Most people hear “project risk” and they think of an adverse event or threat that may occur. Regardless, the term carries a negative connotation, but this common belief means you may be missing out on positive risks or opportunities that potentially have a beneficial effect on your project’s deliverables and goals. When you are presented with a risk (and most projects have inherent positive risks), don’t try to avoid it. Either accept it as is, try to increase the probability and impact of it occurring, or share it so other groups can get the full benefit. An environment that inspires risk and rewards success, but does not penalize failure is an organization to be reckoned with. The movers and shakers of tomorrow are taking risks today. In fact, here are some examples of positive or good risks.
Reducing your Workload
If a PM realizes that he or she probably needs fewer people for certain project tasks to be completed than originally planned, a door of opportunity is opened. The PM should take the risk or responsibility of reducing the team’s headcount to get more accuracy and credibility into the project’s plan (for example, total cost could be reduced and/or the completion date moved up). This process could also be used for tasks that have positive slack. The updated project plan would be re-baselined, but remember to keep the original baseline for historical reasons. Going under budget frees up resources for other projects and could contribute better forecasts in future projects.
Growing your Business
Let’s say you are rolling out a new e-commerce web site, but end up having too many visitors to handle the demand for your products and services. A specific example of this would be a web site that’s under heavy workload especially at year-end holiday sales. You took a risk and cut your capacity short and now you can’t handle the volume of customers, but this is really a “good problem” to have. Since you don’t want to skimp on customer satisfaction and want to continue to grow your business, you can now expand and acquire additional servers and/or increase your network data speeds. The bottom line is that it’s always great to own a company that has too much demand for its products than originally anticipated. You are well positioned to continually grow!
Using New Technology
Years ago, I was working on a new project to implement new Oracle databases for an in-house hard disk drive (HDD) system. Just before we started to execute the project, storage area network (SAN) drives became available. Management and the project team decided to take the risk and purchase them for our new Oracle system even though we had no experience with this new cutting-edge technology. As it turned out, the long-term benefits and savings for doing so were great! For example, the devices took up less than half the rack storage space versus what we would have used with HDD, time to access data was cut in half, the data transfer rate was doubled, and we improved our disaster recovery (DR) processes greatly. We ended up buying more SAN drives than we needed but we got big discounts based on the volume we purchased. And, overbuying turned out to be a positive financial risk because the surplus drives were eventually used for new expansion projects.
Moving to The Cloud
We all likely know of an organization that’s moved away from owning its’ traditional (or production) computer center and related infrastructure, and instead, has turned to third party internet-based data centers to achieve economies of scale. Benefits of “moving to the cloud” include getting applications up and running faster, dealing with less maintenance, and having the ability to pay as you use space. You can also increase your flexibility and scalability, and you’ll probably end up with a speedier return on your IT investment.
Cloud computing is moving beyond its “immaturity” stage and overall, the shift is likely a positive risk for most organizations, but there are still some risks and/or pitfalls that you need to be aware of. Watch for the possibly of hackers getting into your systems, heavy data volumes that may cause brief outages or slowdowns, a system that isn’t as user friendly as you might like, or getting locked into a computing multiple-services contract you don’t want or need. Companies that are moving to the cloud should not initially “put all their eggs into one basket,” but should play it risk-safe by moving their non-critical applications to the cloud first. If this works out over time, then a move of critical applications to the cloud make sense—and eventually you’re able to phase out costly data center(s).
Knowing Probable Outcomes
For some types of projects (new PC rollouts or managing Oracle’s Enterprise Resource Planning upgrades), you will have “calculated” risks with a high probability of success. In short, you are learning from the past when you are looking to the future. Excellent sources for these types of projects can be found, specifically on PMI’s web site (PMI.org). Once logged in, highlight the Learning & Events tab, pick Publications (PM Network to access back issues). You can also find more PMI risk-related articles on their Knowledge Shelf. Educate yourself and learn from PMs who have assumed positive risk and seen successful results!
The below figure is an example of a Decision Logic Table (DLT) that can be used for treating a specific project risk. A DLT is a documentation technique that can display an entire situation visually with all the alternatives shown side by side. Give it a try! If you do not use DLT, you may miss some solutions and could potentially sink your project. The DLT is made up of four major parts. The top left-hand corner contains the Condition Stub, a “yes” or “no” answer test to be made part of the solution to the problem. The top right-hand corner houses the Condition Entry which contains the “Y” (yes) or “N” (no) answers to the questions asked in the Condition Stub. The lower left-hand corner contains the Action Stub that itemizes all possible actions resulting from the conditions listed in the Condition Stub, and the lower right-hand corner contains the Action Entry which contains the appropriate actions based on the various combinations of answers to the conditions contained in the Condition Stub. The “X” will indicate “take this action” and a blank will indicate “take no action.” Remember to be positive and always look for opportunities!
Risk management in most organizations should start by being on the “alert” for positive risks and should learn how to embrace them so the probability of success rises. Positive risks could even be listed in the project charter with their associated benefits. Regardless, they should at least be documented as part of a project’s lessons learned so they can add value to future projects.
The overall objective here is to boost the probability and power of positive opportunities! What do you think? What positive risks have you taken and what outcomes have you seen?