Managing Project Risks and Uncertainty : Project Management

Uncertain events in a project are bound to happen, which are commonly known as risks. Risks are common in all sorts of projects, and Project Team is constantly preparing to determine and resolve these risks. Project teams are assisted with Project Management methodologies to deal with the project risks and deliver a successful project.  

PRINCE2 and Agile are two Project Management methodologies that offer timely review, evaluation and manage risks. These Project Management Methodologies assist the project team in predicting risks and making new risks more predictable. They can pre-determine risks by logging previous risks and learning how to determine and resolve them.

This blog highlights how a project is susceptible to uncertainty. We'll examine project risk management's definition, sources of uncertainty, and strategies for lowering the risk of uncertainty in project management.  

Table of Contents

1) Let’s discuss the term – Risk and Uncertainty in Project Management 

2) What is Project Risk Management? 

3) What are the Sources of Project Uncertainties? 

4) Manage Uncertainties in Project Management 

5) Conclusion 

Let’s discuss the term – Risk and Uncertainty in Project Management 

Risk- A risk is an unplanned event that can affect the success of your project or also alter the planned cost, schedule or even resources. The risk is considered positive if it has a good impact on your project and negative if it has a negative one. 

Uncertainty - As the word suggests, uncertainty is a lack of certainty. Because you lack any prior knowledge of the event, the outcome of any uncertain event cannot be measured or predicted. 

Even though an event has been identified, you are utterly unaware of its background in uncertainty. In risk management, it is sometimes considered that risks and uncertainty are the same things. Many professionals mistakenly believe that risk and uncertainty are the same, despite the fact that there is a significant distinction between the two.
 

What is Project Risk Management?

The Risk Management Process deals with getting ready to deal with unforeseen issues. Every project has a certain amount of risk. Risks can occur at any point during the life cycle of a project and have an impact on its budget, schedule, and resources. By creating a thorough risk management plan, risks may be addressed. The Project Managers should be able to anticipate, evaluate, and risks proactively. 

Why should We Track Risk in Projects? 

The impact of a risk can affects the scope and complexity of the project. The project team and Project Managers are responsible for tracking and developing mitigation plans for reducing the negative impacts of the risks on the project.  

When the team follows for risks, they can also come across positive risks that are not harmful to the project but beneficial. A risk management plan will help you identify and take advantage of positive risks. The purpose of risk tracking is to enable the project team to respond quickly and make the needed modifications. They can also make sure that future projects can benefit from the lessons learned. A project's success or failure depends on its ability to manage risks effectively. Monitoring risks in advance will maximise a project's success.   

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What are the Sources of Project Uncertainties? 

Let’s say you want to establish a manufacturing unit in an already-constructed building. You will have to remodel that building and estimate all the required elements.  

Though you may have estimated everything, it may vary when practical because of undetermined uncertainties. Uncertainties come in many ways, like human errors, not considering a standard procedure while estimating or maybe neglecting essential aspects. They are simply called sources of uncertainties.  

1) Incomplete Understanding of Scope 

We might not have taken into account every necessity. Do the baseboards need to be replaced? If we didn't consider the baseboards, our idea of scope would be incomplete, and our estimate wouldn't account for the work necessary to replace them.  

2) Incomplete Understanding of Work per Scope 

Let's say baseboard replacement was included in the scope this time, but we figured it would just require a few nails to secure the new ones in place. Unfortunately, even though the scope was correct, the effort estimate will be too low because we failed to take into consideration the work involved in measuring and cutting the baseboards to the proper dimension.  

3) Imperfect Understanding of Known Work 

Even if we remembered to account for everything that needs to be done to install the baseboards, our estimates might still be inaccurate because some of the boards may split when nailed. To prevent splitting when we nail them, we shall either replace those baseboards or drill them. In either case, the workload will go beyond the initial estimation.  

4) Inability to Forecast the Unexpected

These external events are unpredictable and disrupt our scope or schedule, thereby affecting the entire plan. The same is the case with the project, which may affect its success.  

Manage Uncertainties in Project Management 

Until now, we learned about the uncertainty and risk in Project Management, and after finding the problem, we need to look at solutions to control and manage these risks.  

Follow these steps to manage uncertainties: 

1) Understanding the Cause of the Issue:

Firstly, understand the cause of uncertainty before making the next move. As for some things, we tend to overestimate the problem, while it may be silly. But this can only be understood after thorough analysis first.  

Finding the true root of the problem is also a productive endeavour because it will provide a thorough understanding of the cause and possibly lead to the suggestion of a workable remedy. 

2) Try to find Issues Quickly:

Only the project managers are qualified to respond to inquiries about uncertainty or risk. This means that in order to determine the amount of harm to the project, they should examine the issue or problem as soon as feasible. They should suggest a course of action so stakeholders can unwind and the project can proceed. 

3) Keep the Team Updated on the Progress:  

Gaining trust and credibility requires maintaining solid relationships, communication, a plan, and a routine.  Building trust, cooperation, and honesty among the project team members are crucial since a strong team will group and attempt to find a solution. 

4) Mark the Issue as Solved for Future Projects: 

Accounting the problem and its resolution will help you avoid running into it again in upcoming projects. Once this uncertainty has been resolved, it can be recorded as a known project risk.

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Conclusion 

Uncertainty cannot be eliminated by any estimation methods. It arises partly because of imperfect knowledge of what to do and how long it should take and partly because of unpredictable events. Reducing scope helps to reduce uncertainty, but only to a point.  

In this blog, we have discussed everything about how risks are inherent in a project and how to determine them. You have to know that risks and uncertainties in a project are inevitable, but a good mitigation plan will make your project successful and clients satisfied.