Steering Committee members never really expect risks to materialize. They approve project budgets without including funds to deal with threats effectively. Sure, the Project Risk Log is acknowledged, but that is about it.
Properly discussing these risks, a strategy on how to deal with these and allocating any mitigation or contingency budget in most cases seems to be a bridge too far.
Imagine being the father of the bride. Not only have you barely come to terms with the fact that your little princess is about to leave your fort, but you're also confronted by the traditional responsibilities of the father of the bride. Mostly financially of course, as your daughter had already picked her wedding dress at the age of 13, and the color of the napkins before reaching her sweet sixteen.
Now you’re forced to smash that piggy bank of yours and hire a wedding planner as your project manager for the big event. After having gathered all requirements, she will create that plan and attach a budget for all that is needed.
Do you now sleep safely at night knowing that there is no way your daughter's fairytale wedding will encounter any hiccups?
What about the risk of a wedding shower? The wet kind. Should you also consider a potential power failure, the band not showing up, somebody falling ill or the venue canceling on you at the last minute? Definitely.
So you sit down with your planner to discuss how to deal with these potential occurrences because the last thing you want is for your princess’ big day to be ruined. You would not ignore these, because she will never really forgive you, her daddy, her king.
So you decide to keep track of weather reports, and in case these remain unfavorable, rent a couple of large party tents to limit the impact of rain. You also include a power generator as a backup in case of power failure. Maybe not large enough for all electrical needs, but at least to ensure cold champagne and music.
Other measures you might consider are including a penalty clause for the band in case they don’t show up, merely to lower that risk. At the same time, your planner keeps a phone list of disc-jockeys handy just in case. You also arrange for a first aid medical team to be present should someone fall ill.
The risk with the highest impact is probably that last minute cancellation by the venue. Luckily this risk also has the lowest probability. You can decide to invest heavily in a backup location or merely choose to ‘accept that risk’ since it is highly unlikely to materialize. You could also mitigate it by negotiating a hefty cancellation penalty with the venue. That should keep them in check.
Still, not all goes went well on the big day. There was that one shower, but that didn’t bother anyone as you had the party tents set up. Good for you! The band showed up, and uncle Peter was adequately taken care of by the Red Cross team after passing out on one or two glasses of champagne too many. Sure, in hindsight hiring the generator was in vain, but it was a justifiable investment, as the consequences of a power failure without a backup would have inevitably ruined the day.
All in all, it was a beautiful event as everyone visiting your daughter in the next couple of years will relive through her wedding album and the 90-minute video they'll be forced to sit through while repeatedly saying “how delightful!”. Your wallet might feel a lot lighter but your little girl is as happy as one can be and that is all that really matters to you.
How different are projects treated compared to the above wedding?
Project Managers are expected to identify risks upfront and deal with these immediately and continuously. Just like the father of the bride, the Steering Committee should genuinely acknowledge the existence and possible impact of these risks, and either invest in risk mitigation and contingency or consciously accept the risk and all of its consequences.
This price should be paid, or at the very least pledged, upfront, because no matter how good the project manager updates the risk log, these risks are not virtual risks. These do not automatically disappear by merely updating impact and likelihood. Just like the father of the bride decided to approve the costs of renting the power generator upfront and keep some contingency cash available for renting party tents if the weather predictions were unfavorable.
But for some reason companies seem to think that all risks are virtual, i.e., having a probability close to zero. Steering Committees tend to frown when seeing budget amounts attached to risks. In their eyes, this budget is optional or does not directly contribute to the product that is built. “What is this money for? Why should we approve this now? This will only make our project unnecessarily expensive when we don’t even know if we'll need it”.
But once a major issue arises, guess who reacts most shocked. These same Steering Committee members. Even though the risk had actually been identified from the start! It’s as if the risk documented from the very beginning never really registered in their brains as being a real probability.
If only every project risk log were addressed as a threat to the wedding of their offspring.