MONTHLY COLUMN:

ADVANCES IN PROJECT MANAGEMENT

New Insights to Managing Risk in Projects

By Darren Dalcher, PhD
Middlesex University
London, UK

Editor’s note:  The series on Advances in Project Management was launched with a Guest Editorial by Professor Darren Dalcher and first article in the December 2009 edition of PM World Today.  Please read that introductory editorial here, where Professor Dalcher explains and sets the stage for articles in this exciting series by leading authors in the field of project management.  Please read previous articles in the series by visiting the archives, beginning with the December 2009 edition.  Each month’s article is introduced by Professor Darren Dalcher, editor of the Series on Advances in Project Management.  Here is Professor Dalcher’s introduction to this month’s article.

Introduction to February Advances Series Article

In an increasingly ‘projectised’ world should we be preoccupied with projects or with risks?

The management of risk has gradually emerged as a normal activity that is now a constituent part of many professions. The concept of risk has become so ubiquitous that we continually search for risk-based explanations of the world around us. German sociologist Ulrich Beck even noted that risk had become a dominant feature of society, replacing wealth production as a means of measuring decisions. Yet, at the same time progress is implemented through increments of projects; chunks of action that endeavour to bring about a new future that will improve and change our reality.

Progress is risky, especially when there is a lot at stake and thus risks and projects become closely intertwined. Projects can be introduced to mitigate risks or address perceived dangers, thereby becoming an instrument for dealing with known risks. Projects often have an element of uncertainty and can also be viewed as a way of creating new risks. Risk can provide a reason for embarking on a project, or become an output resulting from a project. Risk can also be shown to have a negative impact on a project therefore requiring a managed approach to control the impacts. Risk management can be utilised as a way of helping to manage or direct a project. Risk analysis can also be used as a systematic approach for improving decision making.

In summary, risk is integral to business and economic activity and to the pursuit of improvement, while projects provide a means of facilitating improvement and bringing about a new reality, which overcomes current risks and introduces new ones (both in terms of the explored new unknowns and the outcomes of the process of exploring). Risk is also concerned with enhancing potential benefits, while projects (and programmes) are evaluated in terms of the actual delivery of benefits.

However the management of risk is not a precise and well defined science. It is an art that relies on attitudes, perceptions, expectations, preferences, influences, biases, stakeholders and perspectives: Once again very much in common with the discipline of project management.

Managing risk is closely integrated with project management. Many standards now offer processes and methods for dealing with the risk portion of project management. Some of the techniques are well understood and well applied. Risk registers in multiple colours are common in many projects, including failing projects. However, despite the awareness of risk and the recognition of the role of risk management in successfully delivering projects there is still evidence that risk is not being viewed as an integrated perspective that extends beyond processes.

The work of Dr. David Hillson has been instrumental in forging a deeper understanding of the issues and perspectives of risk management in projects and in pushing the boundaries of what we know about risk and its management. David is firmly rooted in the practice of managing risk, but is constantly on the look out for ways of extending the discipline and improving the art and practice of risk management.

The accompanying article by David Hillson is a fresh reflection on the current state of the knowledge and practice related to the management of risk. It provides a high level summary of some the key issues. The work follows the publication of his new book Managing Risk in Projects published by Gower in the Fundamental of Project Management book series. (The purpose of the Fundamentals series is to provide a more comprehensive grounding in key areas related to the discipline of project management. It complements the Advances in Project Management book series by offering definitive and focused treatise of the key areas in the discipline: Each book is written by one of the leading experts in the discipline offering reflections, ideas and insights.)

The book recasts knowledge and expertise into clear areas, each packed with new ideas and suggestions. It is unique in concisely summarising available best practice whilst also introducing the latest advances in the discipline. The article summarises the improvements needed, grouping them into the core areas of principles, people, process and persistence.

By linking and integrating the key concepts in risk management and relating them to emerging trends such as Enterprise Risk Management, Dr. Hillson has provided a coherent glimpse of the bigger picture reflecting the current state of the practice. New insights continuously stretching the boundaries of knowledge, such as the concept of risk energetics, skillfully combine with distilled and pragmatic pictures of the essential steps, actions, attitudes, behaviours and competences to refresh and re-energise the discipline. Above all Dr. Hillson succeeds in showing us how to uphold the delicate balance between projects and risks in order to maintain our focus on progress and the successful delivery of benefits.

Darren Dalcher, PhD
Middlesex University, London
Series Editor