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Managing Project Risks (Part 1): Don’t Be Snared by These 6 Common Traps

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Copyright 2005 Adele Sommers

When your enterprise decides to undertake a new endeavor —
whether it’s designing a new training program, planning a
new service, or revamping an existing product — this
endeavor is called a project. It involves people, funding,
resources, schedules, requirements, testing, fine tuning,
and deployment, plus a host of other activities.

You may have seen this phenomenon by now: projects are risk
magnets. Why is that?

There appear to be several factors involved. Managing
project risk is a process that seems to be poorly
understood by business owners and project managers. As a
result, projects frequently experience problems with
understaffing, schedule overruns, cost overruns, and unmet
requirements. This article (the first of a series) explains
six common traps that, when not fully recognized, can lead
to unpleasant surprises.

Here’s what I’ve observed over many years as both a project
leader and participant:

1. Each project differs in some way, shape, or form from
the last one.

If all your projects were exactly the same, you could
simply use a cookie-cutter approach to crank ’em out
without losing any sleep at night. Although projects may
share some similarities, a new project could very easily
introduce several new, unfamiliar elements that can
completely throw off your sense of balance – often without
your even realizing it until it’s too late.

2. Projects are often constrained by finite conditions.

Initially, you might hear limitations such as, “We only
have $1,200 and three weeks to have you complete all 18
training modules for this project.” (What? You’re thinking
that based on the requirements you’ve heard so far, this
project should take a year and a half and cost three
hundred grand!)

Speaking of constraints, it’s not unusual for project
sponsors or clients to ask for 1) low cost and 2) fast
completion and 3) high quality and 4) many features in the
final project deliverables. Although it’s understandable to
want the greatest value for the money, unless the project
is blessed with an infinite schedule and an unlimited
budget, tradeoffs become necessary.

Usually it’s only possible to achieve two or three out of
four of these goals on a typical project. The tradeoffs
might constrain the number of features, limit the quality,
or both.

3. People chronically underestimate their time and effort.

Whether it’s because of a perceived social stigma or a
cloudy crystal ball, people typically have a difficult time
deriving realistic project estimates. Given the number of
project unknowns, coming up with accurate predictions can
be tricky. (Smart project managers know this and frequently
add buffers derived from records of actual past experience,
commonly known as “fudge factors,” to project bids.)

To complicate matters, people often feel pressured to
further “reduce the truth” — that is, to minimize whatever
their already low calculations tell them it should take
when they put together a bid. Whenever management pushes
people to underestimate this way — perhaps for fear of
losing the project — the risks can easily overwhelm and
even destroy the project’s success.

4. Project requirements are typically fuzzy at the
beginning.

Whether you’re talking to a client, your boss, your
colleagues, or your clients to figure out what the project
should produce, whatever they say initially may sound as
clear as a bell in some areas but very sketchy in others.
Getting clarification on the fuzzy parts might entail many
conversations with many people, and much more time than
anybody ever imagined.

5. Requirements invariably shift over time.

The minute after you’ve cemented the requirements with
everyone’s agreement, “scope creep” begins. This means that
the project needs may expand, shrink, or morph into
something altogether different! These situations arise
because the very act of creating something new can produce
a result (or a series of results) that may exceed or differ
from what people were capable of imagining at the start.
And even when the team guards against it, pressure to
include “add-ons” can stretch the scope beyond its limits.

6. Nearly everything else about the project is dynamic!

Aside from the requirements changing, many other things can
stop, start, or fluctuate during the project. Experienced
people may leave and new people may come on board. Budgets
could get chopped. Schedules might get slashed or —
sometimes even worse — delayed. Resources may evaporate or
not materialize in the right forms. Politics can sneak in
and remove support, or require skipping critical steps such
as testing. The list goes on and on.

Studies of failed projects have revealed how difficult it
can be to detect all of the red flags in advance. Unbridled
optimism can block everyone’s ability to see clearly. Yet
turning down an iffy project may be better than letting
egos rule.

What to do? As we’ve seen, projects can involve several
highly dynamic variables. They often operate under tight
budgets and schedules. People tend to miscalculate time,
effort, and resources. Requirements frequently expand,
shrink, or change. And shifting circumstances can pull the
rug out from under everyone’s plans. Add these together and
many projects will cook up a recipe for failure.

But it doesn’t have to be that way. You and your team can
learn to avoid project pitfalls by paying close attention
to the cause-and-effect relationships among these six
important keys!

About the Author:

Adele Sommers, Ph.D. is the creator of the award-winning
“Straight Talk on Boosting Business Performance” success
program. To learn more about her tools and resources and
sign up for other free tips like these, visit her site at
http://LearnShareProsper.com .

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