Project Risk Management

Summary

James Clements presents a simple yet effective risk assessment strategy for small to medium projects. He outlines a straightforward process using a spreadsheet to identify, analyze, and control risks. The approach involves categorizing risks by their likelihood and consequences, then implementing control strategies with clear responsibilities and timelines. Through practical examples, such as a fence-building project, he emphasizes the importance of managing risk causes and impacts to ensure project success. This method provides teams with clear guidelines for risk mitigation, fostering better project outcomes with a focus on simplicity and team collaboration.

Takeaways

• 😀 Keep risk management simple and effective for small to medium projects.
• 😀 Start with basic systems if you're new to risk management for better team buy-in.
• 😀 Use a shared spreadsheet or software for risk assessment and control.
• 😀 The risk management process involves three phases: identification, analysis, and control.
• 😀 Always track risks with a unique number for easy reference and reporting.
• 😀 Identify both the causes and consequences of each risk to fully understand it.
• 😀 Rank risks based on their likelihood and potential impact to prioritize them effectively.
• 😀 For risks that are moderate, high, or extreme, develop a specific risk control strategy.
• 😀 Assign responsibility for managing risks to senior project members with authority.
• 😀 Include risk management activities in the project schedule for visibility and timely action.
• 😀 When managing risks, involve key project stakeholders, such as project managers and foremen, at critical points to ensure quality control.

Q & A

What is the primary purpose of the risk management strategy outlined in the transcript?

The primary purpose is to provide a simple yet effective risk management system that helps manage and control risks in small to medium-sized projects. This strategy involves identifying, analyzing, and controlling risks to ensure better project outcomes.

Why is a spreadsheet preferred over other tools for managing risks in this strategy?

A spreadsheet is preferred because it allows for easy access and sharing among all project team members. It ensures that everyone has visibility into the risks and the control strategies, contributing to better team collaboration and accountability.

What are the three main phases of the risk management process described in the script?

The three main phases are risk identification, risk analysis, and risk control. These phases involve recognizing risks, evaluating their likelihood and impact, and implementing strategies to either eliminate or mitigate them.

How does the risk control strategy work after identifying a risk?

After identifying a risk, the next step is to analyze its causes, consequences, and likelihood. Then, a control strategy is created, which includes actions to stop the risk from occurring or to mitigate its impact if it does occur. The strategy is assigned to the most appropriate person or team member.

What role do project team members play in the risk management process?

Project team members, especially senior staff like project managers or quality managers, play a crucial role in implementing the risk control strategies. They are responsible for ensuring that the identified risks are monitored and addressed according to the risk control plan.

Why is it important to assign risk control strategies to senior project members?

It is important to assign risk control strategies to senior project members because they have the authority, influence, and experience necessary to manage and address the risks effectively. This ensures the risk management process is taken seriously and acted upon.

How are risks prioritized in this system?

Risks are prioritized based on their likelihood and the impact of their consequences. Risks that are rated as moderate, high, or extreme are given more attention, and a control strategy is developed for them. Low-risk items may be monitored but do not require extensive intervention.

Can you give an example of a risk control strategy discussed in the transcript?

An example provided in the transcript is for a fence-building project, where the risk is that the fence might not be straight. The control strategy includes holding project inspection points at two stages: after marking out the fence and before pouring the foundation. These inspections require sign-off from the client and project manager.

How does scheduling play a role in risk management according to the script?

Scheduling is used to ensure that risk control strategies are implemented at the right time during the project. By including specific dates or events in the project schedule, the team ensures visibility and awareness of potential risks, allowing them to take proactive steps before the risks occur.

What is the significance of 'retiring' a risk in the context of this strategy?

Retiring a risk refers to officially closing or resolving a risk once it has been successfully mitigated or after the risk event has passed. This ensures that the project team recognizes when a risk no longer poses a threat and can focus on other ongoing or new risks.