How to evaluate projects and manage risk

 

How to evaluate projects and manage risk? Risk management goes hand in hand with project management. How smoothly a project runs will always factor on how well risk is identified, assessed and planned for. It is necessary to manage risk  effectively in order to avoid and reduce risks that pose a threat to project completion and success.  

 

Projects are liable to change throughout the project life cycle. For this reason, risk management should be an integrated and ongoing part of project management. You do not identify potential risks once, plan for them and then forget about risk. Evaluating new risks as the project is progressing should be one of the ongoing activities of the project manager. On a regular basis, the PM should be running through the following tasks. 

 

Identify risks 

 

Identifying and evaluating risks is a constant process. It requires complete honesty on the project manager’s part. There is no room for a ‘head in the sand’ approach to risk management. No matter how inconvenient a risk is, it needs to be acknowledged, and in evaluating risks, it is important to be honest again. It may be a small risk, but there is no sense in pretending that it is negligible when it is not. Correctly identifying and evaluating risks makes the next step easier. 

 

Document risks 

 

Well-documented risks make planning easier for the whole team. A risk log, listing and describing risks along with the predicted impact of the risk and the mitigating actions that could or should be taken is invaluable.   Everyone involved should be able to access and easily update this risk log. This allows the whole team to see at a glance not only what risks exist but also what can be done about them and what has already been done by other team members. 

 

Prioritise risks 

 

Not all risks are equal. In order to prioritise risks, the project manager needs to look at the impact the risk could have in terms of cost, time and the quality of the final deliverable. This needs to be assessed alongside another variable: how likely is it that the risk will actually occur? A risk that is very likely to occur but will have a very low impact may actually be assigned a lower priority than a less likely risk that would have a much bigger impact. 

 

Plan responses 

 

Every risk should be planned for. The plan should include what can be done to avoid the risk and what can be done to reduce its impact. Planning responses to risks will also help identify where time and resources should be spent within the risk management process. If the actions needed to avoid that big-impact, low-probability risk are minimal and cheap, then it may make sense to avoid that risk and accept or reduce the very low-impact, high-probability risk. Ongoing, well-documented risk management will often make the next action crystal clear to everyone involved. 

 

Verto provides a whole programme view so you can plan, assess risks and stay focused on project delivery.  Sign up for your 14 day free trial to check it out or email us at info@vertocloud.com  for more information!


Forecast frequently to enable tactical shifts

 

Good project management involves frequent forecasting. While it can be useful to forecast results right at the beginning of a project’s life cycle, the true magic of forecasting is that it allows for constant readjustment throughout. Forecasting allows you and your team to stay on track by anticipating extra tasks and resources for the project plan or budget and identifying tasks and resources that may no longer be necessary.

Frequent project forecasts facilitate proactive planning and flexibility. They can allow the project manager to regularly update the business case, which can help the team members keep the project on track, and also allow sponsors and other stakeholders to understand the reasons for any delays or changes.

A key element of project forecasting is to review the risk events that have already occurred and assess the remaining risk triggers. There are always a number of unknown, and often unpredictable, variables in any project, but frequent forecasting provides the project manager with valuable knowledge that enables proactive resource management as the work progresses.

What should we forecast and how frequently?

Frequent forecasting around time, costs and quality of deliverables is vital. Each forecast will allow the project manager to update the business case so that all team members and relevant sponsors know exactly how the project is moving along. The project manager will also be able to reallocate resources and seek sponsor approval in a timely manner.

Time forecasts allow for the reallocation of resources, including team members. To accurately forecast project duration, it is necessary to monitor the activities that will impact the project completion date as well as those that influence project milestones. Modern project management software lets you log updates on the progression of these activities as often as needed for any individual project, which will depend on its nature. You may need to do this daily, weekly or as you complete each relevant task.

Cost forecasts allow the project manager to plan for an injection of more resources and seek sponsor or management approval when necessary. Most projects can benefit from employing the Earned Value Management System in order to accurately forecast ongoing project costs. Depending on resources and the complexity of the project, you can also use trend forecasting, also known as “straight-line” forecasting, to estimate future project costs, although this can be less accurate. Cost forecasting is also something that software-based systems incorporating financial data to support budgeting decisions can help with, and again, using such software lets forecasting occur on an ongoing basis and as frequently as is appropriate for the individual project.

Quality forecasts also allow for necessary adjustments to the project schedule or resources. Frequently forecasting in the area of performance and the quality of the project deliverables increases the chances that the project outcomes will match those identified at the planning stage. According to the “Rule of Tens,” the cost of correcting a technical issue increases tenfold as a project progresses from one phase to the next. This means, of course, that you must identify and correct issues around performance and quality as soon as possible. You can do this as long as forecasting around these factors happens frequently and in advance of the project moving on to a new phase.

Understanding the limitations of forecasting

A forecast is not a prediction. Even the best forecasting is still simply a projection based on current data, which is why frequent forecasting is necessary. Data is always subject to change, and forecasts need updated as new information becomes available. Decisions made based on your current forecast should always stay flexible. They are the best that you can do given your current knowledge of the situation. Remember that as soon as that knowledge expands, you have the opportunity to do better.

Frequent forecasting also narrows uncertainty as the project progresses. At the beginning of the project, you are looking a long way into the future, and your team should be prepared for the fact that early on, forecasting has a lot of limitations. As the project moves through each new phase, forecasting should become progressively more accurate. Towards the end of the project, forecasting correctly should be much easier. At this stage, there are naturally less variables, although they still may exist. The project manager or software can also use the team’s past performance to forecast future performance.

Types of forecasting

There are a few types of forecasting that you can apply to project management, and they may change throughout the project’s life cycle. Qualitative techniques can be particularly useful when data is scarce, which is typically at the beginning of a new project. These techniques may involve human judgement and rating schemes to help forecast possible outcomes.

Statistical techniques become more important when there is a lot of data to support forecasting. In project management, this might happen in the later stages of a project or when there are many comparable completed projects to draw data from. You should, however, remember that statistical techniques assume that past performance predicts future performance. While this is a reasonable assumption, it is more likely to be correct over the short term than the long term. The recent past can forecast the immediate future better than historical data can forecast the distant future, unless data patterns are very stable with few variables that can potentially impact the project.

Ultimately, frequent forecasting that uses recent and relevant data is a key element of successful project management. A responsive project manager can use forecasting to implement an ongoing series of tactical shifts that will keep projects running on time and on budget throughout their duration.

Verto’s project management software gives project management teams the ability to customise their forecasting needs to their individual projects. To find out more, register for our free 14-day trial!


Risky Business: How decisive risk management can keep your projects on track.

 

Risk Management  is a balancing act.  Here's our thoughts on how managing risk and the approach to risk can be handled to keep your projects on track.

Risk management is, and has always been, a tricky conundrum. This is where you, as a Project Manager, need to identify, analyse and respond to uncertainties when making decisions related to your project. Of course, when you add the word ‘risk’ to anything, it can cause mixed feelings.  A risk that pays off is a huge uplift, but no one likes taking unnecessary risks.

This is where a solid risk assessment framework is key to making decisive and well-thought out decisions to reach the end-goal of your project with as few problems as is possible.

 

 

  • The likelihood of a negative outcome occurring
  • The impact if the negative outcome does occur
  • The likelihood of a positive outcome occurring
  • The impact if the positive outcome does occur
  • The feasibility of possible responses to a risk
  • The cost of possible responses to the risk

In many situations, there will be attendant risks whichever way a decision is made, and these will need to be compared. Possible negative outcomes also need to be balanced against possible positive outcomes. Though risk management tends to focus more on the former, there are situations in which possible positive outcomes play a significant role in decision making. It is not the job of a risk manager to make these decisions, only to ensure that those doing so are as well-equipped as possible to understand the balance of risk.

The risk assessment process needs to be carried out repeatedly across different project management phases to take into account changing risk profiles.

Risk management in innovation

An awareness of positive possibilities is especially important when it comes to innovation. Large businesses and organisations are particularly bad at this because they have a lot to lose, be it profits, funding or credibility, so they tend to be very cautious about doing anything new. This focus on the risk of failure, however, can distort the overall picture and means they miss out on opportunities, with strong ideas being ignored in favour of the status quo. Over time, this creates a risk of falling behind the competition.

A more positive approach to risk management, which balances possible losses against possible gains within each project and acknowledges that gains from a certain proportion of successful projects will balance out the losses from those that fail, allows established businesses and organisations to be more successful innovators.

Successful risk management in innovation requires a proactive approach. Because this is new territory, tried and tested solutions to identified risks won’t always work. Project management methodologies need to be flexible and ready to try new approaches – but that doesn’t mean indulging in projects where the risk potential is too high. It’s also necessary to be ruthless when risk tolerance levels are breached.

Avoiding natural bias

We all have inbuilt psychological biases when it comes to dealing with risk. Therefore, very few people can assess risk objectively without taking a formal, analytical approach. We can see this in impulsive people who are far too quick to take unreasonable risks, and in anxious people who play it safe to the point where they achieve nothing, but often it’s more subtle and harder to spot. Correctly structured risk management removes the danger of bad decisions resulting from this kind of bias. It also enables the production of reports that everybody can understand in the same way. This prevents complications resulting from crossed wires and means that if the risk manager changes part way through the project management cycle, disruption will be minimal.

Some areas of risk management are harder to approach in this way than others. Areas dealing with health and safety or consumer response, for instance, can benefit from expert assessment in the form of qualitative risk analysis, even though aspects of them might also be subject to quantitative risk analysis. The latter – also known as data risk analysis – is the natural choke for assessing risks that are easily understood in numerical terms.

Data risk analysis

Data risk analysis uses mathematical tools to calculate the balance of risk and establish priorities. It also makes it possible to run simulations to help establish the likely results of different approaches. It’s particularly useful in complex scenarios where multiple risks must be assessed together because it means the probable results of different strategies involving combined risks can be displayed side by side. Most of the best organiser software available today includes tools for use in this kind of modelling

Using data risk analysis to make numerical projections makes it much easier to compare strategies involving different types of risk. It means that everybody in a project management office is looking at the options in the same way, and it makes it easier for senior managers who lack risk management expertise to understand those options and make good decisions.

Building credibility

As well as making it easier to understand the options available, good risk management makes it easier to justify decisions, both at the time and retrospectively. It means that funders can be encouraged to support a project based on clear, quantifiable data, which demonstrates the value of the approach to be taken. It means that when negative outcomes do occur, managers can show that they nevertheless made the best decision possible in light of the uncertainties involved, reducing the reputational risks involved with failure.

Well-presented risk analysis reports demonstrate that the business strategies they relate to are based on fact and reason rather than on conjecture. This does a lot to establish the credibility of an organisation. Even if not every decision produces good results, it demonstrates that the potential for achieving good outcomes remains high. Over time, this is important to brand building, attracting investors and maintaining team morale.

Ultimately, every organisation takes a different approach to managing risk because they all have different objectives and priorities. Legal obligations may need to be factored into decision making, as may broader aspects of corporate policy. The underlying mechanics of risk management, however, remain the same. By systematising the process of identifying and analysing risk, an organisation can reduce human bias and place its decision-making on much firmer foundations.


Critical success factors in delivering technical projects

As part of our Leadership Series we talk to Dr Sarah Tasker, founding Director of CAM-SCI, about the critical success factors in delivering technical projects

What are the critical project management principles that lead to successfully delivering technical projects? Most programme managers agree that there are many keys elements to a project’s success; from getting buy-in from key stakeholders, strong support from top management, to a clearly defined project scope.

Some of the most fundamental elements of a successful project lie in getting the set up right from the start. There’s no doubt that clear communication and expectation management, the right skills and understanding and a robust risk management plan are crucial for a project to remain on track.

We spoke to Dr Sarah Tasker, founding Director of CAM-SCI, who shared some of her thoughts on the factors that lead to the successful completion of complex technical projects. She’s worked with many clients to develop some of the UK’s most exciting science park projects in Cambridge, Oxford, London, Manchester and Liverpool.

Dr Tasker specialises in projects that involve partnerships with universities, non-profit organisations, public-sector firms and sometimes private investors. CAM-SCI work exclusively in Knowledge Economy development, a critical part of enabling the UK to fulfil its vision to be a world leader in Innovation and Technology.

“The UK economy is increasingly reliant on wealth creation coming from Knowledge Economy development”

“The UK economy is increasingly reliant on wealth creation coming from Knowledge Economy development” Dr Tasker notes; and the reason for her company’s success is their understanding of the requirements of the sector, from specialised services to infrastructure.

The property sector has often overlooked the innovation sector where the requirement is for more flexible workspace and flexible operations - with a capacity to change according to the needs of the occupants and importantly the infrastructure around emergent sectors like the life sciences, biomedicine, cyber and ICT sectors. Keeping up to date with the trends in the market, and anticipating new trends, is critical in making sure projects are fit for purpose.

Knowledge-economy development brings together public and private sectors, non-profit organisations and the education sectors including universities.  These partnerships can lead to challenges as stakeholders often approach projects with different cultures, mindsets and different priorities.

"Creating a clearly defined vision that is supported by all parties throughout the life-time of the project is a key starting point to any successful project. "

"Creating a clearly defined vision that is supported by all parties throughout the life-time of the project is a key starting point to any successful project.  Understanding the differing priorities of clients – and helping them to understand key market drivers and critical success factors, underpins vision development.  It is important that clients from all background are confident in their vision and delivery strategy.  In a fast-changing market, working within a strong evidence-based methodology is critical in creating a best-practice approach.”

She adds that as the knowledge-economy has become more main-stream in the last two decades, there is a greater awareness that a specialist approach is required to support, develop and grow companies in the innovation, science and technology sectors. Key to this is developing an in-depth understanding of the specialism that you are delivering.

Dr Tasker has an interesting point of view on the types of skills required to deliver a project successfully. “You clearly need an experienced team with the specialist skills required to complete the project within a defined project scope.  We work with teams of highly skilled designers and technical experts to deliver our specialist infrastructure, facilities and services”. However, she notes that it is just as critical to ensure that the project stays true to its vision. This sometimes means having “the integrity to keep the project on track and fighting for its best interest even when behind the scenes politics could threaten to knock it off course. “Some of our projects are in development for a period of years.  Pro-active communications with and between client stakeholders is a crucial element of successful delivery”.

Dr Tasker considers risk management essential for the successful delivery of a project. She feels that every project is unique, so it’s essential to conduct an evidence-based risk assessment rather than assume there is a “one-size-fits-all solution” when assessing risk.

She adds that in many cases, the reason a project fails is lack of a proper risk assessment before implementation. “When every client has a different appetite for risk, getting into the detail with our clients and understanding their attitude to risk, and how they perceive the kinds of risks that the project brings them is fundamental to the success of the project.”

"A significant risk to projects that is often overlooked, is losing the vision and project priorities over time or allowing them to become watered down to the detriment of the outcome."

A significant risk to projects that is often overlooked, is losing the vision and project priorities over time or allowing them to become watered down to the detriment of the outcome. “It sometimes takes courage to voice concerns if we feel a project is being compromised but being willing to do the right thing, not just the expedient thing, has been critical to our success.  A priority for all our projects is delivering sustainable success over the long-term – both for our clients and for the tech-companies that are our target audience.”

Cloud-based project management software can make collaboration between the project management office and stakeholders more efficient and improve project control.  Verto’s work collaboration and programme management software provides real-time programme information and gives project management teams and stakeholders their own role-based customised views.

Our cloud-based software provides dashboard status and reports as well as document storage and sharing. Stay in touch with us, follow us on LinkedIn and chat with us on Twitter to learn more about our ideas and software.


How Verto Helps You Manage Risk

You’ll have noticed in our blogs that we often talk about risk and how important it is that you manage it well.

 

In our last blog we described effective risk management as being aware of everything that could go wrong, having plans in place to respond quickly if something does go wrong and updating these plans as the project progresses and the risks change.

 

Others say that risk management is about anticipating what could happen between where you are and where you want to be.

 

This means looking at:

 

  • What you’re aiming to do
  • What might go wrong and why
  • If it does go wrong, what would happen
  • What you can do to stop it happening or make it have less impact

 

You should identify potential risks as soon as you start to plan your project. And you should monitor them throughout the life of the project.

 

Verto can help you do this.

 

A quick and easy way to manage risk

 

One of the greatest risks to any project is poor communication. For example, John finds out that in order to meet the deadline for a bid a member of his team needs some information. He’s out of the office when he’s told this, so makes a note to sort it out when he gets back. However, events overtake him and his note gets lost in the pile of other things he has to do. The deadline passes and his project ends up short of funds.

 

With Verto, wherever John had been when he first heard about this risk, he could immediately have sent a message to however many members of his team he needed to. And they could have picked it up, wherever they were.

 

He could also have created a task to remind them what they needed to do and by when. He could then have set an alert to let him know when the task was complete or if it was at risk of being missed.

 

A quick and easy way to monitor risk

 

Of course, you’re aware of some risks from the start of a project.

 

Let’s look at another example from John. He’s managing a project and has six months to complete one part of it. From the outset, some of his team warned that it could take much longer than this. However, the management team chose not to restructure the whole project. Instead they asked for weekly progress reports and for John to have a contingency plan in place.

 

If John were using Verto he would have a clear and detailed view of all his projects, in one place. This would make it easy for him to keep a close watch on the part of his project that was at risk of overrunning. Verto’s automatic notifications would also alert him straight away if anything began to fall behind. So John would be able to step in and take immediate action. And he would be able to produce and share an accurate progress report so his management team were always well informed.

 

While this wouldn’t remove the risk, Verto’s tools mean John could stay in control of the situation rather than just respond to it.

 

After all, it’s better to manage a risk than manage a crisis.

 

To find out more about how Verto can help you manage risk please call us on 0844 870 8785 or message us here.