Controlling Project Risks
By: Richard Fanelli
A potential client once asked me at a sales presentation, “What do you see as our greatest risk on this project?” After losing my “deer in the headlights” look in my eyes, I responded with some extemporaneous answer about budget or schedule. He didn’t look satisfied with the answer. Now I try to do more research and digging before I go into a sales presentation to find out what are the major concerns that are keeping my prospective clients up at night before they take on a major facilities project.
It takes more than one person on a project team to determine what the potential risks are. This can be done by having a brain-storming session of all the higher-level management and internal PMs who have previously been involved with major facilities projects. Asking the question…”What would happen if Murphy’s Law took over the project? Asking these next two questions are critical for planning a course of action:
- What is the probability of this issue or occurrence happening? (give it a scale of 1 to 5; 1 being low and 5 being high)
- What would be the level of severity if that issue or occurrence actually did occur? (give it a scale of 1 to 5; 1 being low and 5 being high)
If there are any issues that ranked a 5 for probability and a 5 for severity, then assign your best and most experienced project team member to that risk.
Risk avoidance is the ability to elude the risk through experienced team members taking the proper steps to bi-pass the potential risk. An example of this would be the potential of the project being completed later than the “drop-dead” completion date due to equipment lead time issues. This can be avoided by the owner or tenant ordering the long lead equipment directly if the general contractor has not yet been selected. Having the right team members assigned to this risk is critical to avoid this risk.
Risk mitigation is knowing that a potential risk is unavoidable and preparing the project team and stakeholders to act to lessen the severity of the risk. One common example of this is to have a contingency pot of money to draw from in the event of change orders. (see my April 12, 2017 blog on “Creating a Realistic Project Budget”) or to plan for a peer review permit to shorten the permit approval process if schedule is the critical issue. Another risk mitigation task might be to assign a secondary team member as a back-up to a critical team member, should that critical team member not be able to perform their assigned responsibilities during the course of the project. Similar to that of an understudy for a key player in a play.
This risk matrix can be used when evaluating project risks and their severity: