Risk in Projects

Ross Woods, with thanks to Jοkο, Mulyοnο, Phιilips Budιman, Krιstιn, Dαrιus, Mιrwαni, Suyαntο , Dwι Krιstιαn Dj., Mαrkus Sugiαntοrο , Yοhαnes Sutαdi., 2022

You start with an excellent project idea, a good plan, and the agreement of everybody involved. The question then is, “What could go wrong?” This is the question of risk management.

The common risks in projects are:

1. The project leader cannot continue (e.g. sickness, family crisis).
2. Another essential person cannot continue (e.g. sickness, family crisis).
3. The organization withdraws permission.
4. Participants withdraw, for example. This might have all sorts of reasons:
1. They fall sick or die.
2. They have a family crisis.
3. Their employer transfers them to another location.
4. They are disciplined for bad behavior.
5. Participants do not develop skills intended in the project.
6. Funding runs out or is withdrawn.
7. The project goes longer than scheduled.
8. The project takes more time or other resources than planned.
9. A laptop computer breaks down or is stolen.
10. The organization has a change of leadership.
11. The team has disharmony and fails to function.
12. Communication problems, e.g.
1. loss of vehicle,
2. unanticipated amount of time in travel.
13. Incorrect assumptions about participants:
1. They are more capable than assumed.
2. They are less capable than assumed.
3. Cultural or regional differences.

Identifying risk

Although no procedure is guaranteed to identify all risks, the better you can identify risks, the safer your project will be. (One of the worst cases is to be surprised by a serious problem that you had not anticipated.) Idenify the risks in your project and make a written list of them; talking about them is not enough. The following is helpful for identifying risks:

1. Look at the history of similar projects. Your risks might be similar.
2. Go through the steps in the project and ask “What could go wrong?”
3. Discuss it with others and seek their advice and ideas.

Beware. If a small risk eventuates and you ignore it, it might grow into a major problem.

Calculating risk

Risk comprises two factors:

• The probability that it will eventuate
• The amount of harm it would cause if it eventuates

Give each risk is a probability rating of 1-5. A score of 1 means that the risk is very improbable, and a score of 5 means that it is very probable (or is perhaps already a problem). Then give each risk a harm rating of 1-5. A score of 1 means that the risk would not cause much harm, while a score of 5 means that it would be catastrophic. The whole project would be canceled and relationships would be soured.

Then multiply the two together. For example:

• If the probability rating is 1 and the harm rating is also 1, then the risk rating is 1. Very low risk
• If the probability rating is 3 and the harm rating is also 3, then the risk rating is 9. Medium risk
• If the probability rating is 5 and the harm rating is also 5, then the risk rating is 25. Very high risk.

Controlling risk

It is best if you can completely eliminate a risk. In many cases you can only limit the risk by reducing the amount of harm or reducing its probability of occuring.

If goals change, how can I know that my project will pass?

The best way is to have a clear set of feasible goals and manage risks. However, a project with changed goals can still be quite acceptable if it meets the standard.

It is quite normal for goals to change as you learn what is feasible and what is not. You might not achieve some goals but exceed some others. Your project might also have benefits that you had not anticipated. Even if your project goes exactly to plan, it will probably feel different because pragmatic reality is different from a theoretical plan. A project must have some risk of failure, because no risk of failure means success has no value.