What is Risk Management?
Microsoft Project Professional and Microsoft Project Server both provide ‘risk management’ capabilities. How in the world can a project manager objectively and empirically manage ‘risk?’ Does it mean that Microsoft’s Enterprise Project Management tools encourage you to “lay low” during your project? Does it include a library of books with titles like “Why Bad Things Happen to Good People?” Is it some kind of karma management device? Does it help you root out un-confessed sin?
No.
Risk management is a set of project management best practices that can be used to estimate:
- Bad things that can happen to your project.
- How bad the bad thing would be, if the bad thing happened.
- How likely it is that the bad thing will happen at all.
- What to do about the bad thing if, Heaven forbid, the bad thing does in fact happen (contingency planning).
Microsoft Project Professional and Microsoft Project Server 2003 have tools that help itemize and manage potential bad things that might happen, without getting too paranoid.
Risk Assessment Example 1 – My Dog Champ
My dog is a very large and muscular greyhound capable of speeds up to 45 miles per hour. Apparently an animal’s speed is inversely proportional to its mental capacity, and Champ is a case in point. I love Champ dearly, but on the intellectual front we are not exactly saving up for his college education (if you catch my drift.)
Champ is deathly afraid of the butterflies that frequent our back yard. He is loathe to go outside if they can be seen flitting gently from flower to flower. I have tried my best to explain to him the principles of risk management in this regard:
Risk = (The PRESENCE of an object or event) and the (POTENTIAL it has to cause harm)
Using this best practice to assess the risk of butterflies to my dog Champ, it becomes apparent that
- The butterflies are indeed present.
- However their potential for causing harm to an 80 pound dog is very small, even if they all ganged up on him at once.
Champ has never been one for mathematically calculating probabilities, so he remains unmoved by my logic. Even using Microsoft tools to organize and present this information has failed to move his opinion.
Risk Assessment Example 2 – A Project to Buy Milk
My friend’s father has grown extremely forgetful with age. During a recent get-together, we ran short of milk and this kindly old gentleman took it upon himself to get more. Due to his relatively short attention span coupled with a very optimistic outlook on life, the trip to the store took about four hours rather than the customary fifteen minutes. Though this was six months ago, he would presumably still be strolling happily North had the good officers of the local constabulary not found him, as a result of our missing persons report. Not to worry, he had an extremely pleasant afternoon and met some very nice officers. As I said, he is a very optimistic and friendly person.
In fact, the whole thing ended quite happily except for one tense moment. The police ‘all points bulletin’ instructed the officers to be on the look out for a “confused looking man” in mismatched clothing, and to place him in protective custody immediately. Upon hearing this particular turn of phrase, I quickly hid in my friend’s basement lest the good officers scoop me up in the same net, based on this physical description. I am, after all, a computer professional.
But I digress.
So, if we had a project team that included my friend’s father and the project required him to get milk, the risk would be:
(High probability that he would get lost) and (that the event would delay the project from 15 minutes to at least four hours AND require the addition of resources with guns in squad cars, AND the use of a basement).
So, measuring risk is simply an accepted means to determine how likely an event is to happen and what the impact is going to be if it does. This is then used to adjust schedules and resources (move milk delivery out four hours, add 14 squad cars and hide in the basement), so that the project schedule is not impacted.
Risk Assessment Example 3 – Smelling Like a Rodent at the Worst Possible Moment
Risk management also helps you to avoid over-reacting to things that seem scary but really aren’t. If you spend a lot of time fretting about being bitten by a cobra, and you live in Minneapolis, you should probably seek professional help and/or medication, unless you happen to be the curator of the Reptile House at the Minnesota State Zoo, and you smell like a rodent; now that, ladies and gentlemen, was a sentence. My point in this paragraph, as nearly as I can remember, is that a risk management methodology also helps to prevent the project manager from over-planning for bad events that are very unlikely to happen.
If a cat has kittens in an oven, it doesn’t make them biscuits.
Here is another truth we can take away from this post. Just because you happen to own and use Microsoft Project doesn’t mean you are a qualified project manager. If a cat has kittens in an oven, it doesn’t mean the kittens are biscuits.
So, it is important to understand the logic of risk management in general, before learning to use it in a tool like Microsoft Project Professional. Project management tools do not turn people into project managers.