Categorized | planning

Identifying project risks

One of the top priorities of the responsible project manager is to identify project risks. After that he has to take adequate steps to safeguard against these risks being a potential hazard, preventing the successful completion of the project. So what are the different project risks that may be faced by a project manager? Apart from financial and cost risks, a project manager has to take human resource risks and material resources risks into account. He also has to take into view the impact some of these factors are going to have upon the project and the cost of solving this risk in the most proper and timely fashion.

Now that you have identified potential project risks, you are going to look at the different plans and options with which you can solve these problems. You can either accept them and try to plan around them. Or perhaps, you can avoid these risks by making sure that you have backup strategies. For example, if you think that there is a potential financial risk going to crop up in the middle of the project, it is going to be sensible to have alternative sources of finance at hand. Mitigation of any potential threat is also one of the duties of an experienced project manager. It is going to depend on him to look for the best conditions in which he can use proper strategies to tackle these tangible or potential project risks.

Now let us take an example. When your company decided to invest a lot of money in building a hydroelectric dam in a foreign country, you looked at the different project risks like – is the political scenario in that country steady? Can you get easy access to skillful human resource, technological materials and raw materials whenever required? These are just some of the factors which you would need to calculate before you decide to invest a lot of manpower, time, energy and money while bidding for the contract. Naturally, you cannot guard against possible natural disasters, putting a stop to your project. But you can safeguard against financial risks, and other factors which may threaten the chances of your company completing its project in a timely and systematic fashion.

Identifying project risks can be done in two fashions – identifying tangible project risks and identifying potential project risks. There is a chance that potential project risks may never occur. For example, you may never have to face a flood or a hurricane or a political coup in your country. On the other hand, there is always the chance of these force majeure situations occurring during the execution of your project. Tangible project risks include your money source drying up, your raw material supplier network breaking down, loss of manpower due to strikes, etc. These factors are definitely going to have an adverse impact on your project. A worse case scenario includes shutting down the project because these factors have not been solved or tackled in a timely or proper fashion. Best case scenarios would include you making a contingency plan against possible potential risk factors and those problems not cropping up at all during the execution of the project.

Now that you know how to identify project risks, risk management, done by an experienced project manager is going to look into the best systems and methods to solve, prevent and ameliorate these potential threats to the successful completion of your project.

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