Project Management: Managing Risk Project

Project Management: Managing Risk

Project management is defined as "a set of activities which has a defined start point and a defined end state and pursues a defined goal" (Slack, Chambers, Harland, Harrison, & Johnston 1998, p. 589). The challenge of project management is to ensure that the project achieves the defined goal. The major problem of project management is that there is a lot of uncertainty involved in getting from the start point to the end point. Project management means getting from point a to point B. successfully, but there is never a clear path to point B. The project manager has to manage uncertainty to make it most likely that point B. is reached. One source describes this effective saying,

The role of project management is to assist in turning uncertain events and efforts into certain outcomes and promises. If this is the case, then the primary process associated with project management should be that of risk management (Focused Performance 2005).

This shows how risk management is a key part of project management. The processes of risk management will now be discussed further.

Risk management is a process that involves measuring risk, assessing risk, and finding ways to manage identified risk. Before anything can be done about risk though, it is essential that risk is first identified. The alternative is that you assume that the project is going to proceed smoothly. However, while these kinds of false assumptions can initially make a project seem simpler, they only make the outcome harder to reach when problems do occur. In short, to prepare for and minimize risk, you first have to know about the risk. Daft states that "the measure of risk captures the possibility that future events will render the event unsuccessful" (Daft 1997, p. 280). Assessing the most likely risks relates to considering uncertainty, which is described as "a situation in which a decision maker has neither certainty nor reasonable probability estimates available" (Robbins, Bergman, & Stagg, 1997, p. 192). This refers to making a decision where the definite outcome cannot be known. If a future event has a high possibility of rendering an event unsuccessful, then it needs to be identified and action needs to be taken to ensure that it does not. The likelihood of a problem occurring is also important to consider. For example, even if a problem only has a small impact on a project, if it has a 90% chance of occurring, it is worth considering. These are the kind of problems that may not stop a project completely, but can gradually wear it down. Even very minor problems can accumulate, creating problems and causing stress, and causing a gradual decline until the project does fail. This shows that it is important to focus risk management activities by identifying the most likely problems and the most damaging problems.

The next consideration is how risks can be identified. This can start with a simple process of considering a project and listing everything that could be a barrier to its completion. This can be a starting point, but may not ultimately be useful. After all, there are an unlimited number of things that can theoretically prevent a project from proceeding effectively. It is not feasible to suggest that every possible problem can be prepared for. Another way to manage risk is to consider all the steps necessary to successful completion of a project and then determine what can prevent each step from proceeding. In a complex project, this can also mean determining the steps of a project that are the most critical to a successful outcome. This focus on the key success steps associated with a project is an effective way to concentrate on the most critical problems, rather than focus on every possible potential problem. In addition, while some would say that it is better to prepare for the worst and think of every possible problem, this in itself can be a waste of resources and can reduce the amount of focus on the most important potential problems.