Project risk comes at us from all angles – from internal factors like budget and time to external ones, like client restructures, competitor innovation and changes in market demand. While not all project risks can be 100% controlled, adopting a culture of proper risk management is vital to delivering projects successfully. Managing project risk helps you solve issues flexibly within original timelines, improve estimates for future work and resources, and make informed decisions when taking on new projects. Here’s exactly how to go about it.
Common project risks
First up, you need to identify potential project risks. You can do this simply by auditing individual project areas or functions, using data and direct experience from previous projects. Common sites of project risk include:
Scope creep is one of the biggest threats to project success. It occurs whenever additional requirements that weren’t outlined in the original SoW (scope of work) push themselves into your team’s workload. They aren’t purely down to indecisive or demanding clients – project teams are just as guilty of adding to them. Ensure your project budget accounts for such potential risks, and that project objectives themselves are always clearly defined and settled before work starts.
People are the core of a project’s success, but they can also cause its collapse in certain circumstances. Consider the skills you need for each project and make sure you can access the right colleagues for the job for the whole of your project – paying particular attention to other project commitments and planned vacation days.
Underestimating the time needed to complete a project is another huge risk. It’s vital your time estimates are based on holistic data from past projects, rather than just rough guesses. External risks may also include changing market variables and competitor speed, which need to be researched ahead of project kick-off.
Money is on a par with time as your most important project variable. Running out of budget halfway through a project is a disaster to avoid at all costs. Avoiding it requires you to capture all project costs, resources and hours accurately – protecting projects from human error as much as possible.
Ensuring you have the right project management tools can make or break a project, especially if you’re working with remote teams or external collaborators who need an easy way to stay aligned. Of course, tech carries its own risks – data security, privacy and compliance need to be closely supervised at all times.
Stakeholders and clients who change their minds from one moment to the next represent another major project risk. If you come to a roadblock with a client in the middle of a project, it can have a real knock-on effect on team moral, budget and delivery timelines.
Monitor your biggest risks
Once you’ve identified your risks, you need to rank them in order of severity. Assess which risk is the biggest, most frequent or most time-sensitive to the project. This ensures everyone is aware of your biggest potential pitfalls, and keeps them front-of-mind.
The easiest way to then monitor these risks is by tracking performance against them. Project budget spend, internal costs, individual activities, time per task, employee capacity and resource availability can all be monitored with the help of a robust project time tracking tool.
Project trackers are particularly useful for quickly highlighting the biggest drains on project time and budget, like serial client back-and-forth and spending an unusual amount of resource on one task. They also surface hidden project costs, like internal coordination, client communication, meetings, travel and project management itself.
At the end of a project, you can see exactly how long project phases and individual tasks took, what ate up the majority of your budget and whether the work was actually profitable.
Be proactive, not reactive
Risk management is not something you only do at the beginning of a project – it needs to be maintained throughout a project’s lifecycle. You need to set a time with your team to regularly review risks and monitor the progress of logged items. This will help you mitigate and prepare to tackle issues before they arise, instead of constantly reacting to unforeseen issues, which can leave you totally burned out and demoralized.
Risk management is also a team responsibility. Ensure your project team knows about key risks, so everyone can recognize what they look like and work to prevent them. This is what’s known as contingency planning - essentially, preparing for scenarios A, B or C should a risk event occur in a project cycle.
Remember, while it’s unlikely you’ll be able to eliminate every project risk, having a solid action plan in place to keep problems to a minimum is a vital part of holistic project management.