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Project Manager : Project Manager Aug Sept 2013
4 Project Manager TO MARK THE END OF MY current tenure of two years in the national presidency role, I thought we might chat about an issue near to my heart -- project risk management. I recall my first national conference, the Alice Springs event, when I convinced my boss to pay for the conference by giving a paper myself. Titled 'Risk Management -- Beyond the Standards', it was a brave 'first outing' for me. The precept was that, at that time, our risk management practice fell short of the spirit of the then national standard: ASNZS 4360: 1999. Those who attended the Hobart conference in 2007 may recall that my tr usted colleague John Hutchison and I co-delivered another paper on the topic. By way of a follow up, it was called 'Risk Management -- See I told you I was ill!', a take-off of Spike Milligan's epitaph. The paper argued that we were still slow to adopt better practices in risk management. My view now is that there has been steady improvement, but still a few holes. The fact is that project risk management is so fundamental to project success it simply has to be given our best effort. A couple of years back, Steve Bunotto, an e xperienced corporate lawyer, gave a great talk to a Brisbane membership night on the criticality of good project risk management to corporate gover nance. He cited a number of topical examples of complete disconnect between major projects a nd corporate management on project risk exposure. In hindsight, at least one of Steve's examples led to the demise of a very senior CEO in the Australian major corporate space. The latest risk ma nagement standard: ISO 31000, to the credit of the original Australian standard, is based on the earlier ASNZS 4360. The key concept for me is that risk management fundamentally deals with uncertainty. It is quite simply a decision-making and management tool to deal with one of the primary characteristics of any project -- uncertainty. Properly used it can resolve, within reasonable expectation, all of the uncertainty factors in a project. Whether we deal with those uncertainty factors through immediate or contingent risk treatments is one of the fundamental decisions we make in the risk management process. To take up Steve Bunotto's point, and to take a positive slant on this discussion, it is great to see quite a number of organisations who do 'get it'; organisations that understand that even small projects can be deadly as far as carrying substantial corporate exposure is concer ned. I have seen, and I trust you have, good examples of organisational practices of project, program, portfolio and corporate risk alignment. The ability to triage risks at various levels and carry that risk awareness to the cor rect level of risk accountability is fundamental to good corporate governance. The converse; ' hero' behaviour at PM level or ignorance at corporate level commonly leads to project risk being bottled up as purely a PM responsibility. The trouble with bottling anything up is that a high pressure burst can be catastrophic, especially when project stakeholders have been kept in the dark. And of course the 'neat' thing about focusing on areas of uncertainty as a main input to our risk management is that we can address potential positive and negative outcomes. A robust risk management framework should deal with opportunity management as it does on the traditional 'negative' risk management. Talking with a client recently about an example of managing the downside of potential variations in a contract, we reached the conclusion that it just makes sense to apply as much consideration to how to optimise the likelihood of positive opportunities arising from the same possible variations. The underpinning element in the ISO 31000 model, in my opinion, is the focus on communication and consultation throughout the risk management process. A robust discussion between the PM and stakeholders on risk appetite and the acceptability of risk thresholds is critical to setting the project risk context. And I am sure you agree that consultation has to continue giving key stakeholders a clear picture of the residual risk contingency that will be car ried into project execution, as well as keeping stakeholders apprised of ongoing risk trends. I guess this discussion continues the theme from the Febr uary/March article where our chat centred on the need for continuing improvement in our practices. It is just a matter of adhering to Stephen Covey's advice to 'sharpen our saws'. David Hudson National President FIRST WORD Resolving project uncertainty PROJECT RISK MANAGEMENT IS SO FUNDAMENTAL TO PROJECT SUCCESS IT SIMPLY HAS TO BE GIVEN OUR BEST EFFORT
Project Manager June July 2013
Project Manager Oct Nov 2013