Tuesday, June 11, 2013

Risk management's funny side

Some time ago I chaired a Gateway Review of a major building redevelopment.

The review panel made a few comments about the project manager's approach to risk management, including its unrigourousness. For example, there was no evidence of a systematic identification of risks on the basis of even a high level work breakdown/project breakdown structure, or against a mapping of dependencies to identify risk sources.

The fatuousness of the exercise concerned all panel members with our concerns confirmed when we saw the risk schedule: the lead risk in the project was the location of the public car park!

Not sizing of the project for its market, or customer access (it was distant from a large proportion of its customers), or future demand (would there be too much or too little service capacity in the facility), industry capacity to deliver, or even something as simple as sub-soil conditions. No, it was the car park!

Moreover, there was no probability attached to the risk...to any risk in the list, and no range of effect on the project value: that is, the range of the dollar effect of the risk event on the net present value of the project, given the cost the risk event would cause to be incurred, or revenue deferred or avoided. There were no numbers at all in fact, so it was hardly a risk schedule of any kind, more a type of ceremonial gesture than anything of decision-making benefit.

Donnez moi une break!!

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