Project classifications attempt to address the interaction between complexity and uncertainty and the impact that this interaction has on project management. In this week’s post, I aim to build on last week’s post about managing and leading teams within uncertain times. Some people conclude that managing projects is about ‘managing risks.’ And unpacking the definition of risk is to be examined, through the consideration of the factors that contribute to risk and uncertainty as well as the difference between risk and uncertainty in project management. And it was a shred of evidence that team management, for a project is best done when the project leader is transformational. Since projects involve people, an extra attention needs to be dedicated, which management theory may not take into consideration. More so, it can be said that a transformational leader, who manages a project, will be more effective during decision-making project phase. The decision-making process is very crucial and requires professionals who are competent in dealing with risk and uncertainties. From a project management perspective, risk and uncertainty are words that are used interchangeably. Well, this is wrong, as the risk does not equate to uncertainty, and to help get a proper picture of what is risk and uncertainties, David (2015) defined risk as project “uncertainties that matter” because for a very project, one may detail millions of risks. However, some of them may not be tangible. Although, from the millions of the hypothetical uncertainties, a project manager creates a risk register for those that are more tangible.
Besides, with the analogy, one may conclude that all risk are uncertainties, but not all uncertainties are risky. John (2013) provided a clearer definition, by stating risk are part of project elements, one can assign a probability. While uncertainties one cannot add probability to an exact degree. Marle and Vidal (2010) research paper, provided the cluster approach to managing risk. And the methodology helped show the comparisons that exist among possibilities when combining risk in a project, by utilizing the several indicators. One of the ways to determine the highest possibilities or create the decision tree is using the payoff table, maximize, minimize regret, and expected value as John (2013) stated. The evaluation of risk and uncertainties should not just focus on managing project treats. Zwikael and Ahn (2010) study found that the effectiveness of project risk management practices impacts project success. “Although risk levels, reduce project performance, effective risk management planning was considered too moderate this relationship.
As a result, we sometimes face high-risk projects that are completed more successfully than projects with low levels of perceived risk. This study also found that environmental context determines the standard of perceived project risk. Specifically, we found that the perceived level of risk, and hence risk management planning, are lower in countries characterized by low levels of uncertainty avoidance (e.g., Japan) in cultural diversity terms, and in industries with immature project management practices (e.g., production).” The mentioned, relates to the statement above, and correlates to the post from last week, on factors that increase the success of projects. One needs a leader who is a strategic manager, in this case, a transformational leader, or termed by Krane, Olsson, and Rolstadås (2012) as a super project manager. The super project manager can apply the risk management tools, to influence the impact it has on a project outcome explicitly by evaluating the uncertainty that matters. Since the uncertainties that matter determine, the super project managers can influence the project outcome by exploring the opportunities and threats.
And this is done in a timely fashion, given an effective management of risk does not stop and preventing potential issues. However, exploring how the risk could be of importance to the project, i.e. helps make things work better. Since, some risk may occur that helps save project timeline, budget or resources. For example, the future risk that may impact a project such as oil price decline. A project that was estimated a year ago may be cheaper now because the expensive resources are now more competitive, and a project manager can afford to have multiple resources on the project shrinking the timeline and seen as risk opportunities. So, in conclusion, a project manager will be evaluating any risk that affects the project objective i.e. those beneficial and those that are of no advantage to a project. There are various risk management strategies as seen in the different publication (ACRON, nd; Fink, 2014; Mignan at al., 2014; Cárdenas at. El., 2014); however, risk can have a negative or positive impact on a project. However, to maximize the evaluation of risk, a super project manager is needed who has a clear view of risk from all perspective.
ACRON (nd) Tools and technique for project management [Online] Available from: https://www.researchgate.net/file.PostFileLoader.html? id=5659f5cf5e9d977cd08b4575&assetKey=AS%3A300835612446729%401448736207649 [Accessed: February 19, 2016]
Cárdenas, I, AlJibouri, S, Halman, J, Linde, W, & Kaalberg, F (2014), ‘Using Prior Risk Related Knowledge to Support Risk Management Decisions: Lessons Learnt from a Tunneling Project’, Risk Analysis: An International Journal, 34, 10, pp. 19231943, SPORTDiscus with Full Text, [Online] Available from: www.ebscohost.com [Accessed: February 19, 2016]
David H., (2015) New concepts in project risk management: Bahrain 2015 [Online Video] Available from: https://www.youtube.com/watch?v=9zQ1VDS90II [Accessed: February 19, 2016]
Fink, Dieter, Dr. (2014) Project Risk Governance. Farnham, GB: GowerProQuest ebrary. Web. 18 February 2016.
John N., (2013) ACCA F5 Risk + Uncertainty [Online Video] Available from: https://www.youtube.com/watch?v=oeoEfoyzdKA [Accessed: February 19, 2016]
Krane, H.P., Olsson, N.O. & Rolstadås, A. (2012) ‘How project manager–project owner interaction can work within and influence project risk management’, Project Management Journal, 43 (2), pp. 5467.
Mignan, A, Landtwing, D, Kaestli, P, Mena, B, & Wiemer, S (2015), Induced seismicity risk analysis of the 2006 Basel, Switzerland, Enhanced Geothermal System Project; influence of uncertainties on risk mitigation, Geothermics, 53, pp.