Manage project risks and issues

By Lonnie Pacelli

Your project is humming along, and things are getting done. Then suddenly, an unanticipated product design issue comes up. As the project manager, you assess the issue as having no short-term scheduling effect, and you delegate resolution of the issue to a project team member. Unfortunately, the project team member thought that you were driving resolution of the issue. Before you know it, the project is late because your team didn't address the design issue in time.

Management of project risks and issues is one of the most critical yet easily overlooked aspects of successful project management. Risks and issues can quickly derail plans and divert focus from important project activities. Unfortunately, there's no avoiding risks and issues, and so it pays to have a plan to minimize their effects.

Managing risks

Have you ever created a project plan and documented assumptions that need to be true in order for the project to be successful? Assumptions are relied-upon, specific outcomes for particular issues. Because you're relying on a specific outcome, the assumption presents a risk to the project if the outcome is different.

For example, you assume that customers will be available for a minimum of 20 hours per week throughout the project. Because you've made this assumption, you're relying on the customers to be available, to avoid delays in the project schedule. Therefore, this assumption entails a project risk that needs to be managed.

Project risks have the following attributes:

  • They're generally known at the beginning of the project.
  • They can exist at a specific point in the project, or they can persist throughout the life of the project.
  • They can materially affect the outcome of the project if they become reality.
  • There's a reasonable likelihood that they could become reality.
  • Risks are extraordinary to what normally would be managed on a project.

A sound method of identifying project risks is to look at your assumptions. Assess risks based on three factors:

  • Materiality
  • Likelihood
  • Extraordinariness

When defining risks, try to limit yourself to the top six to eight things that:

  • Can seriously hurt the project if they were to occur.
  • Have a likelihood of occurring.
  • Are extraordinary to normal project management.

As an example, if you're implementing a new technology as part of a project, you would make the technology a project risk because there's a likelihood that it could fail and seriously hurt the project. But you wouldn't define as a risk something like "activities must be completed on time" because, although this is material and likely, it's not extraordinary.

Implement mitigation strategies for risks

After you define the top project risks, your next step is to put mitigation strategies in place. To continue with the example of implementing a new technology, a mitigation strategy might include conducting stress and acceptance testing at the beginning of the project to ensure that the technology is able to perform under expected volumes.

By defining mitigation strategies for each risk, you outline how to head off risk and manage potential issues.

Managing issues

Similar to risks, issues are problems that occur during a project. If an issue isn't managed, it can materially affect the successful completion of a project. Where issues differ from risks, however, is that they generally don't persist throughout the project, and they may not be known at the outset of a project. Your issue list will not be persistent, as your risk list will be; issues will open and close as they're identified and resolved.

What's important in identifying and managing issues is this: Issues must be material to successful project completion. For example, an issue exists if the project sponsor needs to make a policy decision as a precursor to a key design point that you're completing. There's materiality because the policy change directly affects the design and may have a widespread effect on the organization.

In addition, you may have an issue on your hands if the owner of a work item is unable or unwilling to drive resolution of the item. In this situation, the project manager may escalate the issue to the project sponsor or a steering committee for resolution.

When poor risk and issue management leads to failure

Poor risk or issue management can threaten a project with failure in three ways.

Badly defined project risks or issues

In defining project risks or issues, it's important to ensure that the entire management team has input into and buys into the definitions. In defining risks, be sure to ask yourself the following:

  • If it happens, is it material?
  • Is it likely to happen?
  • Is it extraordinary rather than just a normal project management issue?

Similarly, when defining issues, stay focused on materiality and project harm. It's also important to raise issues to management only when they exceed your grasp of control. If you chronically raise issues to the steering committee or the project sponsor that you might have resolved yourself, your credibility as a project manager becomes suspect.

Lack of mitigation strategy for managing risks

Defining and filtering your risk list is easy relative to defining risk mitigation strategies. Defining mitigation strategies is where your creativity and resourcefulness as a project manager come into play and may be one of the fun parts of the job.

As an example, consider a project that has an abnormally compressed time frame to meet the needed completion date. The project team identified this as a key risk and mitigated it in part by conducting weekly demonstrations of product functions completed that week. The product development team moved quickly because it had weekly demonstration deadlines to meet, and the project team was able to react quickly if there was a problem with the product. In this case, an unconventional approach proved to be an appropriate and effective mitigation strategy.

Lack of an action plan for managing issues

Some people are great at saying "I've got an issue," but they do little beyond that to help resolve the issue. As a project manager, learn to push back on issue dumpers by asking them to clearly define issues and help to resolve them. Maintaining an action plan that documents needed actions, due dates, and owners is crucial to ensuring that issues are closed before they derail your project.

Warning signs that you're headed for failure

  • You don't have a project risk or issue list.     If your risk and issue lists aren't readily accessible by the project team, you're likely to be caught off-guard.
  • You don't have a risk mitigation plan.     If you've documented risks but have no specific mitigation plan for each, you're unprepared. Each risk needs a clear mitigation plan to help ensure that it doesn't come to pass.
  • You don't have clear owners or due dates for resolving issues.     An issue rears its head on the project, and because there isn't an identified owner or due date for resolution, it affects your budget or schedule. Problems assigned to "the team" or to some other group of people might just as well not be assigned at all, because it's unlikely that anyone will take ownership for resolving the problems. Each problem, whether it's a schedule, risk, or cost issue needs to be assigned to a single owner and needs to have a due date.
  • You're not using the project sponsor or steering committee for effective issue resolution.     Either issues are escalated when they shouldn't be or they aren't escalated when they should be. You've likely got limited time with your project sponsor or steering committee, and you need to make sure that that time is spent on issues that you can't control or that require approval greater than you can provide.
  • The project team isn't clear on the problems that your project faces.     If your project team members are surprised or confused by problems, you're lacking either timely team communication or a system for early problem identification. Your team could also be meeting too infrequently to understand problems and potential resolutions.
  • You don't know when something's about to be a problem.     If you're frequently hit with problems that you didn't anticipate, you might not have the right early warning system in place. The project team isn't meeting frequently enough, risks and issues aren't being reviewed regularly, or some team members are sweeping problems under the rug. Any of these situations can lead to problems popping up and surprising the team.

Turning things around

You must take three actions to protect your project from risks and issues.

Define risks and a clear mitigation strategy for each

It's never too late in your project to take this step. Take the time to think about the risks you face that are material, likely, and extraordinary. If you developed an assumption list as part of your project plan, use the list as a starting point. Review the assumption list with the project team to ensure that it's accurate. Then put together very clear mitigation strategies for avoiding each risk that the assumption list yields. Incorporate the mitigation strategies in the project plan so that they're an integral part of the project.

Right-size the issue list

Clearly define which issues can be resolved by the project team and which need help from your project sponsor, steering committee, or other stakeholder. Don't escalate issues that the project team can handle.

Know who's responsible

For each risk, make sure a team member is responsible for managing its mitigation. For each issue, make sure that a team member owns it, owns its proposed resolution, and will take the issue to the project sponsor or steering committee if need be. The sponsor or steering committee is responsible for deciding the resolution, but the project team is responsible for analyzing alternatives and for providing a recommended resolution.

Don't let poor risk and issue management harm your next project. Use these preparations, warning signs, and turnaround techniques to help you navigate your project to success.

About the author     Lonnie Pacelli is a business owner, consultant, and author with more than 20 years of experience as an executive, project manager, developer, tester, analyst, trainer, and business owner. He is author of The Project Management Advisor: 18 Major Project Screw-ups, and How to Cut Them Off at the Pass (Prentice Hall, 2004).

Applies to:
Project 2003