Research06

Module 6 – Discussion Question 1 – Risk Response

Consider this slide in assessing the situation below and recommend the strategy you would adopt that would best mitigate the negative threat or risk in the first case and the strategy you would adopt to take advantage of the opportunity in the second case:

John is a PM who works in a functional organization and he has worked with functional managers to secure his project team. Unfortunately, three of the six team members do not have extensive experience in the skills required to deliver the final product while the other three have intermediate to advanced skills or equivalent experience. While living the PM mantra, “You may not have the best but you have to make the best of what you have,” John moves forward realizing half of his team is ill prepared and his project is at risk.

Rajeev and his team are thrilled because they have learned that a consultant that Rajeev has worked with before with is available. This person is very senior and she has written three very well received and quoted volumes on the focus of Rajeev’s project. Her hourly rate is astronomical but Rajeev and his team are convinced in the long run the money and time that hiring her will save will more than pay for itself.

In the first scenario, recommend the strategy you would adopt to mitigate the risk. In the second scenario recommend the strategy you would adopt to take advantage of the opportunity. What have you learned after assessing these situations?

1

This is a much more complicated issue than it appears at first blush. While having half a team lacking the extensive experience to successfully complete a project is problematic, John’s position is made even more difficult because he works in a functional organization.

Because he is a PM in a functional organization, he likely has very little power, may be a part-timer on the project, and had no input on the selection of the team. John works primarily as a coordinator on the project responsible for administrative tasks, and risk mitigation is one of those tasks. It is likely that functional managers assigned their more expendable workers to the project since their absence on the production floor will have the least impact on unit productivity. In an organization where the PM has much more power, the team member selections would likely be very different.

Of the choices presented as possible strategies for John to employ, three of them seem to be immediately off the table, as escalation, avoidance and transfer seem to be outside the limits of his power.

Of the two remaining choices, mitigation is the choice that seems to have the highest upside as acceptance is tantamount to doing nothing.

A mitigation strategy might involve pairing each of the least experienced team members with a more experienced peer. This will flatten out the quality variations from six very deviant quality levels to three more evenly consistent work products. While this may slow the pace of the project, it will certainly reduce the risks to the project associated with errors due to inexperience.

Conversely, Rajeev has the good pleasure of securing an expert that will likely facilitate the success of his team's project. The biggest issue that Rajeev is likely to face is the willingness to share some of his authority to the consultant who is best able to capture the opportunity for the project's success. It is critical to the organization that the team make the most of the consultant's insights as using this 3rd party is only cost-effective if she reduces the duration and cost of the project so that her fee is justified.

2

For the first scenario, I would recommend that John adopt the ‘accept’ strategy. This means that John will accept and acknowledge the existence of the risk. This is usually suited for low-priority threats and may be adopted where it is not possible or cost-effective to address the risk. In my opinion, John’s situation classifies as a low priority risk as the only issue mentioned here is the fact that half of John’s team has limited experience. Despite their limited experience, I am certain that these team members do possess the necessary qualifications required to successfully complete a project as well as the requirements needed to be placed on John’s team in the first place. If John and the three experienced team members offer assistance and guidance, it is my believe that this level of risk will surely diminish as the project progresses. It may also not be cost effective or even possibly for John to replace his team members. As such, John’s best strategy would be to consider an active acceptance strategy which allows him to create a contingency reserve. This is typically money; however, it might also include additional labor or time to complete a project. The purpose of this reserve would be to provide John with a cushion against surprises that may come to light if the three inexperienced team members fall short on their responsibilities to the project.

For the second scenario, I would recommend the ‘exploit’ strategy. This is suited for high -priority opportunities where the organization wants to ensure that the opportunity is realized. Based on the exorbitant cost associated with the consultant, it is highly important that the service offered is 100% beneficial to Rajeev's team and the success of their project. By using this strategy, Rajeev can capture the benefits of his decision by ensuring full utilization of the consultant's service. This would in turn validate the time and money that will be saved. What I have learnt from accessing these scenarios is the fact that project risks can take many forms such as threats, opportunities and overall project risks. Each of which has similar yet slightly diffident ways of addressing them. It is interesting to see in scenario 2 that the opportunity available to increase the success of Rajeev's project also comes with a underlaying risk if the correct strategy is not initiated.