Advice for Junior PMs – #12 – Proper Risk Management will make you more like Sun Tzu

Have you ever seen a Project Manager lose their job because of not managing risks?  Usually, a PM will be let go because of multiple schedule delays or cost overruns, but rarely do you hear office gossip about someone being fired because they weren’t managing risks.

However, if you break down how multiple schedule delays or cost overruns happened, it’s usually due to a few small risks that went unmanaged.  Most companies that I have worked with take the view that only the highest impact/probability risks should be listed, and everything else is not worth noting.  Others have the culture of listing risks only that are timely (i.e. could impact the next reporting period), and others still have the culture of listing no risks whatsoever lest it impact the optics that the project is perfect.

It’s because of this that when talking about status reports with Project Managers that I am responsible for (either at a Program Management level or that I am coaching), my first topic of conversation is always about the Risks section. I try to re-iterate to them that incentivizing PMs to only focus on “big” or “visible” risks opens the project to the cognitive bias of risk homeostasis – that is, if the most visible risks are “managed”, we don’t need to do anything else.

 

In the Art of War, Master Sun’s statement regarding winning the battle by making no mistakes is one of the most important lessons for a Project Manager regarding planning and risk management. “He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.” (The Art of War, Section IV, point 13.)

Mistakes in the context of battle mean that resources are wasted unnecessarily; mistakes in the context of Project Management means that the Project Manager has missed important or key details that impact the project’s success, ultimately wasting resource.

Thus, I counsel Project Managers to assess all tasks for the risks. When developing the project schedule and work breakdown structure, look at all tasks for worst case “what can go wrong” scenarios, identify the mitigations, build that time into the schedule and cost into the budget. “If, on the other hand, in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune” (VIII, Point 9)

It may sound simple, but it surely is not. It takes time, commitment from your team to working through the exercise, and your attention to focus on all risks in both the short and long term time horizons of your project’s schedule. Knowing – truly knowing – how to respond to risk events, and having your team know how to react implicitly will spare you and your team from the churn, will demonstrate to your sponsor and client that you have planned for eventualities, and can help you keep your job if you need to draft a change request.

“Hence in the wise leader’s plans, considerations of advantage and of disadvantage will be blended together.” (Section VIII, Point 7)