PERFORM RISK ANALYSIS
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At CSM a special team of assessment experts independently performs risk analysis and makes project selection recommendations. This assessment team met with the executive team to identify project risks and their impact. The list of risks the team identified is shown in Table 2-2.
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| Risks | Team-Identified Impact | Executives' Tolerance |
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| Technology constraint-getting software, hardware, partnered license | High | High |
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| Pulling resources prematurely | High | Medium |
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| Facility limitation | Low | Low |
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| Availability of networking | Low | Low |
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| Organizational constraints—people being pulled away for other projects | High | Low |
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| Customer constraint—availability of customer to do connectivity, customer shelving the project | High | High |
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The steering committee argued that the risk of resources being pulled from the project prematurely is low because this is a high-priority project to which CSM is strongly committed. Nonetheless, the assessment team argued that, in the past, they have seen too many instances when team members were pulled from an "important project"—so they still felt this concern remained a high risk. The two teams reached a consensus that the issue of not pulling resources from the project needs would be mentioned in the charter.
Project Leadership Considerations
Risk assessment should start with the key project participants who are already assigned identifying the different potential sources of risk. These risks may include:
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Customer-associated
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Contract
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Project requirements
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Business practice expertise
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Project management
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Work estimates
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Project constraints
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Complexity and scale of deliverables
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Contractors.[1]
It is imperative that potential projects be assessed for risks by both management at a high level and technical experts at a detailed level. There are different schools of thought on the composition of assessment teams. Some argue that it is important to have a totally independent team make this assessment objectively and then play no other role on the project. Others argue that seamless transitions are preferable, and that those who will implement the project should be involved from the start. In an organization that values and trusts its associates and that attempts to maximize communications, we believe that the latter approach make more sense. Simultaneously, the executives involved should determine how much risk they are willing to tolerate for each identified category. Then the assessment team and the executives should together determine whether the risks appear to be acceptable.
Everyone needs to express their views candidly based upon their experience and expertise. In the end all parties must agree on the risk level in each category. Sometimes the project approach may need to be altered to reduce the risk levels in one or more areas to an acceptable level. The project leaders should ask themselves the following questions to determine if they are ready to proceed to their third responsibility, which is to justify and select the project:
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Can we develop a sense of shared risk with the project team, client, suppliers, and upper management?
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Have we started having useful discussions in identifying problems and approaches to solving them?
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Have we prepared for the worst while hoping for the best?
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Do we have the ability to identify risks soon enough to overcome them?
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Are we consciously trying to understand who gives us good vs. bad advice?
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Are we identifying opportunities along with risks?
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Have we assessed risk using the categories shown above?
It is clear that in the B2B project we are using as an example, both executives and the assessment team met to assess project risks. What is not as clear is whether they were thorough enough to ensure that all potential sources of risk were considered. A wise project leader really explores the details when assessing risks. Many things look fine on the surface, but trouble lies buried beneath. Leaders want to find that trouble early enough to handle it.
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A Project Leader Needs to:
Accept necessary project risks
Have the courage to challenge risks that can be mitigated
Exercise the wisdom to understand the difference between these two types of risk.
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[1]Paul S. Royer, Project Risk Management: A Proactive Approach (Vienna, VA: Management Concepts, Inc., 2002), p. 18.
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