Managing
Project Risks (Part 1):
Don't Be Snared by These 6 Common Traps
by
Adele Sommers
When
your enterprise decides to undertake a new endeavor
-- whether it's designing a new training program,
planning a new service, or revamping an existing
product -- this endeavor is called a project. It
involves people, funding, resources, schedules,
requirements, testing, fine tuning, and deployment,
plus a host of other activities.
You may have seen this
phenomenon by now: projects are risk magnets. Why is
that?
There appear to be several
factors involved. Managing project risk is a process
that seems to be poorly understood by business
owners and project managers. As a result, projects
frequently experience problems with understaffing,
schedule overruns, cost overruns, and unmet
requirements. This article (the first of a series)
explains six common traps that, when not fully
recognized, can lead to unpleasant surprises.
Here's what I've observed over
many years as both a project leader and participant:
1. Each project differs in
some way, shape, or form from the last one.
If all your projects were
exactly the same, you could simply use a
cookie-cutter approach to crank 'em out without
losing any sleep at night. Although projects may
share some similarities, a new project could very
easily introduce several new, unfamiliar elements
that can completely throw off your sense of balance
- often without your even realizing it until it's
too late.
2. Projects are often
constrained by finite conditions.
Initially, you might hear
limitations such as, "We only have $1,200 and three
weeks to have you complete all 18 training modules
for this project." (What? You're thinking that based
on the requirements you've heard so far, this
project should take a year and a half and cost three
hundred grand!)
Speaking of constraints, it's
not unusual for project sponsors or clients to ask
for 1) low cost and 2) fast completion and 3) high
quality and 4) many features in the final project
deliverables. Although it's understandable to want
the greatest value for the money, unless the project
is blessed with an infinite schedule and an
unlimited budget, tradeoffs become necessary.
Usually it's only possible to
achieve two or three out of four of these goals on a
typical project. The tradeoffs might constrain the
number of features, limit the quality, or both.
3. People chronically
underestimate their time and effort.
Whether it's because of a
perceived social stigma or a cloudy crystal ball,
people typically have a difficult time deriving
realistic project estimates. Given the number of
project unknowns, coming up with accurate
predictions can be tricky. (Smart project managers
know this and frequently add buffers derived from
records of actual past experience, commonly known as
"fudge factors," to project bids.)
To complicate matters, people
often feel pressured to further "reduce the truth"
-- that is, to minimize whatever their already low
calculations tell them it should take when they put
together a bid. Whenever management pushes people to
underestimate this way -- perhaps for fear of losing
the project -- the risks can easily overwhelm and
even destroy the project's success.
4. Project requirements are
typically fuzzy at the beginning.
Whether you're talking to a
client, your boss, your colleagues, or your clients
to figure out what the project should produce,
whatever they say initially may sound as clear as a
bell in some areas but very sketchy in others.
Getting clarification on the fuzzy parts might
entail many conversations with many people, and much
more time than anybody ever imagined.
5. Requirements invariably
shift over time.
The minute after you've
cemented the requirements with everyone's agreement,
"scope creep" begins. This means that the project
needs may expand, shrink, or morph into something
altogether different! These situations arise because
the very act of creating something new can produce a
result (or a series of results) that may exceed or
differ from what people were capable of imagining at
the start. And even when the team guards against it,
pressure to include "add-ons" can stretch the scope
beyond its limits.
6. Nearly everything else
about the project is dynamic!
Aside from the requirements
changing, many other things can stop, start, or
fluctuate during the project. Experienced people may
leave and new people may come on board. Budgets
could get chopped. Schedules might get slashed or --
sometimes even worse -- delayed. Resources may
evaporate or not materialize in the right forms.
Politics can sneak in and remove support, or require
skipping critical steps such as testing. The list
goes on and on.
Studies of failed projects have
revealed how difficult it can be to detect all of
the red flags in advance. Unbridled optimism can
block everyone's ability to see clearly. Yet turning
down an iffy project may be better than letting egos
rule.
What to do? As we've seen,
projects can involve several highly dynamic
variables. They often operate under tight budgets
and schedules. People tend to miscalculate time,
effort, and resources. Requirements frequently
expand, shrink, or change. And shifting
circumstances can pull the rug out from under
everyone's plans. Add these together and many
projects will cook up a recipe for failure.
But it doesn't have to be that
way. You and your team can learn to avoid project
pitfalls by paying close attention to the
cause-and-effect relationships among these six
important keys!
