Shared Responsibility

Sam: I think I have done a good job of risk management with my new jet engine project.

Mike: Have you done something innovative, or just followed the rules?

Sam: My Company just recently established a new set of guidelines for risk planning, and my project is one of the

first ones that must comply with the new guidelines. It is always difficult being the trailblazer because any glitches

related to the new processes and procedures will happen to my project. So far, it is working for me.

Mike: That is good. What is different about the new system?

Sam: My project must have a formal continuous risk management plan that is documented and approved by the

senior management, which wants to ensure that all the elements in the new guidelines are adequately addressed

in my plan. In addition, because I feel that communications is a key part of risk management, I have included a risk

management coordinator to help collect information about potential risks from other project personnel. This new

person, Cathy, will also let the project team members know the status of all of our risks.

Mike: Are those the only changes, formal approval, and a new position?

Sam: Oh no! Unlike risk management tools used only by the project risk manager, our system is integrated into

everything we do. Everyone is responsible for identifying risks. We find risks in meetings, vendor status reports,

hallway discussions, voicemails and emails, in addition to a monthly interview with key managers. Then, we work

together to develop risk mitigation plans. Someone is assigned the responsibility for analyzing each risk. The risks

are discussed in our weekly staff meetings. I am realizing that we are identifying more risks because everyone is

involved, and not just the risk manager.

Mike: So, in effect, you are giving people permission and expecting them—to report problems and risks up the

management chain. This is a lot different from trying to hide problems.

Sam: Yes, it is. We now have a shared vision within the project team to look beyond our own responsibility and

make sure that everything is being analyzed for risks that overlap areas. In addition, I am finding that most

problems have been identified as risks before they become problems. When one is forewarned, it is a lot easier to

find a solution than when a problem just appears out of nowhere.

Mike: Have you thought about measuring your effectiveness with your new process?

Sam: Funny, you should ask. I measure effectiveness by how many active, retired, or accepted risks we have, and

how long they take us to mitigate them. Active risks are reviewed in our weekly staff meetings. Retired risks have a

likelihood of zero; in other words, they are no longer risks. Accepted risks are those that we accept and are outside

of our control, like vendor manufacturing issues.

Mike: So, you count the number of risks in each category each month.

Sam: Actually, we count them each week! Roughly, 50% of all risks have been retired. The number of active risks

has decreased as we have proceeded with our production of the engines. The number of accepted risks—about

10%—has remained steady. We also noticed that most of our risks are retired within six months.

PM4620: Week 1 Introduction To Project Risk Management

Analysis 1.1

Conversation Between Sam and Mike

2

Mike: If a project is able to retire risks faster than new risks are generated, then the project team can concentrate

on doing the best job possible with the active risks.

Sam: Right. Another thing I measure is project contingency spending. As you know, contingency funds are set up

to cover the “known unknowns” like risks and problems. I found that most of our contingency was spent on risks

our system identified. That means that we were effectively identifying and mitigating risks when there were still

options on how to solve them, rather than having to deal with larger problems that just come up unexpectedly.

Our project team was finding nearly 80% of all cost, schedule, and technical risks before they can affect the project

with major delays, failures, schedule slips or overruns. I consider that an impressive result!

Mike: I agree. That kind of strategic and coordinated teamwork proves that your project communication has

improved with your new risk management process. Congratulations!