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Is Project Risk Management Achievable?

Every project must deal with unknowns, from sudden, extreme weather conditions, material price fluctuations to supply chain interruptions or even a pandemic. These unknowns can wreak havoc on schedules, budgets, scope and success.

How you choose to account for and manage all these risks can make or break your project and your ROI. Fortunately, project risk management is achievable, but only if you have the right processes and the right tools in place to help you forecast and plan for the ‘what-ifs.’

The project risk management process

Your management of risk should start in the early planning stages. Acknowledging, understanding and planning for risks at the outset can help reduce exposure to resulting cost and schedule overruns down the road. That means taking the time to develop a risk management strategy.

  • What are all the possible risks? You can’t plan for what you aren’t aware of. This is where you want to enlist the involvement of project team members from the different risk areas (safety, supply chain, procurement, contracts, etc.) who are familiar with the unknowns that may occur within their disciplines and can advise the larger group. Some of the items that make the list may be unique to your type of project, its size and complexity, its location, the time of year, the state of the local economy and more. It can be helpful to return to similar past projects for historical data to guide you. History can be a great teacher, showing you not only the unknowns that surfaced in the past but how they impacted your project.

If the builds you take on are often larger, more complicated capital projects, you can expect the list of risk variables to have a farther-reaching impact. So, make sure this first step of identifying risks is fully covered.

When managing these massive projects, there’s another risk to consider, which is the project risk management process itself. Losing control of the budget, not communicating crucial project updates to those in the field and missing key indicators pointing to schedule deviations are all situations that can throw off dependent build phases. These can have just as detrimental an effect on your project as late-arriving materials, severe weather and broken equipment, so your process and the tools you choose to execute that process must be examined. 

  • What is the potential probability and impact of each risk? Now that you’ve identified as many risks as possible, you need to understand that not all risks have equal impact. If something has a high likelihood of occurring but its impact is negligible in the grand scheme of the project’s budget and/or schedule, it may not be worth spending as much mitigation effort on a more impactful risk. But if something has a seemingly tiny chance of happening with a high impact, consider creating a plan just for that. Case in point: how many project managers do you think listed ‘pandemic’ as a potential risk factor for 2020?

It can help to evaluate levels of risk severity in terms of the ‘damage’ they could do. What would be the impact from a budget, timeline and scope perspective? What other teams or trades might be affected? What would be the lost business opportunity costs incurred? What about the effect on your company’s reputation? Is there a chance of legal action being taken? 

  • What are effective ways to eliminate or reduce risks? This is where your proactiveness comes into play. Think of ways to keep the risks from happening to begin with. This could be filling out regular equipment safety inspection forms to head off malfunctions. Or it might look like communicating regularly with suppliers so there’s plenty of notice if materials change in price or inventory starts to dip.

If it’s not something you can control, then what can be done to mitigate its effects if and when it does occur? That could mean anything, from delegating certain roles and responsibilities to team members when it happens to saving a list of backup vendors who can provide needed materials should there be a sudden inventory shortage or supply chain issue with your current vendors. Being able to call on a ready list of craftspeople to provide extra support to make a can’t-be-missed milestone can prove invaluable as well.

Establishing a process is one thing. You still need data to inform your planning. And that’s where the right software comes in.

Project risk management software solutions

The traditional ways of planning for the unknowns have made an already difficult process even more so. To really have more control and prepare for the unknown, the right software tools can help you arrive at more comprehensive answers to some of the process questions by allowing you to:

  • Input what-if scenarios to estimate their impact on costs and schedules.
  • Easily access your stored historical data to input realistic variables that create those scenarios.
  • Adjust plans and schedules on the fly as data changes or new data is introduced.
  • Develop contingency plans that are ready to implement if needed.

The right software makes the project risk management process go much smoother and become infinitely less time-consuming. Accounting for construction project unknowns, both the anticipated and surprising variety, becomes more proactive and less reactive and can keep relatively small hiccups from becoming all-out disasters.

When you’re all done with your initial risk assessment, you’re not actually done because your risk strategy must always be considered a work in progress. Adjustments must be made along the way as new or updated information is available. Once you create your first risk management plan within your software programme, you can use it as a prototype for future, similar projects.

While the best-laid risk plans can’t predict or prevent everything, you can gain much more control and confidence in project performance by fine-tuning and implementing project risk management processes and tech tools that work for you. InEight’s planning and risk management software solution provides the increased confidence needed while measurably boosting planning efficiency.

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