Project Risk

Talking about Risk is really challenging 🙂 Because risk always sounds negative and we feel it needs to be avoided by any means. Risk is a part of everyone’s everyday life. Here is a real story:

I was on the other side of the road. ‘Walk signal’ was still on, but only 2 seconds to cross. My heart was beating fast. I was running across the zebra crossing – my eyes were moving rapidly between the signal light and the vehicles which were waiting to cross. I almost crossed three-quarter of the road and the signal changed to ‘Stop’. I increased my running speed as vehicles started moving and a life was at risk. Anytime accident could have happened. But I some how managed to escape.

Leaving the real life experiences apart, as a project manager, we need to love Risks and consider them opportunities to gain more control over the project against probable uncertain events. Here is the definition of Project Risk:

Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective.[1]

Uncertainty is the one which makes Risk management more interesting than any other in Projects. Identifying, analyzing, monitoring and responding Project risks is really a challenging.

[1]. PMBOK® Guide – 3rd edition – Page #. 8

Project Stakeholders

Let us take the following scenario:

“Government came up with a sea canal project last year. Currently, ships have to travel around an island to reach other side. By executing this project, ship travel becomes cheaper as it takes shorter route than earlier.

But environmentalists are concerned that this project will endanger the fragile marine ecology of the area through constant dredging to maintain a canal depth of about 10 m. The increase in shipping traffic will inevitably result in an increase in oil spills and marine pollution. So they protested for the execution of the project without proper clearance from national environment group before starting the project.”

What do we understand from this story?

Environmental groups are negative stakeholders in the sea canal project as they stops the project execution.

Let us examine the definition of Project stakeholders now.

Project stakeholders are individuals and organizations that are actively involved in the project, or whose interests may be affected as a result of project execution or project completion.

They may also exert influence over the project’s objectives and outcomes.

The project management team must identify the stakeholders, determine their requirements and expectations, and, to the extent possible, manage their influence in relation to the requirements to ensure a successful project.[1]

As mentioned in the example, it is not required that stakeholders must have negative influence on the project. Stakeholders may have a positive or negative influence on a project.

So, what is positive or negative stakeholder means?

Positive stakeholders are those who would normally benefit from a successful outcome from the project, while negative stakeholders are those who see negative outcomes from the project’s success. [2]

It is Project manager’s duty to identify all stakeholders, gather their requirements, manage their expectations and appropriately communicating them in timely manner depending on their responsibility & authority levels. Moreover, project stakeholders have high influence over the project at the start and it decreases as the project continues.

Let us examine few key stakeholders:

Project manager The person responsible for managing the project.

• Customer/user The person or organization that will use the project’s product.

• Performing organization – The enterprise whose employees are most directly involved in doing the work of the project.

• Project team members The group that is performing the work of the project.

• Project management team – The members of the project team who are directly involved in project management activities.

Sponsor The person or group that provides the financial resources, in cash or in kind, for the project.

• Influencers – People or groups that are not directly related to the acquisition or use of the project’s product, but due to an individual’s position in the customer organization or performing organization, can influence, positively or negatively, the course of the project.[3]

The list is just a gist of key stakeholders. But whole list differs from project to project even projects are executed within the same organization.

[1]. PMBOK® Guide – 3rd edition – Page #. 24
[2]. PMBOK® Guide – 3rd edition – Page #. 25
[3]. PMBOK® Guide – 3rd edition – Page #. 26

What is Project Management?

There are thousands of different definitions, examples and diagrams to explain about project management. Often we get confused with terminology used in those texts.

First and foremost point as project managers we need to follow is bringing everyone to use the same lingo. This is the reason why Project Management Institute to bring up its standard document on Project Management – PMBOK. It is our duty as project managers to use the standard one instead of confusing jargons. Let us go with PMBOK® Guide 3rd Edition definition.

Project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. . (Page# 8)

Now let us see the parts of the above definition and understand the whole meaning of Project management.

At first place, we need to understand and identify the project requirements. This enables us to verify whether we are meeting the project requirements.

We need to use our skills and knowledge to acquire maximum information out of the requirement documents and organize the project activities to achieve the project goals by considering risks. Also, we need to maintain trade-off between quality, cost, scope and time to get the required results.

So, project management is collection of management skills like scope, quality, cost, time, communication, people, procurement, etc.

Project management is accomplished through the appropriate application and integration of the project management process groups. These process groups consist of:
• Initiating,
• Planning,
• Executing,
• Monitoring and Controlling, and
• Closing.

Project Vs Operational Work

I mentioned about operational work in one of earlier post. We generally categorize work performed in our organization as either Project or Operational work.

Operational works are done to achieve business goals, whereas projects are executed to start new business objectives. One or more projects can be executed to provide inputs to operations for better implementation. So, operations and projects have few intersection points during the product life cycle. Project management used to manage projects whereas business process or operations management is used to execute operations.

Basically, Projects are means of executing those activities that cannot be addressed within the organization’s normal operations limit.

We can appreciate the fundamental difference between Project work and Operational work by listing down the differences & similarities of them.

Difference between Projects and Operations are:

Projects Operations
* Temporary * Ongoing
* Output:Unique * Output: Repetitive
* Purpose: Attain its objective and then terminate * Purpose: Sustain the business
* Concludes when its specific objectives have been attained * Adopt a new set of objectives and the work continues

Similarities between Projects and Operation

  • Performed by people
  • Constrained by limited resources
  • Planned, executed, and controlled

(Reference: pg.6 – 7 – PMBOK® Guide 3rd Edition)

Here is a simple straightforward example:

In a mobile manufacturing company, management decided to create a unique water-proof mobile phone. For that they put together a group of research analyst. After a year of research, research analyst group came up with unique design for the mobile – what they executed was a Project.

With the design blueprint, mobile manufacturing unit started assembling all parts and produced 100 mobiles each day – this is called as Operations.

Project Characteristics

In the earlier post, we reviewed about Project definition and its characteristics. Let us review the Project characteristics little elaborately. So, there are 3 characters:

  1. Temporary
  2. Unique Products, Services, or Results
  3. Progressive Elaboration


“Projects are temporary in nature.”

So, what does the word ‘temporary’ mean? We tend to think that ‘temporary’ means it is of short duration. But it is not so. Projects can be scheduled for years. Though it is for years it should have a definite beginning and ending.

Operational work is an ongoing effort which is executed to sustain the business. But projects are not ongoing efforts. A project is considered to end when the project’s objectives have been achieved or the project is discarded / terminated.

We need to note a point here. Only Projects are temporary in characteristic & not the Project’s outcomes. Building Eiffel Tower was a project. The structure was built between 1887 and 1889. Project Eiffel Tower ended on 1889. But still the outcome of the project exists as a monument.

To summarize the Temporary characteristic of Projects:

  • *Definite beginning and a definite end
  • *Project is considered to end
    • **When the project’s objectives have been achieved
    • **It becomes clear that the project objectives will not or cannot be met
    • **The need for the project no longer exists and the project is terminated
  • *Temporary does not mean short duration
  • *Projects are not ongoing efforts
  • *Temporary does not generally apply to the product, service or result created by the project
  • *Projects also may often have intended and unintended social, economic and environmental impacts that far outlast the projects themselves

Unique Products, Services, or Results

“Every Project is undertaken to create a unique product, service, or result.”

To explain further the above statement:

  • Projects can create:
    • *A product or artifact that is produced, is quantifiable, and can be either an end item in itself or a component item
    • *A capability to perform a service, such as business functions supporting production or distribution
    • *A result, such as outcomes or documents. For example, a research project develops knowledge that can be used to determine whether or not a trend is present or a new process will benefit society.

    There can be existence of repetitive elements with in the project but it does not change the fundamental uniqueness of the project outcome.

    For example, hundreds of house buildings have been developed by a constructor called DLF Limited, but each individual building is unique-different owner, different design, different structure, different location, different sub-contractors, and so on.

    So, each building to be considered as a Project and each Project produces unique outcome.
    Progressive Elaboration

    • *Progressive elaboration means developing in steps, and continuing by increments
    • *Accompanies the concepts of temporary and unique
    • *For example, the project scope will be broadly described early in the project and made more explicit and detailed as the project team develops a better and more complete understanding of the objectives and deliverables
    • *Progressive elaboration should not be confused with scope creep. Progressive elaboration is giving more details for the already defined scope and not increasing the project scope.
    • Classic Example:

    The product of an economic development project may initially be defined as: “Improve the quality of life of the lowest income residents of community X.”

    As the project proceeds, the products may be described more specifically as, for example: “Provide access to food and water to 500 low-income residents in community X.”

    The next round of progressive elaboration might focus exclusively on increasing agriculture production and marketing, with provision of water deemed to be a secondary priority to be initiated once the agricultural component is well under way.

    (Reference: pg.5 – 6 – PMBOK® Guide 3rd Edition)

    What is a Project?

    Take the following scenario:

    “For the past few weeks, I am carrying out a research on impact of environmental pollution in global warming. I planned to finish it by Feb 28th, 2008. I publish the result of my study in a local daily newspaper by March 10th, 2008.”

    “So, tell me what am I executing right now?”

    Your reply would be – “You are doing a research project”

    “Yes, I am executing a research project.”

    “Ok. you used a word ‘Project’ in earlier sentence. How can I call what I am doing right now a project?”

    Definition of a Project:

    A project is a temporary endeavor undertaken to create a unique product, service, or result. [1]

    If the activity being performed has all the above characteristics then it needs to be called as a Project.

    Keywords in the definition are: temporary & unique outcome.

    * Temporary – It has definite beginning and end time. (10th Feb 2008 till 28th Feb 2008)

    * Unique Product, Services or Results – It has results out of my research study – “A Report on Impact of Environmental Pollution in Global Warming”. And the study is unique in a manner that it conducted by considering with different organic & inorganic pollutants specific to particular area.

    One other important inherent characteristic of Projects is progressive elaboration. Progressive elaboration means developing in steps, and continuing by increments.

    * Progressive elaboration – The general methods explained in conducting the research was first briefed and then elaborated during the project phases with the inputs of different experts across the country.

    [1]. PMBOK® Guide – 3rd edition – Page #. 5

    What is Leadership really means?

    Let us briefly discuss about what Leadership really means.

    Leadership means giving guidance or direction. If a person has to be called as a ‘Leader’ then he needs to have followers. A guy without a follower is just another person in the world and cannot be called as Leader at all.

    Termed little differently, Leadership is the ability to motivate a group people towards a common goal and be an inspiration by working along with them.

    Leadership is a quality or characteristics which can be developed by practice. So, what do one need to practice? Practicing certain principles, which are called Leadership Principles, throughout the life.

    John C. Maxwell, a leadership guru, wrote “Leadership is influence; without influence one cannot lead.” He also mentioned that his favorite proverb on Leadership is “He who thinks he leads, but has no followers, is only taking a walk.”

    From all discussion presented above, let me summarize the general components of leadership:

    i) Leadership is a process – it will not stop at a point. Even some leaders live beyond their life time!

    ii) Leadership involves a group of people – it does not starts & ends with an individual

    iii) Leadership involves influence – influence happens through motivation & inspiration

    iv) Leadership aims on goal attainment.

    With this brief introduction of Leadership, let us discuss few questions related to Leadership like Leadership styles, Leadership principles, difference between leadership and management, Required qualities of a Leader, etc. in next topics.