Are you struggling to answer this question? You might as well look at the publicly available statistics for the reasons e.g. CHAOS report published by Standish Group, says 31% of projects got cancelled before completion & 52% of projects cost shoot up to 180+% of their original estimates. Considering above statistics, one may wonder why this does happen. Isn't there any check to limit project failure?
There is no simple answer to it. However if you want your project to succeed, you need to ask 'why it will fail?’ It is precisely like doing a pre-mortem analysis of project for its failure. We have found this is an effective way to limit failure of a given project. Moreover effective way of doing pre-mortem analysis is to practice Risk Management - identifying all the reasons/instances that will threaten success of a given project & tackling such reasons/instances.
Generally Risk is the potential action/activity (or lack of action) that will lead to undesirable outcome(s).
Delivery of each project has certain cost associated with it & this cost is has three primary constraints viz. Time, Quality and Resource. A change in these parameters can affect project scope & in turn affect the project delivery. It is in the best interest of an organization to minimize the uncertainty in project delivery (delay, over-budget, cancellation, etc.). Only if you are well-equipped to tackle risks, you can limit the setbacks to delivery of a project (if not avoid). Proactive & practical approaches in risk management certainly help you to do so.
An organization practicing risk management perform following activities:
Encourage team members, customer to highlight & register risks. It is easy to tackle risk if they are noticed early on. Make sure that you clearly & regularly update stakeholder about the risk status, severity, course of actions and delegation.
Risk management to be effective needs systematic approach of using practices and policies of identifying, analysing, tracking, controlling, delegating and communicating risks. You need to make it a habit.
While tackling risks, the judgment of assessing & building response plan in its subjective part is an art but the systematic & repeated risk management approach with set of guidelines can evolve as a science. Like project planning, risk management is a continuously evolving process.
Bad news gets only worse if it is suppressed for longer hence be transparent & communicate clearly & regularly with the stakeholders.
As you create & execute risk response plan - be it to mitigate, avoid, transfer, accept risk or create a contingent plan; make sure you align all these actions with project objective and objective(s) of your organization.
Do I have to state how critical it is to start gathering data? Trust me, historical data & the statistics makes it a lot easier to understand risk & manage it. If you are not using software, your risk management strategy is all people dependent & is surely error prone. Get risk management software, start registering & managing risks through the software.
Dhan is co-founder of Zilicus, the technology company that offers online project management and collaboration software: ZilicusPM. He writes for ZilicusPM blog about project management challenges, tips, trends, SaaS, Cloud. This post has been republished with author's permission for larger interest of PM network.