Do you track your project risks in a spreadsheet? You are definitely among the majority if you do. But, there are better ways to manage your project risks, and you can take advantage of your existing P6 EPPM solution to deliver better risk analysis and mitigation capabilities.
If you think about why projects run dramatically late, it isn’t that any given task is a little late that causes major headaches – albeit the overall impact of all your activities running a little late can give you nasty indigestion. A majority of a Project Manager’s job is all about anticipating and mitigating significant risks that could happen, and managing and minimizing the impacts of the resulting issues that do happen.
So, tracking risks is critical to a project’s success.
Successful risk tracking is done with a risk register and a risk matrix. The risk matrix lays out evaluation criteria for the amount of harm that could happen if a risk materializes into an issue. You can think of it as the product of the probability of a risk occurring and the damage that risk would cause. The risk matrix gives you a benchmark to assess your risks. The risk matrix is often standard across an enterprise, a department, or a portfolio of projects.
A risk matrix is usually expressed as table like a 3x3, 4x4 or similar pattern. On one axis you will find the frequency or likelihood of a risk occurring (e.g. certain, possible, unlikely), and on the other you will find the impact of the risk (e.g. negligible, medium, high). Low probability and low impact risk areas are colored green, while high probability and high impact areas are colored red. The space in between is shades of yellow. (“Editorial Comment”: Should risks ever really be represented as green, i.e. “good”? Maybe a risk matrix would be better visually if it went from yellow through orange and up to red.)
Project risks may be further categorized as impacting cost, schedule, quality, environment, health & safety, and other factors. The risk matrix communicates that focus should be placed on risks that are high probability and high impact (all of the red areas, and also the yellow areas). The risk matrix is often created and printed – poster-size – for display in meeting rooms.
The risk register – sometimes called a risk log – is where you capture and track your project risks. The risk register includes a description of the risk, a measure of the likelihood it may occur, and an estimate of the potential impact of outcomes. The risk register uses the risk matrix to communicate the severity of the risk. The risk score is defined as a product of the probability and impact and further may include
Often the project manager is assigned with the difficult task of defining the risks on the project on his own. This is a lonely and difficult job. Risk assessments should be done by key members of the project team collaboratively.
Risks in P6
Right inside P6 you can build your Risk Matrix. You can replicate that big wall chart – and even do better. Since the Risk Register lives inside P6, you can associate project risks to it and use the Risk Register to help define the critical nature of each risk you identify.
Right inside P6 you can also build your Risk Register. The Risk Register allows you to capture potential risks, assign them risk impacts that equate to the Risk Matrix, and assign them to the activities they could impact. Since P6 is inherently a collaboration system – allowing multiple people to contribute simultaneously to the planning and management of every project – P6 enables your key project team members to contribute to the risk analysis exercise.
Risk Responsibilities & Reports
In addition, P6’s Risk Analysis allows you to assign responsibilities for mitigating and managing risks. This simple workflow provides the ability to ensure that risks are owned and controlled, and to ultimately help you to be a project management superstar and deliver more of your projects on-time, on-budget, and on-scope.
Assigned risks can be displayed directly on each risk owner’s P6 dashboard – keeping it top of mind, and top of action.
An added benefit of capturing each project’s risks inside P6 is that you can report on the risks at a portfolio or enterprise level. Imagine the ability to look at each project and how many risks have been captured for each. You will know quickly if projects are being well managed if they have too few or too many risks associated with each. You will also be able to easily report on which projects have risks that have been mitigated and to what degree. With this type of information at the portfolio level, you can quickly determine on which projects and project managers to focus to help them become successful.
P6 and Primavera Risk Analysis
What’s your next step after documenting your risk matrix and managing your risk register inside P6? More sophisticated risk analysis can be done through simulation in Primavera Risk Analysis (PRA). Risks that are captured inside P6’s risk register can be automatically pushed to PRA along with the schedule. With PRA you can accurately predict cost and schedule impacts of project risks, and also use a deterministic schedule to forecast an accurate contingency budget. PRA will also help you to evaluate the benefits of contingency plans – for example the ability to “buy” your risks.
Additionally, as you develop increased project management maturity, you may want to look at more sophisticated workflow tools to help you better analyze and manage risks. Primavera’s Unifier has adaptable business processes that provide higher levels of governance and tracking. They can be configured to meet your projects and portfolios needs.
In summary, to start managing risks on your project, look to your existing P6 EPPM and leverage the tools you are already using to schedule, manage resources, and track progress.
Also - have a look at my other post about how you can use Issues to track multiple things on a project. Click here to learn about using Issues in P6 EPPM.