When starting a new project, everything looks shiny, bright and new. Everyone is focused on the end goal. However, it is the project manager’s job to look deeper into the project and identify the possible risks—not what will go wrong (because at this stage we all believe nothing will), but what could possibly go wrong. Without identifying risks, the project manager is not able to plan how to address any of these possible risks or prevent any risks.

The Project Management Institute lists 6 steps for Risk Management: Plan, Identify, Qualify, Quantify, Plan Response, and Control Risk. But Bruce Garrod, founder of the project management consulting firm Solutions Management Inc., recently presented a simpler 3.5 step approach:

0.5 – Establish the highest priority on the project
Talk to your owner and other stakeholders to establish the priorities. For example, ask “Is it ok to overrun the budget to stay on the time line?” This step is crucial since it will directly affect step 2 where you will be prioritizing your risks.

1 – Identify possible risks
Do your homework. Use whatever means are at your disposal: research the city, county, and state plans to see if any will have a direct or indirect impact on your project; use your past experiences to flag trouble spots; read up on any equipment or materials with which you aren’t familiar to identify weak spots; and most importantly, brainstorm with your team.

2 – Prioritize    
Of the identified risks, which are most likely to impact the project? Be sure to use clear language here. Words can be ambiguous—”severe”, “critical”—whichever is higher on your scale, may not be the highest on mine.  Use numbers. Rank 1-5, $50K, 10 days, 75%, etc. are clearer and ensure that everyone is on the same page.

3 – Be Proactive    
Start with working your prioritized list of risk. Keep in mind your three goals to

1. make the risk go away,
2. mitigate the risk by taking actions to minimize the probability and/or impact and
3. move the risk to a 3rd party, such as insurance or contracts with your vendors.

After you have your list, consider what tools you have to manage your risks.  For example, in the Spitfire Project Management System, there is an Issue document where each risk can be tracked and related spreadsheets, files, correspondence, etc. can be attached.

Spitfire also offers a Forecast system that presents the Project’s Budget and the Actuals-to-Date along with the Committed Amount to date. What’s been spent can’t be changed, but forecasting allows for better decisions about future expenditures.  For example, with forecasting, you could start planning on how to appropriate a contingency budget, or could re-appropriate budgeted amounts based on the current situation, or could discover cost overruns and “out of scope” work indicating that a Change Order is appropriate.

In the Spitfire Project Management System, you could even configure a Risk Register to track all risks and then better handle each one before the risk impacts the project budget or schedule. Spitfire’s built-in collaborative capabilities also facilitate the  communication, sharing, and assignment of risk management items with the team.

Risky business is serious business. If you would like to see how the Spitfire Project Management System can help you handle risk management, contact us to schedule your free demo.