Accepting Risks -- It Happens in Projects All the Time

By: Susan Peterson, M.B.A., PMP
Copyright 2010, Susan Peterson, All Rights Reserved

There are a variety of methods to deal with risk either proactively or reactively. However, the one method that may actually be the riskiest is to simply accept that a particular risk or set of interrelated risks may occur during a project. There may be a number of seemingly valid reasons that are used to justify risk acceptance ranging from “It’ll never happen, so why worry?” to “Dealing with challenges builds character”. Regardless of the rationale that is used, it is the project manager who ultimately bears the responsibility when a risk occurrence threatens to derail a project. In this column we look at some useful tactics for dealing with those situations where the prevailing attitude is “If it happens, the project manager will take care of it.”

“A ‘good’ project manager would just deal with it.”

This statement is a thinly veiled attempt to discredit a project manager who requests resources, time, and effort to address a potential risk. It presupposes that a “good” project manager demonstrates his/her skills by waiting for catastrophes to happen and then handling them. While some people seem to enjoy operating in a perpetual state of crisis, this type of atmosphere tends to have everyone working frantically in a state of panic. A possible answer to the statement might be to identify other projects where the risk actually occurred and the negative impacts on interim or final outcomes. Another response could identify the costs of dealing with a risk that occurs versus the costs of advance preparation.

“An effective project team is always lean and mean.”

Human beings can exist only so long when deprived of sufficient food and water. So too projects that are consciously “deprived” of adequate funding, appropriate team members, and/or other requirements can end in early termination. Projects typically face enough “character-building” challenges without deliberately setting them up for failure. In this situation the project manager has to apply a huge “dose of reality” in order to convince stakeholders that “lean and mean” only applies to fitness training. For example, the project manager can provide specific examples of the impact of underfunding, such as being forced to use inferior materials that can lead to failures in the field. Another common occurrence, the unavailability of critical team members with relevant expertise levels, can result in costly delays.

“If we had only known!”

Sometimes risks are accepted unconsciously because there was no upfront risk assessment and management or because the risk was never identified. Some possible indicators of “unknown” risks could include the following:
• Budget constraints that were set before the project was initiated
• Key project resources that are spread across many simultaneous projects
• A schedule that is “too optimistic to be true”
• One vendor’s bid that is substantially lower than other bids
The above situations are common and often occur over and over in an organization’s projects. Rather than just acknowledging that “all of our projects face the same problems”, the project manager needs to remind stakeholders of the actual outcomes in previous projects when warning signs were ignored. Typically, there are major impacts on deliverables and milestones.

Project managers are often the only stakeholders who recognize the value of proactive risk management. It is their challenging responsibility to convince other key individuals of its importance on project success.

Susan Peterson, M.B.A., PMP, is a consultant who manages diverse programs and projects in both the private and public sectors for individual organizations and consortia. She also conducts enterprise assessments of project portfolio management practices. Prior to establishing her consulting practice Susan led major efforts for Fortune 100 organizations throughout the United States. She teaches the Project Management Simulation capstone course as well as the Project Portfolio Management course in the University of California, San Diego, Project Management certificate program and is a member of the curriculum committee. She can be contacted at susanada@aol.com.