How Can Technology Improve Project Risk Management?

For those who are involved in delivering engineering and construction projects, regardless of their type, size, location among others, understand that they need to make many assumptions to address the many unknowns that could impact the project schedule, cost among other project objectives. By definition, a risk is the possibility of a problem that has not occurred yet, and if it occurs it would have a negative impact on a project budget, schedule and scope.

Managing Projects Risks

To enforce professional project risk management practice, an organization needs to formalize the processes of risk identification, assessment, response and control. PMWeb Project Management Information System provides a single web-enabled platform to manage all project related processes including those of project risk management and other related processes like project issue management and project change management.

Similar to other type of project management related processes, risk management process requires having an input document template to capture the data needed to manage the risk particulars. The level of detail of risk-related data to be captured differ from one organization to another differ. Therefore, PMWeb custom form builder will be used to design the Risk Form that is specific to meet each organization needs. The form below is an example of a basic risk input form. The risk form should include as a minimum the likelihood and impact of the risk before taking any risk mitigation actions (pre-mitigation) and the likelihood and impact after risk mitigation (post-mitigation). This will provide the risk score values.

Of course, the output risk form can be designed differently to take into account the risk identification, analysis and assessment results in the desired output format. This format could differ depending on the project life cycle stage, risk type and project that the risk relates to. Nevertheless, what is important to maintain is that the same data fields are used across all projects. This is critical when it comes to analyzing, monitoring, evaluating and reporting project risks across a program, portfolio of projects or the enterprise.

For ensuring that the right data for the risk identification, analysis, assessment and response is provided by the right project team members at the right time, workflows need to be created to formalize the risk management process. PMWeb workflow will be used to map those steps as identified in the project risk management plan and the sequence to be followed in completing risk identification, analysis, assessment and response actions.

For each step, the actions that need to be taken by each reviewer will be identified. Those will also include the duration allowed for each step, description of what needs to be done, what will happen if it needs to be returned, options available for the step owner and notifications rules.

PMWeb workflow also allows incorporating conditions in the workflow that could for example depends on the risk type, risk likelihood, risk impact, risk response among others. When those conditions are incorporated in the workflow, PMWeb will allow creating branches and decision points that will affect how the risk management process will behave to comply with the authorities and approval levels assigned to each project role.

During the different steps of the risk management process, the project team members involved in this process might find it necessary to upload and attach project and other related documents. For example, this could include specification sections, drawings, progress photographs, weather conditions for the past years, contract agreements, insurance documents among others. Those documents will be uploaded into PMWeb document management repository where they can become available to be attached to the risk form.

In addition, PMWeb allows linking the Risk Form to other PMWeb records like the project schedule, cost estimate, budget, awarded contract among others. This will enable the reviewer to launch that record and review the details. PMWeb also allows linking the Risk Form to websites like the Meteorology and Seismology website of a specific country where the project being executed.

The risk data captured by PMWeb will become the basis for creating the real-time risk register which can be designed in any desired format. The risk register will provide details of each risk along with pre-mitigation and post-mitigation risk scores along with the approved risk mitigation actions. In addition, the risk register data can be saved in MS Excel file format to enable the organization to conduct advanced qualitative and quantitative risks analysis using Business Intelligence and Monte Carlo simulation software applications to run the needed risk analysis.

In addition, using PMWeb Business Intelligence (BI) reporting tool, the organization can create dashboards to analyze risks and the impact of those risks on projects objectives across all projects. The enterprise risk management dashboard can be designed in any desired format to provide the organization with the knowledge and trends needs to better manage their projects risks.

In conclusion, although many organizations are now more conscious about the need to manage their projects’ risks, nevertheless, the majority continue to use MS Excel or risk logs provided as part of project planning and scheduling software applications. Although, this is far better of not having a risk register in place, nevertheless, it lacks enforcing transparency and accountability when it comes to risk identification, analysis, assessment and response due to the absence of having a formal risk management process. A process that requires a document template, workflow and access to supportive documents. In addition, capturing the risk register in multiple data silos, not only prohibits the organization from analyzing risks across programs and projects but also wastes the knowledge gained from identifying, analyzing, analyzing and responding to risks. Further, risks cannot be managed in isolation of other project management process such as cost management, schedule management, communication management, procurement management among others. Finally, project risk management needs to be closely associated with the project issues management which are the risks that have actually occurred and project change management which quantifies the actual impact of those risks that have actually occurred.