In the first systematic step of the risk analysis, an attempt helps identify as many project risks as possible using various methods, mentioned below in more detail.
Like many other planning documents, such as structure and process plans, the stakeholder analysis or precise targets should be available before moving with this step. You can also take some assistance from commercial management services Houston, i.e., SCurve Solutions. The project manager and associated experts and committees should have visualized the project goal and the process in mind.
Before we explain the methods for identifying risks, I would like to differentiate between internal and external risks as well as between technical risks, commercial and planning risks, customer risks, and environmental risks.
External risks are usually understood to mean risks with an external effect on the project. It can include legal conditions, environmental influences (e.g., the weather during construction projects), politics, or current case law. Risks from sales markets and competitive conditions are also considered external.
Stakeholders are not designated as external because they are (mostly) involved in the project.
In simplified terms, it can be said that all risks that are not directly controlled or influenced by the project team can be classified as external.
In contrast to external risks, internal risks can (more or less) be controlled and influenced by the project team.
Risks from the use of resources, contractual conditions, or the project process are referred to as internal risks. However, internal risks arise in the project and the project’s environment, the project-leading trade. For example, the IT infrastructure’s failure within a company is just as much an internal risk as to the loss of data in important planning documents.
Service provision risks can arise from defects in the end product and incorrect handling of devices and/or software required to create the service.
These areas mentioned in the heading are so extensive that an entire book could be devoted to them rather than just an article. Surprise: someone did that too.
If you want to delve deeper into this topic, I recommend the book by Mr. and Mrs. Pinnells – Risk Management in Projects, Identifying and Minimizing International Risks.
Technical risks arise from the individual work packages and their results. If the electrician swaps two cables and causes the power grid to implode, this is a technical error. Countermeasures can actually only be taken with well-trained and experienced staff, with strict quality control and a watchful eye.
The old saying “where there is planning, chips fall” retains its core message: You work with people, technical errors will occur, but it is your task to prevent and defuse them from a planning point of view.
Imagine you are working on a research and development project to bring a new product to market. Now a big brand is coming and bringing a product onto the market that makes your product look obsolete, for example, CD player vs. MP3 player. The drying up of markets is just as much a commercial risk as to the depletion or cutting of the available project budget.
Furthermore, solvency, financing, and venture capital are among the greatest business risks that can also affect your project budget. Depending on the industry, however, the perception fluctuates between “does not matter” and “very likely”.
Here you can find all the risks that can occur if you or your contact persons (key accounts, consultants, etc.) have screwed up something. Be it errors in the work breakdown structure, errors in personnel deployment, errors in quality control, or stakeholder analysis errors.
Antidotes are, for example, the use of consultants who verify planning documents or the four-eyes principle.
Environmental risks (and environmental risks) originate from the direct environment of the project or are triggered by environmental events. More specifically: In a building project (construction project), the weather (environment) can put a massive thwart in your calculations.
Likewise, a stakeholder or a stakeholder group (environment) can make life difficult for you in a commercial building project.
The risk log, or the risk overview, is your holy grail when it comes to risk management.
In this list, uncomplicated as an Excel table or Open Office table, you can secure all identified risks. If you want to create this list yourself, please create at least the following columns:
In principle, a risk analysis should be carried out for every project before the start of the project. If this is available, it usually contains measures to be taken to eliminate or contain the risk. But it also happens that risks arise in the course of the project. It is therefore important to identify and evaluate the first signs of risk.
If a risk arises, a quick reaction is required. It is helpful if defined escalation processes can be used here. Escalation is often seen as a weakness in project management and initiated too late. But there are situations that exceed the decision-making authority of the project manager. Other departments for which he has no disciplinary responsibility or competing projects prevent access to resources for the elimination of a problem. An escalation must be professionally prepared by the project manager and initiated quickly.
Here is a tip for a successful escalation in the form of the most important cornerstones for an escalation document:
A risk that frequently occurs in practice is a resource conflict that cannot be resolved by the project manager.