Every project manager wants to reduce ‘management by crisis’, overtime costs for employees and contractors, and late nights at the office. —– Risk management allows you to minimize the number and impact of these surprises. A comprehensive risk management plan allows you to improve your construction processes and thereby gain a competitive advantage. It increases the probability of project success, most importantly profitability.
What are the potential impacts of not having a Risk Management Plan and Process in place? Consider the
- Cost of not meeting a commitment
- Embarrassment to the company and loss of good will in the marketplace due to not meeting a commitment
- The appearance of not knowing what you are doing to a customer. This can decrease the customer’s trust in you and create openings for your competition.
On the other hand, the positive impact of effective risk management is
- increased profitability
- less overtime
- fewer deficiencies and
- a competitive advantage.
Risk Management is a tool to prevent problems from occurring or escalating and facilitates a focus on the right results the first time.
Every project plan, every estimate, carries embedded within it elements of risk. Risk is uncertainty. To address this uncertainty, we use expert estimators, past experience and best guesses. MS Project and most project management tools provide us with the means to record these best guesses. But what really happens, as every project manager knows, is not always what is on the project plan. The best guesses are often just guesses. Risk Management is a vehicle for looking at the uncertainty in these guesses, measuring it, examining the consequences and deciding what to do about them. It is the next step in PROACTIVE Project Management.
“It’s what you don’t know or understand that comes back to bite you.”