Part 3 : Risk Management and Good Governance; ensuring the tasks are right for the business.

NB: You way want to have a look at the first two parts of this post on projects and tasks.

Projects create something unique for your organisation and compared to day to day operations, a lot more things can go wrong. This is where risk management and good governance come in. When working on a project team you will be involved in risk and governance processes to help reduce the uncertainty and ensure the project delivers what was expected for the monies spent. A project without the risk and governance aspects is just a a bunch of people doing tasks and hoping that they deliver what their executives funded.

It is often difficult to work out how much effort should be spent on governance and ideally your organisation has its own appropriate methodologies that define the level of governance required. Typically the level of governance required depends on the risk associated with the project. The higher the risk, the higher the governance needed. Building a bridge wrong has more terrible consequences than building a single house wrong. Erroneous banking computer systems have a lot more impact than errors in maintenance planning software. Risk can also be positive, and similarly the higher the positive risk, the more governance is required. R&D for a new product model may be a fantastic opportunity for an organisation, while choosing a new season’s colour for the existing model may not have such an impact, so would require less governance.

Risk is first assessed by the impact of the consequence, then the probability of the consequence. It's typical for organisations to dictate the actions required once the risk has been assessed. Interestingly, appetite for risk varies between industries and organisations.


An example matrix identifying a "Risk Score" by Likelihood (probability) and Consequence (impact)


Based on the risk assessment above, the level of Governance and action is prescribed.


The Project Management Body of Knowledge (PMBOK) 3rd edition details 44 separate project management processes for managing risk and good governance of projects. The use of these 44 processes depends on the project and ideally the effort applied should directly relate to the risk of the project itself and the organisations risk tolerance. These processes are;

Time
  • Estimating, schedule creation and control.
 Scope
  • Scope planning and definition, creation of WBS, verification and control of scope.
Quality
  • Quality planning, assurance and control.
 Cost
  • Cost estimation, budgeting and cost control.
Communications
  • Planning, information distribution, performance reporting and managing stakeholders.
 People
  • HR Planning, acquisition, development and management of project team.
Procurement
  • Plan purchases, contracting from RFQ to contract closure.
 Risk
  • Planning, identification of risks, risk analysis, risk response planning and continuous risk control.
Integration
  • Project initiation and planning, project execution and control and finally project close.
Summary of the nine project management areas and 44 processes in the PMBOK standard.

The forty four processes are a way of detailing the work that needs to be done on a project to manage risk and ensure good governance. Most processes such as quality control directly relate to the Task Management responsibilities of team members. Other processes such as “Project Close” aren’t directly related to getting things done, however it’s extremely important to make sure everyone gets paid and assess the success of the project, so that future projects can learn from the successes and failures of this one.

These good governance processes can be broken down into activities typically expected to be performed with the project team members and Part 1 of this post gives further examples.

A successful project is within budget, scope and schedule constraints and fits the needs of the organisation. To complete a project successfully everyone in the project team needs to be actively involved in the Risk Management and Good Governance aspects of a project. The length of the list of the forty four processes presented above isn't intended to imply that the majority of time spent on a project is spent updating risk registers, filling in time sheets and so on. To be clear, the "Task Management" aspects of project will take up the majority of team member’s time. The above list is intended to illustrate the team member’s responsibilities in risk management and governance in addition to the completion of tasks. By accepting they exist to improve the success of the project will help ensure the completion of the project within scope, schedule and budget.


References