Yesterday, I told you all how wonderful risk is. But it is fair to say that most of us work very hard to get rid of risk from our projects. Why this difference?

Well, I think it is because there are two broad types of risks in a project. The first type is one that we all should try to reduce. It’s to do with competence, with doing our job well, with checking we are putting the project in the best position to be a success.

The second type of risk is the one I like. It’s to do with the change we are trying to bring about, the effect we are trying to have on the world outside our project. It’s the risks that you can’t get rid of, because they are part of why you are doing the project.

But because as project managers we have to deal with so many risks of the first type, we seem to get stuck in the mindset that risk is bad, that risk must be removed, that we have to play it safe. But trying to play it safe may be the most dangerous thing you can do.

Let’s look at these two types of risk. The first type are risks that we can and should get rid of. If you are creating a new product, of course you’d do market research to find out if there is demand for it. If you are putting in place a new business process, of course you’d talk with users to find out what they want from it.

To put it bluntly, of course you’d do your job. A lot of the risks we can easily get rid of in a project are really around making sure we’ve done our job correctly, and around making sure others in the business have done theirs. So of course we need to be interested in getting rid of these risks.

It’s like climbing Mount Everest. Before you go, you do your research and decide that it’s probably best to pack warm clothes. You may even investigate further and decide a few bottles of oxygen will come in handy. You make the preparations that get rid of the risks that can be got rid of.

But that still leaves the second type of risks. We may know there is a market demand for a new product – but will your product actually be successful? We may know what the users have told us they want from a new process – but will they actually use it?

These are the risks we can’t get rid of. Yes, we can do everything we can to create a product that meets the apparent needs of the marketplace, but we can’t know people will buy it. We can do everything we can to produce a process that is simple and easy to use, but we can’t know users will switch to that from what they already know.

Going back to our Everest metaphor, you can wear cold weather gear, carry oxygen, and make sure all the equipment you could need is available. But at some point you actually have to go out and climb the mountain, facing the dangers of the cold, the thin air, the strong winds, and the avalanches.

In other words, before you set off on your adventure, you make sure you have taken all the sensible precautions – and then you set off to face the danger anyway.

And there’s actually a good reason for that. Setting off to face the danger only makes sense if the rewards for overcoming it are significant. Those rewards, whether they are financial, social, personal, whatever, are the reason for facing the danger – the value of that payoff is weighed against the danger in achieving it.

In the same way, we weigh up the possible rewards of a successful project – be it increased profit, reduced costs, and so on – against what we are risking if the project fails – wasted money and time, lost opportunities, and so on.

So risk is good – at least, the right type of risk is. If there is a high risk project that we can do cheaply, then we definitely should. The concept of expected value (here’s an example of expected value in poker) comes into play here – though the probabilities involved with success and failure of projects tend to be harder to estimate!

For a business running a lot of projects, they can almost treat their projects as a gamble – they will stake a certain amount of ‘value’ (money and time) to try and achieve a larger amount of ‘value’. If the probability stacks up that you are making a profit, then do the project – accept the risk, embrace it.

Now, all of this makes sense if we are a business looking at risk, and trying to find a sensible way to deal with it. But what about just us, as project managers? It’s all very well knowing the second type of risk is different for the business, but is it different for us? Well, it all depends – and that’s what I’ll talk about tomorrow.

(Image courtesy of psd. Some rights reserved.)

Risk is the absolute best thing you can have in your project. Yes, you read that right. I’m a project manager who craves risk, who wants risky projects.

I feel like I should start a support group: “Hi, my name is Trevor. I am a project manager and I like risks”. But my group wouldn’t be trying to stop anyone taking risks, it would be encouraging it.

Think about it. A project is a new venture, a new risk. Or to use another word from the same root, a project is a new adventure. Now, doesn’t that sound better? Doesn’t that sound a bit more, well, exciting?

“A new adventure” brings to mind much more interesting ideas and concepts than “a new project”. We think of excitement, of courage, of winning through against the odds. In other words, we think of the upsides of overcoming danger, the positive aspects of risk.

For many project managers, though, “a new project” immediately brings to mind thoughts of caution, of danger, of failure. We think of the negative aspects of risk. And not unnaturally, we start to think of how to get rid of the risk from the venture, to ‘de-risk’ the project.

But consider this: Any project has to include risk. Yes, it has to. A project is about change, about creating something new, or doing something differently. And any change has a risk associated with it – we simply can’t know exactly what will happen.

But this isn’t a bad thing! It is thought that the word ‘risk’ derived from an Arabic word ‘rizk’, meaning ‘to seek prosperity’. Similar words were used in the Middle Ages specifically to do with the dangers involved in sea trade, in sending goods you had paid for out onto an unsafe sea, in the hope of selling them for a profit elsewhere.

If you think about it, we often use risk to mean the same thing today – we risk our money by buying shares, or by trading in commodities, or even by starting a project! We are putting our money in harm’s way, risking it being wasted or lost, in the hope that we will in fact get a bigger return.

Risk is good. Without an element of risk, we won’t be able to achieve success. Without risk, we don’t have a project. Without risk, we’re just doing the same old thing again – we’re doing business as usual management, not project management!

And usually, the bigger the risk, the bigger the potential reward. A big reward sounds great! So why do we all, (project managers, I mean) seem to avoid risk wherever we can? Well, that’s what I’m going to talk about tomorrow. See you then!

(Image courtesy of szlea. Some rights reserved.)

I’ve been giving some thought recently as to what lies behind the work we do as project managers. Too often we get caught up in the tools and techniques, the how of what we do, without looking at the concepts and ideas behind it, the why of what we do.

So far, I’ve suggested that:

• The primary aim of every project is to benefit the business.
• Project management is about making the project environment as stable as possible. What is possible varies.
• Project management needs both awareness and control of the project. Control is impossible without awareness.
• The project manager can control time taken, money spent, and scope fulfilled – but only within set limits.
• The project team is a project’s most important resource. Guard them well, to allow them to get one with their tasks.
• The project manager doesn’t do the project work. The project manager does the project managing.
• Only work a project team member is doing on something assigned by the project manager is project work.

Today I want to look at the knowledge that all project managers need about the work on their project. The project management concept I will be looking at today is: Project managers need to know what has been done, what is being done, and what needs to be done.

We need to have knowledge of what has already been done. It is important for us to know the path we took to get to where we are now, to understand the decisions we took, to remember the obstacles we had to overcome. In this way, we can learn from our project experience, and make our future path smoother.

We’ve already seen that we need a good awareness of what is happening in the project at present. This awareness, this knowledge of what is happening right now is means we become aware of problems as soon as possible, to make sure we can solve them as quickly as possible.

We also need to have knowledge of where we plan to go next. It is important for us to have a clear idea of where we are going, to understand the challenges that we will face, to accept that unforeseen problems will arise, and to plan to deal with surprises. To make sure these unexpected events don’t derail the project, we have to have an understanding of our final objective.

By having knowledge of these three areas – the past, present, and future – we can improve our project management. We can do this by drawing on our experiences from the past to help us overcome obstacles we face in the present, and plot a course around foreseeable problems in the future.

And that leads us to today’s project management concept: Project managers need to know what has been done, what is being done, and what needs to be done.

(Image courtesy of Jacob Bøtter. Some rights reserved.)