In the previous blog we introduced you to the idea that without projects the business will go nowhere. In fact growing a business is all about projects. For example:
- Implementing a new website
- Hiring a new member of the team
- Installing new technology
- Creating a new product
Each of these is a project. They all have the word “new”in them. They all have a beginning, middle and end.
We further pointed out that careful preparation is essential and we introduced the tool called the Strategic Focus Project ContractTM.
But projects are risky endeavours:
- Cost overruns
- Scope creep
- Result not what was expected
- Late delivery
- Failure!
And so to minimize risks we use a tool called the Strategic Focus Risk AssessmentTM. The purpose of a risk assessment is to identify the events that could cause project failure so we can develop contingency plans to avoid the events happening.
The Strategic Focus Risk Assessment tool has three columns with the following headings:
- Column 1 ‘ Events
- Column 2 ‘ Probability
- Column 3 ‘ Impact
The exercise should be done with everyone involved in the project. If outside vendors are involved include them in the process.
The first step is for the team to brainstorm every EVENT that could cause the project to fail. Some examples:
- We run out of money
- The new product is not accepted by our clients
- We are unable to convert the data from the old to the new system
- A surge of new clients brings our operation to a halt
- A change in legislation causes a change in direction
Once you are satisfied that you have identified every event, determine the PROBABILITY of each event happening; rate each event as a High, Medium or Low probability of happening.
And if the event does happen what does the team think will be the IMPACT? Will it be a High impact (i.e. putting the project at great risk), a Medium impact or a Low impact?
At the end of the process you have identified the events that have a High probability of happening and a High (BAD!) impact if they happen. We call them High/High’s, which has nothing to do with the past smoking habits of our politicians. These are the ones you focus your attention on. What can your team do to prevent these events from happening? Or what can you do to lessen the probability and/or the impact so it no longer rates a High/High?
This is a powerful tool but keep in mind it is a snapshot in time. As the project proceeds towards its completion things change. We revisit the Risk Assessment on a monthly basis so we can evaluate the risks as circumstances change.
Like everything, conducting a risk assessment does not guarantee project success but executing the assessment diligently does allow your team to minimize risks that could cause project failure. That’s a pretty smart thing to do!
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