Сommon Project Risks and How to Overcome Them – Ultimate Guide

Every project manager’s ultimate goal is to deliver a project on time and within budget. However, some risk factors may hinder this process. Most importantly, project managers do not work in isolation; they lead a team of people with diverse talents, each contributing to the project’s overall outcome.

“Talent wins games, but teamwork and intelligence win championships.” Michael Jordan

Skillfully managing team members is an art in itself, and this is where you, the project manager, play a critical role in minimizing project risks.

While managing some teams and projects can be simple, others can be so complex that they compromise project completion and quality.  

Projects in engineering, IT, marketing, professional services, or any other field inherently involve risk. In this article, we will introduce you to the fundamental aspects of project and team management, ensuring that all your projects are set up for success.

What are Project Risks?

Understanding Project Risk involves recognizing and analyzing the potential issues that could negatively impact a project. It’s about foreseeing problems that might arise from various sources, such as financial uncertainties, technological failures, resource shortages, or external factors like regulatory changes.  

The key is identifying these risks and evaluating their likelihood and potential impact on the project’s objectives. Effective project risk management requires a proactive approach: anticipating challenges, planning responses, and implementing strategies that minimize risk exposure.

By thoroughly understanding project risks, managers can prepare more robust plans, ensuring that the project remains on track and within budget despite the uncertainties that lie ahead.

5 Key Project Risk Factors and How to Overcome Them

According to a significant IT research institution, The Standish Group (www.standishgroup.com), a mere 16% of IT projects are completed on time and within budget. Standish estimates that 53% exceed their schedules and budgets, while 31% are canceled. META Group (www.meta-group.com) suggests that nearly   50% of all new software projects in the United States will exceed budget.

In other words, there’s only a one-in-six chance that your next project will be successful. These odds can be disheartening. However, your next project doesn’t have to be a gamble, unlike Texas Hold ’em. By understanding the most common causes of project failure, you and your company can strategize effectively and consistently achieve successful outcomes.

Renowned project management experts agree on five primary risk factors that can jeopardize your project.

1. Internal resistance to project management tools and methodologies

Let’s explore why internal resistance poses a risk to projects and discuss strategies for overcoming it.

People hate change, mainly when it entails additional work: tracking time, detailing steps to reproduce a defect, updating task statuses, etc. If you ask your team members what would motivate them to do this extra work, the most common answer might be, “Short of holding a gun to my head, nothing.”  

However, there are ways to encourage your team’s cooperation. Here are the top three suggestions from seasoned project managers:

Don’t force the new system on anyone.

Never introduce a new tool and say, “OK, folks, start using this software now.”

• First, educate your team before implementing the new software or system. Explain the tool’s significance to the company and why they are being asked to use it.
• Next, arrange a trial and involve as many team members as possible in the test run.
• Ensure that all users receive introductory training before being allowed to use the application independently.
• During the trial period, meet with users and gather feedback. Address all concerns and determine if the issues can be resolved.
• If some users need help evaluating the tool within the allotted time, try to persuade your vendor to provide additional trial time.

Show the personal payback.

You’ll need to show people the personal benefits they’ll gain from using the product.

• For example, engineers in your organization may be frustrated by a constant barrage of conflicting customer requests. By prioritizing tasks, you ensure excellent service, as engineers will know which activities to focus on first.
• Many employees don’t like having long status meetings to stay on top of projects. Consider this incentive: ‘Use this project management software to track your progress and skip the weekly status meeting.
• Alternatively, you could tell the team that we must regularly demonstrate our budget progress to the COO. This way, we can adjust our actions before it is too late.

Make it a habit for everyone.

Once you’ve resolved all the issues and fully implemented the system, clearly communicate the metrics or data you require and make that input mandatory. Regularly check this information.   Don’t make exceptions for anyone, and don’t accept excuses for not using the tool. Its use must become routine – a highly beneficial habit.

After that, your team members will likely become enthusiastic and may even use the project management application in more ways than you initially anticipated.

2. Poor Team Communication: A Critical Project Risk Factors

Even with top talent, detailed specifications, and comprehensive requirements, your project’s success largely depends on effective team communication. Key factors include hiring the right people, fostering a positive work environment, and equipping your team with the best tools. Considering these prerequisites, here are the necessary steps to reduce project risk:

Create a central location to manage and store your team communications.

Few things are more frustrating for a project manager than hearing a team leader say, “You never told me about this…” two weeks before the product release deadline. The only thing worse might be the client saying, “Oh, no, no! What I meant…” just a week before the deadline. This will be addressed in another part of this series: “Avoiding the ‘We need one more feature’ trap.”

To prevent blame-shifting and ensure every team member knows their responsibilities, follow these straightforward guidelines:

• Assign each task to a specific person in your project management software to hold them accountable.  
• Use the software’s collaboration tools to discuss project issues instead of relying on emails or instant messaging like Slack. If you must use Slack or email, copy these communications to your project’s message board to maintain a historical record.
• Additionally, all project-related documents should be stored in the same system to ensure everyone uses current specifications and avoid outdated information from forgotten network folders.

Accommodate personal communication preferences.

As mentioned, your team is full of talented individuals who may be protective of their time. They want to use it wisely when talking to others or attending boring project status meetings when they could be working on brilliant ideas or perfecting algorithms. However, it would be best if you still had their input and communication with the rest of the team.

The solution? Please provide them with the tools they prefer and the freedom they need. If they don’t want to attend meetings, that’s fine as long as they update their progress in the project management software or generate a report to send to their project manager.

Make customers a part of your team.

Your project could face issues if your team communicates well internally but struggles with customer interactions. You need to make your customers a part of your team and get them working for you. Here are some valuable tips:

• Ask customers to use your PM software instead of emails or phone calls to submit new requests. This helps track history and trains clients not to fall into the “One more small request” habit. When clients see a list of all the new requests they’ve submitted, they might think twice before adding another one.
• Make it easy for customers to report issues, e.g., set up your work management system to retrieve emails from a dedicated sapport@… account and post them as issues. Configure the system to automatically assign new issues to the Team Leader or QA Lead. This ensures that nothing slips through the cracks.
• Encourage customers to post feedback and discuss the project using the message board. This keeps the project transparent and minimizes the risk of unpleasant surprises for you and your customers.
• Use project management software like Birdview PSA, which features a custom portal,   alert system, and communication tools.

Following these three simple techniques will help you build a more robust and efficient team while keeping your project on track.

And who knows… maybe from now on, you’ll only hear, “Are you kidding?

It’s already done…” from your team and “Wow!” from your customers.

3. Inadequate initial project planning significantly increases project risks.

Imagine climbing Mount Everest with just a compass and ice axe, tackling problems as they come without checking your food supply or learning about dangerous areas in advance. It’s absurd, yet this is akin to why 48% of projects fail due to inadequate initial planning and poor estimation.

Detail Your Project Plan

Before starting a project, define it as clearly as you would explain your desired hairstyle to a hairdresser. Rushing the planning stage can lead to overlooked details such as goals, scope, budget, and constraints, which may cause issues later. You will establish a solid foundation that guides all subsequent work by aligning the project manager, client, and stakeholders on these key elements.

Always be prepared, like a Scout.

Set clear project parameters and develop a detailed work plan that estimates required time and effort, mapping out tasks weeks in advance for proper resource allocation. Ensure all team members and stakeholders understand the project management approach by creating a concise document outlining issues, scope, quality, risk, and communication.

Keep Everyone in the Loop

For project success, it’s essential to maintain consensus and cooperation by involving all team members and stakeholders throughout the project. Traditional methods like paper, whiteboards, and spreadsheets are outdated. Now, many organizations use cloud-based project management software, enabling remote updates, visualization of project statuses, and continuous communication. This technology allows team members to share updates and feedback instantly from anywhere, reducing the need for lengthy meetings and office visits.

4. Changing requirements during development significantly increases project risks.

Imagine leading a large marketing project with all materials finalized and approved. Initially, the client is pleased, but then change requests start arriving: a new feature, changes to the background, and changes to the layout. Each addition widens the project scope, causing delays and requiring more work than planned.

That’s called feature creep.

Feature creep, stemming from uncontrolled requirements, often leads to project failure, especially in software or marketing projects where changes are more manageable than construction projects’ rigid constraints. For instance, altering a website’s design is feasible during development, unlike making structural changes to a half-built house.

Typically, development projects begin with defined objectives, but frequent additions by sponsors and stakeholders can significantly alter the outcome. Effective change management is essential, facilitated by a formal process of reviewing and approving changes and supported by the right project management software. This approach helps prevent delays, budget overruns, and compromises in quality, keeping projects aligned with their original goals.

Separate Project Tasks from Change Requests for Clearer Management

Project management has evolved from using pencils and paper to essential software that efficiently tracks and organizes tasks, feature requests, and defect reports. As a project manager, handling new feature requests separately from ongoing tasks is critical to preserve the project’s scope and keep it on track and within budget. Even small changes, if not appropriately managed, can accumulate and significantly impact the project.

By isolating change requests from regular tasks, you can evaluate which ones can be integrated without affecting the project’s deadline or budget.  

Implement a Change Approval Process and Keep a Change Log

During the initial planning stages, it’s crucial to establish a straightforward change approval process. This process should guide how changes and feature requests are submitted and managed, educating stakeholders on what information is needed and detailing subsequent decision-making and communication steps. It should allow for necessary changes to be made with appropriate adjustments to schedule and costs while preventing unsuitable changes from impacting the project.

Keeping a change log is also essential. This log should document all change requests and be a central reference for all submitted changes.

Utilize Online Communication and Collaboration Tools

Effective communication is crucial for project success. Online tools such as web conferencing, file sharing, and message boards centralize and organize information, reducing the need for costly in-person meetings and long-distance calls. These tools enable real-time audio and visual communication, allowing project managers to provide updates and resolve issues quickly.

Additionally, using online collaboration tools prevents feature creep by ensuring all project-related documents, including change logs, are accessible to team members and stakeholders at any time, from any location.

5. Objective Project Status Reports Reduce Project Risks.

You’re geared to celebrate a significant milestone four weeks into a project, but the progress meeting reveals it won’t be met. Continual issues have caused delays and budget overruns–a nightmare for any team.

As a project manager, it’s vital to monitor your project’s health and regularly identify problems early. Gathering detailed data on everything from product development to team performance and potential risks is crucial. This information should be the core of your project status reports, ensuring they are accurate and objective.

Here are tips for creating practical and objective progress reports.

Identify the Required Information

During the planning phase, the project manager should meet with stakeholders and team members to ensure that all reporting needs are effectively met. This discussion will help make status reports most useful by determining the format (bullet list, narrative, data table) and frequency of these updates.

Some things to keep in mind to write an effective report:

• Status reports should be written, short, and focused.  
• An effective status report should convey the project and its reporting period to the reader.
• Communicate what the project team has accomplished and what must be accomplished during the following reporting period. Keep your report positive and use action words like completed, improved, fixed, etc.
• Don’t be afraid to discuss potential project risks and propose possible solutions. It is essential to identify risks early on and allow input from the rest of your project team, stakeholders, and project sponsors.

Go beyond software to reduce project risk.

Don’t solely rely on project management software to gauge your project’s progress, as its effectiveness depends on user input. For instance, if a team member updates their progress only on Fridays, checking the status on Thursday might misleadingly show no progress for the week.

Encourage open communication where team members give feedback before and during tasks, not just after completion. Hold project review meetings to enable everyone to share their concerns and insights. Concentrate on the hours required to finish the project rather than the hours already spent to gauge the remaining work accurately.

Make Your Reports Accessible

Traditionally, status reports might be handed out as hard copies in meetings and followed by an email. However, what is often overlooked is the potential for more dynamic distribution methods that can improve accessibility and efficiency.

Consider using online collaboration tools, which offer a centralized location for storing status reports. This allows team members, stakeholders, and sponsors to access documents anytime and from anywhere, regardless of geographic location.  

Use web conferencing tools for teams across different regions to facilitate real-time communication. For example, if your project sponsor is in Europe while your team is in North America, online meetings can seamlessly integrate them.  

 

Mastering Project Risks with Project Management Software

Managing project risks often feels overwhelming, burdened with complex spreadsheets and continuous updates, leading some to dread the tasks involved.

However, advanced project management software can simplify risk management, making it a seamless part of daily workflows.

Automated Risk Identification: Modern project management software can detect potential risks based on project data and historical trends.  

Real-Time Risk Analysis: Features that provide real-time analytics allow project managers to see an up-to-date view of all risk factors at any moment. This capability allows you to monitor the risk of running over budget and time and make proactive adjustments.

Risk Prioritization: Not all risks warrant the same level of attention. Prioritize them so that you can focus your efforts on managing those that pose the greatest threat to your project’s objectives. This step is crucial for efficient resource allocation.

Implementation and Monitoring: Assign responsibilities and ensure each team member understands their role in risk mitigation. Regular monitoring and control are essential to catch new risks and assess your mitigation strategies’ effectiveness.  

Integrated Communication Tools: Many project management platforms feature tools that enable instant sharing of risk assessments and responses. For example, a marketing agency effectively used its system to spread strategies for a rapid market change, keeping all team members informed and responsive.

Collaborative Risk Mitigation Planning: The best project management software offers collaborative spaces for brainstorming and planning risk mitigation strategies.

Identifying and Managing Risks in Resource Planning

Risk management refers to resource planning and allocating all types of resources, such as people, equipment, and materials, to manage potential risks effectively throughout the project lifecycle.

Key Elements of Resource Planning in Project Risk Management:

1. Resource Identification: Determining what resources are necessary at each project stage, including human resources, technologies, and materials.
2. Resource Allocation: Assigning available resources in a manner that optimizes the project’s performance while considering potential constraints like budget and personnel availability.
3. Resource Buffering: Setting aside additional resources to handle potential risks, such as unexpected demand surges or supply shortages.
4. Resource Flexibility: Ensuring some flexibility in resource allocation, allowing for adjustments as project demands change or when risks become realities.
5. Monitoring and Adjustment: Continuously monitoring resource utilization against the plan and making necessary adjustments to address any discrepancies or emerging risks.

By meticulously planning and managing resources, project managers can avoid delays and cost overruns and enhance the project’s ability to withstand risks.  

Leveraging these sophisticated tools makes managing project risks less daunting and more dynamic. These tools save time, reduce errors, and promote a culture of proactive risk management that can significantly increase the chances of project success.

Managing Project Risks with Birdview PSA

Birdview PSA simplifies the complex task of risk management by offering key features that streamline the entire process.  

Birdview PSA enables effective communication through integrated tools, ensuring all stakeholders know about risk management strategies and updates. By centralizing risk management functions into one platform, Birdview PSA makes risk management more manageable and significantly improves project risk control efficiency.