Project Risk: 7 Risks Your Projects Face and How to Manage Them

Project Risk: 7 Risks Your Projects Face and How to Manage Them
Author: PM Majik
Copyright 2021. All rights reserved. www.pmmajik.com

Contents
1.0 Purpose of this presentation
2.0 Background
3.0 Positive and negative risk
4.0 Types of risk
4.1 Scope creep
4.2 Costs
4.3 Time
4.4 Technology
4.5 People
4.6 Communications
4.7 Procurement
5.0 Summary
6.0 Additional resources

1.0 Purpose of this presentation
The purpose of this presentation is to provide an overview of the risks that projects can
face. This will help during the planning stages of projects; providing risks to consider and
options for managing them.
You won’t ever mitigate all risks within your projects, but this guide will ensure that each
project under your project management office (PMO) has fully assessed and understood
how the project could inadvertently change.
These risks are a guide – each business and project will have different risks to look at.
Take this as a starting point when designing and conducting risk assessments.
Additional Resource
https://www.pmmajik.com/7-types-of-project-risk-your-pmo-needs-to-understand/

2.0 Background
• All projects come with risks; it’s an unavoidable part of doing business. Risks are anything
that could disrupt or change your projects and alter their level of success.
• Every project should have a risk assessment carried out before getting underway. A PMO
should be able to provide a template that’s designed with its particular use case in mind to
guide those carrying out the risk assessment.
• Not all risks are negative. Sometimes, things happen that unexpectedly make the project
more successful, and these are to be celebrated.
• In this presentation, we’re going to cover the different risks you projects may encounter and
some options for understanding and managing them.

3.0 Positive and negative project risks
• Your project finishes early
• A technology upgrade improves workflows
• A grant application is accepted
• Additional resources are allocated to your
project
Additional Resource
https://www.pmmajik.com/project-risk-issue-and-assumption-management/
• The client wants to change a deliverable
• The materials your project needs cease
production
• An illness affects 40% of a project team
• Important software no longer receives
support from the manufacturer
Negative risks needs to managed and mitigated whilst positive risks should be
celebrated and attempts made to replicate them.

4.0 7 types of project risks you need to understand
Broadly, there are seven types of risk that a project under your office could encounter.
Additional Resource
https://www.pmmajik.com/7-types-of-project-risk-your-pmo-needs-to-understand/
Project
creep
Costs Time
Technology People
Communications Procurement

4.1 Scope creep
Scope creep happens when project clients or stakeholders change the deliverables they
expect, making a project last longer or cost more money than planned.
To prevent scope creep in projects, you can:
• Set clear parameters with a Project Scope Statement
• Involve clients when planning and setting expectations
• Set clear priorities so you know where compromises can be made
• Have a change management process in place to prevent unnecessary changes
Additional Resource
https://www.pmmajik.com/risk-of-project-scope-creep-what-is-it-and-how-to-
manage-it/

4.2 Costs
Cost risk is anything that can make your projects spend more money. These risks can be
internal, like poor budgeting or unanticipated travel, or external like exchange rate
fluctuations.
Your project costs can increase in the following areas:
• Labour
• Materials
• Equipment
• Administration
Building in budget contingency controlled by project sponsors, and accurate planning of
potential costs are the best methods to understand and control your project cost risks.
Additional Resource
https://www.pmmajik.com/cost-risk-in-project-management-and-how-to-manage-
it/

4.4 Time
Every project will have a schedule, but it’s easy for that to get derailed. Sometimes, though,
a project will come in early and your PMO should celebrate and analyse it.
Increases in costs, reputational damage, and missing out on valuable project information
are all consequences of not managing time risks properly.
Here’s how to minimise your project time risks:
• Understand your project lifecycles
• Ask your experts for time estimates
• Choose an appropriate project methodology
• Build in time contingency into your schedule
Additional Resource
https://www.pmmajik.com/project-time-risk-what-it-is-and-how-to-minimise-it/

4.4 Technology
You don’t have to be a software company to face technology risks.
Risks can be positive, with better processing power, improved automations for your
workflows, and hardware upgrades.
These are the three biggest technology risks and a tactic to minimise them:
• Data security and protection – build strong backups and fail safes into you systems
• Unsupported legacy systems – do due diligence on software and hardware vendors and
stay up to date with changes
• Software that you can’t scale – contact sales teams of any Software-as-a-Service you
use to understand growth options before you commit
Additional Resource
https://www.pmmajik.com/technology-risk-in-project-management/

4.5 People
Your project managers and your team are the biggest cost on a project. There are also big
risks associated with your human resources.
Examples of people risk in projects include:
• Temporary loss of people
• Permanent loss of people
• Not enough people
• Queuing people from old projects
There are lots of ways you can improve your colleague engagement and retention to help
reduce your people risks, with the full list available on the link below:
• Health and wellness programs
• Positive scheduling
• Offering training for skills and development
Additional Resource
https://www.pmmajik.com/project-resource-risk-managing-the-people-risk-in-your-
pmo/

4.6 Communication
Getting communication wrong can be costly – you need to know that everyone working in
your projects knows how the project contributes to the business and how they need to
contribute to the project.
Five ways to reduce your communication risk are:
1. Know which communication tools are for which purpose in your projects
2. Be aware of the communication preferences of the people receiving your messages,
including translation needs
3. Have open communication channels with stakeholder to know problems early
4. Outline the goals of any messaging before sending it out
5. Keep your messages positive with deliverables and expectations clear
Additional Resource
https://www.pmmajik.com/what-is-project-communication-risk-and-how-to-
minimise-it/

4.7 Procurement
There are lots of things that you need to buy for your projects. This will always involve risks.
The main risks you need to assess are:
• Fraud and corruption
• Cost escalation
• Quality reduction
• Delivery delays
The ways you can minimise these risks include:
• Accurate needs analysis at the start of the project
• Strong supply chain management
• Effective contract management
Additional Resource
https://www.pmmajik.com/assessing-and-mitigating-project-procurement-risks-
across-your-projects/

5.0 Summary
In this presentation, we’ve covered the risks associated with the projects that fall under
your PMO.
We’ve explained what some of the most important risks to include in your risk
assessment are and offered tactics that can be employed to mitigate them.
Some positive risks have also been noted for your project managers to consider.
Remember that you need to assess risks in seven key areas, which are:
1. Scope creep
2. Costs
3. Time
4. Technology
5. People
6. Communication
7. Procurement

5.0 Resources
If you want more information, visit www.pmmajik.com where you will find lots of project
and PMO resources including the FREE guide, 7 Steps to Set-Up a PMO.
Visit http://www.pmmajik.com/set-pmo/
PM Majik Website
On the PM Majik website you will find over 400 articles that contain practical and
pragmatic tips and insights for designing, mobilising and managing a PMO. New
articles are added weekly. Topic requests are encouraged from the community.

Project Risk: 7 Risks Your Projects Face and How to Manage Them

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Project Risk: 7 Risks Your Projects Face and How to Manage Them