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What is a project risk? What strategies do project managers use to assess, monitor, and communicate project risks to stakeholders?

Resource:  Schwalbe, K. (2017). An introduction to project management (6th ed.). Retrieved from https://redshelf.com

• Chapter 6: Planning Projects, Part 3 (Project Quality, Resource, Communications, Stakeholder, Risk, and Procurement Management) (read pages 212-221)
• Chapter 8: Monitoring and Controlling Projects (read pages 299-329)

  WEEK 4 – PROJECT MONITORING AND CONTROLLING

In this week’s lecture talk about the importance of minimizing scope creep, managing risks, and how to optimize the change management process.

Scope Creep

Projects may change in scope as the project is worked and more is learned about the project, but in an ideal situation these changes are made early in the project, where the changes are more manageable.

Scope creep is the addition of new requirements for a project already underway, often with the expectation that the additional requirements will be completed within the same timeframe, budget, and resource allocation as the original project plan.

Scope creep comes in many forms – from a small addition to the user interface in a software development project, to major structural changes of a building under construction, to outright directional changes in a project’s critical foundational assumptions. What is critical to understand is that changes, regardless of its size, has time/money/resource costs associated with it. The length of the project and number of changes are often directly proportional to each other. It is the project manager’s responsibility is to plan and monitor for this eventuality.

The project manager needs to ensure from the outset of a project, that the project plan is the development of a good scope statement that describes the goals of what the project is. In week 2, you learned that the scope must have enough detail to provide limits on the project while meeting the deliverables of the project. It is vital that project sponsors agree to (validate) the scope at the outset of the project. The validated scope provides the foundation for the project manager to evaluate any changes that come with managing an active project. The validated scope also allows the project manager to manage stakeholders’ expectations and concerns.

Evaluating Change Requests

Change is a part of our personal and professional lives. Therefore, changes are expected in projects. The project manager is responsible for evaluating any requested changes to the project, and ensuring others know the new scope, time, and costs of these changes to implementing the changes. This is part of the change control procedure.

One of the ways to manage the change process is earned value management (EVM). EVM provides a quantifiable method to forecast the impact of a change in the overall scheme of the project. It uses baseline project information, scope, time, and cost estimates. Tools like EVM help project managers, sponsors, and stakeholders see the potential impact of a change without the ‘baggage’ of user impulses, parochial concerns, or even emotions, that often cloud project change requests. Your Schwalbe text has more detailed information on the EVM method in Chapter 8.

Project Risk

The Project Management Institute (PMI, 2017, p. 397) defines a project risk as an uncertainty that can have a negative or positive effect on meeting project objectives. Risk management deals with risk identification, risk analysis, prevention strategies, decision-making, and crisis management. Risks can occur at any time during the project life cycle, so the project manager needs to go review risk management planning at a scheduled interval such as at the end of each milestone.

Within a project life cycle, risk management is a proactive approach to risk rather than a reactive approach. A well-planned risk management approach can identify as many risk events as possible (what can go right or wrong), minimize their impact (what can be done about the event before the project begins or as soon as it happens), manage responses to those events that do materialize (contingency plans), and provide contingency funds to cover risk events that actually materialize (Larson & Gray, 2017, p. 208).

The impact and severity of a project risk is based on the project’s current stage. Figure 1 created by Larson & Gray (2017, p. 209), shows that risk is higher during the initial stages of the project cycle compared to the later stages. Inversely, the cost to fix the risk event is relatively low during the initial stages of a project compared to the later stages.

Figure 1: Risk event graph

During this week, the class will be focused on scope and risk management. Defining project scope allows project team to understand which tasks are included as well as excluded from a given project. Without a well-defined scope, client-vendor relation can become contentious.

Once scope is finalized, project manager should lead the project team to come up with a list of potential risks. Once risks are identified, the project team should sort them based on severity and likelihood of their occurrence. This information should lead to the creation of an agreed-upon risk mitigation plans. The risk is then monitored and acted on as needed.

Proactive monitoring and controlling strategies give the project manager better control to manage unexpected events and help reach project objectives on time, within budget, and according to specifications.

Key Terms This Week:

Earned value management (EVM) is a method that measures the project’s scope, schedule, and resource in order to assess the project’s progress and performance (PMI, p.705).

Scope creep is defined in the 6th Edition of the PMBOK® Guide as “the uncontrolled extension to product or project scope without adjustments to time, cost, and resources” (p.722).

References

Larson & Gray (2018). Project management: The managerial process (7th ed.). McGraw Hills, New York, NY.

Project Management Institute (PMI). (2017). A guide to the project management body of knowledge (PMBOK® Guide) (6th ed.). Retrieved from https://www.ebscohost.com/ebooks

Rowley, J. (2014, April 18). Scope creep and the St. Francis dam disaster of 1928. Retrieved from https://4squareviews.com/2014/04/18/scope-creep-an…