men and machines to fight on the front to which they were directed.  This worked, and it can work in modern organisations.  It is not so much divide and rule as unify and lead.

What other strategies are there? 

Please do add your own strategies in the comments.

Top Ten things to build into your Project Contingency Plan

A contingency plan is a valuable part of your risk management. Whilst it won’t stop risks happening, nor even make them more likely, it will give you a clear set of steps to follow if it does happen. This will allow you to rapidly restore control and limit the potential for consequential threats. But what tactics can you put into a contingency plan? There are very many, but here, we sample ten of the best.

1. Create a schedule contingency, or “float”

Build extra time into your programme to allow you to absorb the delays that a realised risk can generate.

2. Identify options for extended working hours

If things go wrong, it will need to be all hands to the pump. So look at where you can generate a little extra work time if needed. Never use up this potential extra time by scheduling it into your baseline plan.

3. Look for non-dependent later activities that could be re-scheduled

If you need to turn your attention to the issue that’s arisen, know in advance what planned activities you can put off until later, without affecting your critical path and hence your completion date.

4. Identify non-critical activities that could be dropped

You may be able to do better than delay some activities… Are there any discretionary activities that can be cancelled entirely without compromising core functionality or essential quality standards?

5. Research off-the-shelf solutions that could be bought in

If you lose time, then you may want to save it again by buying ready-to-use components. If you find yourself over-budget, you may be able to buy less expensive generic components that have lower but acceptable levels of functionality.

6. Create budget contingency

Always squirrel away a small amount of budget as a contingency against troubles. Whenever you make a saving, keep it in reserve.

7. Identify non-critical activities, or deliverables that you could de-scope; reducing functionality or quality criteria

This will be an uncomfortable compromise, but if you know from the outset where stakeholders’ priorities lay, and the relative influence of different stakeholders, you can compile a hierarchy of specifications according to their priority, and hence know which ones you could compromise, if you have to.

8. Build test and remediation time into your plans

Things will go wrong, so it is far better to find them in planned test time and to fix them in scheduled remediation time. And if you have fewer failures than you anticipated, you will have the up-side risk of finding ways to use the extra time profitably.

9. Secure expert evaluators

Some projects are susceptible to deep expertise or experience and bringing this in at well-chosen points in your project can be an investment worth making. Know who you could call upon quickly if things go wrong and you can cut your remediation time and cost significantly.

10. Put in place effective change control procedures

Change upon change is chaos, so a project with no control over changes in scope, quality or specification detail is almost certain to encounter problems. And, in addition, without change control, your project governance is severely compromised.

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Learn more about how to build a project contingency plan, in Dr Mike Clayton’s new book, “Risk Happens! Managing Risk and Avoiding Failure in Business Projects”

See www.riskhappens.co.uk for details.

Buy it in paperback from Amazon here,
or in Kindle format, here.

Five Ways to Remove Project Risk

The highest standard of risk management strategy is to remove the risk altogether. It is not always possible, but let’s survey five approaches that you can consider on aspects of your project.

1. Over-design

A “gold-plated” specification that is over-specified with respect to the core functionality. Examples include redundant components, over-size strength components, or higher specification materials. This is a solution beloved of civil engineers who build structures on which many lives depend. The up-front cost can be high, but often whole-life costs are reduced due to longer maintenance cycles and longer life expectancies. Not therefore a solution used in consumer electronics!

2. Buy certainty

When you select components that are well tested, you can lock certainty of functionality, quality or cost into a component of your plan. These are sometimes known as “COTS” solutions, standing for “Commercial Off-The-Shelf”. Rather than develop bespoke components that do “exactly what we want”; trade some functionality for certainty that what you have will work.

3. Alternative solution

There may be other solutions to an element of your plan that offer complete certainty of schedule, budget or functionality. For example, rather than risk stakeholder resistance to an unusual idea, invest in a more acceptable solution even if you feel it does not offer equal benefit.

4. Address root cause

Root cause analysis, using techniques like the Fishbone and Five Whys, can help you identify a strategy that will address the cause and remove the threat entirely. This can be an exhausting and costly process, but identifying all of the failure modes up-front and addressing each one will remove a big chunk of risk.

5. Remove the risky element from your plan

if you cannot control the risk and the threat level is unacceptable, the only thing to do is remove that element from your plan and accept the compromise this causes. This is the basis of many public health campaigns: to avoid the risk, avoid the risky behaviour. Most readers will apply this in many aspects of their lives.

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Learn about the five other strategies for managing project risk in Dr Mike Clayton’s new book, “Risk Happens! Managing Risk and Avoiding Failure in Business Projects”

See www.riskhappens.co.uk for details.

Buy it in paperback from Amazon here,
or in Kindle format, here.

The Ten Strategic Risks that Cause Projects to Fail

Project failure seems to be almost endemic at the moment. There are frequent press reports of massively over-spent Government projects, and major commercial project delayed or cancelled. Anyone who works in a big organisation will have seen it up close, so let’s look at ten of the commonest reasons why projects fail. Each one is strategic, predictable and, most important can be avoided.

Risk 1.

The project goal and objectives are either unclear, or are disconnected from the organisation’s other priorities, leading to a weak case for change. This is really two reasons for the price of one.
Strategy: Invest time up front getting a strong definition signed off by strategic level managers.

Risk 2.

People have unrealistic expectations, leading to a determination of failure despite the project meeting its goal and objectives. Stakeholders will always have the last word on success or failure.
Strategy: Prioritise stakeholder management at all stages of your project.

Risk 3.

Senior people in leadership roles fail to accept responsibility for the project, and do not give it the support, commitment and leadership it needs. This often leads to an over-reliance on consultants or contractors.
Strategy: Unless you have clear and committed sponsorship, fold the project now.

Risk 4.

People resist the changes that the project brings or resist participating in the process, often because their role in the project’s success is under-valued by the team. Rule 1: people resist change. So what will you do about it.
Strategy: Plan time into your programme to engage positively with the inevitable resistance.

Risk 5.

Project management, change management, stakeholder management and risk management skills are lacking. Often, functional managers are co-opted into project management roles with little or no preparation.
Strategy: If you can’t secure experienced project managers, provide high levels of training and support.

Risk 6.

The project is poorly planned, without a sound basis for estimates of schedule and resources, leading to unrealistic deadlines or budget. And worse still, project managers believe their plans too early, with little or no supporting evidence.
Strategy: Stress-test your plans and never consider them complete without full risk mitigation and contingency plans included.

Risk 7.

Key elements of the project are not controlled effectively, such as changes to scope or functionality, delivery or quality of products, or deviations from plan.
Strategy: A robust change control process is necessary in all but the simplest projects.

Risk 8.

There is too much focus on cost – or price of contracts – and not enough on the balance between cost and risk/value. Value for money means understanding the risks and benefits, not just the costs.
Strategy: Always ask why low prices are as low as they are. If it seems too good to be true, then it probably is.

Risk 9.

A project solution is defined before adequate research has validated that is technically possible, organisationally desirable, and free of unintended consequences. We are too often seduced by the lure of the novel and innovative. New plus original equals big risk.
Strategy: Prototypes, pilots and extensive testing are not gimmicks but sound risk management tools.

Risk 10.

Project overload – the organisation is simply trying to do too much with the resources and attention that it has available. Many organisations don’t fail because they don’t manage projects well, but because they try to manage too many.
Strategy: Ruthlessly prioritise your initiatives and cull those which offer poorest value.

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Each of these threats is fully addressed
in Dr Mike Clayton’s new book,
“Risk Happens!”

See www.riskhappens.co.uk for details.

Buy it in paperback from Amazon here,
or in Kindle format, here.

Another New Favourite Software

Recently, I reviewed Trello as a fabulous, free Kanban tool.

Now, I have seen another tool, equally good.  It is called Wunderkit, and it is great for managing, collaboratively or alone, simple projects.  It is not what the project management community would understand by the term “project management software”.  It does no programming or sequencing, but for small, simple projects that many of my readers carry out, it may be just the tool – easy to use, free, entirely web-based (so no installation needed and easy multi-partner collaboration) and multi-project capable.

Because it is as much a personal productivity tool as it is a project management tool, I’ve posted a full review on my other (non-projects/change/risk) blog, on my main website.  If it sounds like this tool could be for you, check out that article, here.

Ten Reasons Crises Happen – and what you can do about them.

Risks don’t always materialise one at a time. Sometimes a whole flood of them takes over your project or business and creates a crisis. We usually think that crises emerge from nowhere, but this is rarely true. More often, we can see the crisis emerging with the benefit of hindsight and, with that in mind; we can draw conclusions as to what caused it. These conclusions offer valuable lessons that can allow us to prevent them… if we are wise enough.

Crises most often happen due to overconfidence, which can lead to an inability to perceive the available evidence:

1. Overconfidence in your predictions

The more work we put into our predictions and the more detail we give them, the more we are seduced into believing they are true. Remember that a prediction is just one scenario and any serious manager or project leader will identify a range of scenarios and make their plans flexible enough to deal with all of them.

2. Overconfidence in your plans

Plans are a special type of prediction – but the problem is compounded by each plan being based on its own set of predictions and assumptions. Make sure that each major element of your plan has its own contingency and risk mitigation strategy.

3. Overconfidence in your systems and processes

Systems and processes create a controlled environment, but they can go wrong or, more likely, we discover that they were not quite the right process for the situation. When we misread the context and implement a poorly chosen process, it is bound to fail under pressure. Constantly monitor your systems for the start of failure modes.

4. Overconfidence in your people

People are a common source of error, so constantly review performance and give feedback. Prioritise training and support, and use people and systems to provide back-up to one-another.

5. Overconfidence in random or unpredictable events,
like the weather

The clue is in the words “random” and “unpredictable”. Yet we often let nothing stronger than faith dictate our planning assumptions. Use evidence and statistics to draw up your scenarios and if sudden bad weather can be catastrophic, either change your plan or have a robust crisis plan in reserve.

6. Overconfidence leading to blindness to small but significant changes

The “confirming evidence trap” leads us to notice things that happen as we expect them to and be blind to small deviations that should alert us to forthcoming problems. Evaluate the detailed data and use “fresh eyes” from an outsider if you are in any doubt.

7. Overconfidence leading to blindness to outside influences

We think we are in control, but constantly survey the horizon for external changes that can affect your project or your business.

8. Overconfidence leading to blindness to the possibility of human error

We think we have the best people with perfect training, but many factors can lead to human error, like sensory overload, stress, multi-tasking, or distractions. Build in fail-safe modes if failure can lead to disaster.

9. Overconfidence leading to blindness to human weaknesses

People succumb to temptation – to take a day off unannounced, or to come to work tired, or ill, or under the influence of drugs or alcohol. We can be seduced by charismatic or attractive colleagues and are susceptible to greed, fraud and bribery. If you think your people are different, ask “what makes them so?” You’ll need a pretty special answer.

10. Overconfidence leading to deafness to warnings

Cassandra warned the Trojans but, believing their walls impregnable, they were deaf to her warnings. Which of your walls have weaknesses. The Greeks came in through the main gate. Listen to Cassandra and evaluate her warnings objectively.

 

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Learn more about managing risk and
avoiding failure in business projects in
Dr Mike Clayton’s new book,
“Risk Happens!”

See www.riskhappens.co.uk for details.

Buy it in paperback from Amazon here,
or in Kindle format, here.