In The End Project Management is About Risk Management

This is the last in the series of blogs about project management on federal projects. To wrap up, I want to leave you with the most important topic – risk management. The concept of managing the development or deployment of any project using deterministic, linear and causal analysis contains several pitfalls. As the system grows in complexity, the interaction between the components becomes non–linear and indeterminate, creating many opportunities for failure.

There are two key properties of such systems:

• The presence of significant and credible risk
• The multiplicity of legitimate perspectives on the functional requirements of the users of the system

In these systems, risks are created through the interaction between the emerging system capabilities and the business processes it is intended to serve:

• The interaction of the stakeholders with the developing system creates changes in the core system requirements. As the stakeholders come to understand the capabilities of the new system they make new demands of the project’s outcomes.
• The interaction of the system with the business processes creates a new understanding of how the system impacts these business processes. As the stakeholders come to understand the system they make new demands of the business processes. These new requirements, in turn, impact the system requirements.

These behaviors may appear to describe an unstable set of requirements and in fact, they do. They also describe a set of requirements that are driven normal market forces. Any properly-run business should be able to change its priorities for a variety of reasons. Increasing understanding of the problem domain is the prime source of these changes. Business environments change. Technology changes over time. Change is a reality of the business world. Without change and the appropriate reaction to change, businesses would fail.

Risk is Created by Failing to Deal with Change

In the context of product or services engineering, development and project management, risk can be defined as the possibility of suffering a diminished level of success (loss) within a development program. The prospect of loss is such that the application of the selected theories, principles or techniques may fail to yield the right products or services.

The potential loss and the association of risk to the program involves a value judgment as to the potential impact of risk to the outcome. The term loss, danger, hazard and harm, all of which reflect a negative perception, involve at least a relative assessment of value.

Various definitions of risk state that uncertainty expressed as a probability is involved with risk. Uncertainty involves both the description and measurement of uncertainties. ^[2] In addition, the nonlinear, non-deterministic character of the dynamics of the environment also contributes to uncertainty. Uncertainty also arises from the inability to measure or describe exactly the circumstances associated with risk. Uncertainty collectively forms the kinematic and dynamic characteristics of the environment as it evolves with time. The interrelationship of uncertainty and time is evidenced in the probability of the outcome of future events. It is the management of this uncertainty through risk mitigation that is a critical success factor in an IT project.

The final piece of advice for any project manager is to remember …

“Risk management is how adults manage projects.” – Tim Lister

Glen Allenman is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.