Project Risk Management Methodology

Chapter 18 - Using the Web for Enhancing Decision-Making: UN Project Failures in Sub-Sahara Africa (SSA)
Managing IT in Government, Business & Communities
by Gerry Gingrich (ed)
Idea Group Publishing 2003

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Effective risk management calls for an understanding of the totality of a project or part of a project under consideration, which may be helped by using checklists appropriately. As Dingle (1997) points out, many formal presentations of risk management methodology do not make it clear that the techniques must not be applied mechanistically. In addition, it is important that risk management calls for creativity, imagination, and lateral thinking. However, as communication is also a vital element in risk management methods, it is best to formalise communication and use it to best advantage.

The ultimate responsibility for risk management falls on the project manager. In SSA, subordinate responsibility should be allocated and delegated wherever and to whomever the project manager deems most appropriate for that project's circumstances. It follows that the project manager must understand and approve the methods used, and must delegate sufficient authority to the person acting as "risk analyst" to ensure that the analysis is independent and objective. Chicken (1994) emphasises that a project manager will use the findings of the risk analysis to develop risk management strategies; first, to reduce the likelihood of risks arising, and second, to minimise their impact should risks occur.

Harvey (1992) argues that efficient project risk management depends on recognition that proactive and judicious spending of some of the budget (e.g. time and/or cost) before any actual adverse event will provide better control than invoking a mitigation plan only when a potential risk has become an actual adverse event. The following basic steps in project risk management are recommended to project managers, including key project team members (Harvey, 1992; Chicken, 1994; Dingle, 1997).

• Identify the risks as early as possible

• Record what has been identified, for the purposes of information control

• Predict the likelihood of the risks, and how serious their impact may be

• Decide on suitable action

• Implement the decisions

• Monitor the implementation via a genuine and reliable method

Dingle (1997) suggests that in large projects someone responsible for coordinating and recording all risk management activities must be appointed and report immediately any possible risk that can endanger project development. In SSA, it is ideal to appoint someone who can be reliable and trusted. The public are the ones who, with anger and frustration due to socio-economic failures, may wish to contribute (through a reliable monitoring media, for example the Internet) to project progress and development. They can become part of a project team. The public in the SSA are likely to work together on suggesting how to overcome potential future project problems rather than counting on only government-appointed project leaders. It can be said that risk assessment does not guarantee correct decisions: however, it does enable people to make better decisions. Effective risk management should be seen as an important step for aid project "investment."

The very prevalence of risks (potential future problems), which could jeopardise a project's success, demands a systematic, methodical approach to risk awareness. It must also be noted that the identification of risks, the assessment of their likelihood and impact, linkages between risks, and prioritisation of a suitable response strategy is needed in the SSA.

For most projects, the perception of risk by the public influences the acceptability of national risk strategies. This influence is most rigorously imposed through higher authorities, but its perception may also be expressed through the Internet (media) reporting of project developments. It has become increasingly important for project decision makers to take account of public perceptions of project risk in the SSA.

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