Planning for uncertainty is the new project management model. Markets are plummeting and cryptocurrencies are disrupting the financial system. Facebook is stealing our data. Experian is losing our data. Unstoppable nuclear missiles, wars, and rumors of war abound. Masses of people are on the move and protestors are in the streets.High volatility is the new stable state.
The World Economic Forum’s 2018 Global Risk Report notes that “humanity faces a growing number of systemic challenges, including fractures and failures affecting the environmental, economic, technological and institutional systems”. The report lists extreme weather events, natural disasters, cyberattacks, and data fraud or theft among the top risks facing humanity in 2018.
Risk-Off Project Management
The first four factors on the Risk Report could easily have immediate implications for project planning, especially in the case of large-scale, long-term, or transnational initiatives.
Project managers constantly deal with risk scenarios and use established risk management techniques to evaluate and account for them. But as the Global Risk Report points out, increased connectivity and acceleration make for expanding risk footprints.
Combined with the fact that project and resource planning, especially at smaller enterprises, is often carried out within a risk management framework based on small-picture, short-term views, it opens up the potential for significant blind spots. Here’s how to play defense.
Adjust risk management strategies to an environment of global-scale high-volatility by evaluating risk accurately and out to the proper scale. Identify points of vulnerability then drill down to get detailed pictures.
For example, your deliverable relies on input from a particular supplier. The yearly audit yields a satisfactory evaluation. Looking closer, you see that certain operations are outsourced to disparate domestic regions. This is documented in the audit, but what the audit missed is the fact that one of the supplier’s critical resources operates in a coastal city. The city has a history of typhoon strikes. Your delivery date falls in the middle of typhoon season.
In this case, a fully nuanced view of risk associated with this supplier was obtained by digging both deeper and wider. That’s what you need to do. In many cases, putting boots on the ground will be well worth the investment of time and money.
Some potential economic, environmental, legal, political, social, and technological risks will be accounted for during the evaluation piece. Another component revolves around the old maxim “Always have a Plan B.”
What are you going to do when a risk is realized? Project plans should include precise outlines of what is going to be done, how it is going to be done, and who is going to be doing it. Don’t forget coverage for uncontrollable financial risks such as currency fluctuations, inflation, new regulations, and changes in tariffs. It’s not enough to just add a lump onto the project budget. Use available metrics and data to get a calculation for each possibility.
This is absolutely essential for projects that will run longer than the current political cycle. They face uncertainty in the potential for political, social and regulatory shifts.
Agility. Portfolio management has proven its worth as a method for aligning individual projects with an organization’s larger business objectives. When addressed within an agile paradigm, portfolio management can also offer advantages in volatile and uncertain times. The keys are a clear understanding of strengths and weaknesses, a process for carefully monitoring the current and future value of projects, and the ability to make rapid adjustments as called for by internal and external factors.
Develop and implement a formal, consistent approach to project, program, and portfolio management. Establish metrics- and data-based evaluation points for each project and keep a close watch on changes in projected ROI and the evolving risk environment. Take a ruthless management approach and be ready to drop non-productive projects early.
Just Keep Dancing
Recognize that project risk is unavoidable but realize that it has upsides that can be exploited. A long-term view, accurate risk identification, and an agile, proactive approach to portfolio management are key project management tools for volatile times.