Project risk management (with or without tools) is not about not having problems. Risk management is about being able to handle the problems that come up. With good risk management the problems that occur have a very low probability of ultimately impacting the project. Here are two approaches that have worked for us.
We had some great project management tool discussions on risk based upon 3 Secrets For Successfully Putting Your Project Management Team At Risk. The most interesting notion was that risk free or low risk must mean few or no problems. As everyone reminded me every project will have problems.
Risk management from where I am coming from is not about not having problems. Risk management, I will argue, is about being able to handle the problems that come up. With good risk management the problems that do come up have a very low probability of ultimately impacting the schedule, cost, quality or effectiveness of the project.
I’ve taken teams and organizations from late and buggy products to on time and good quality products. Yet, we still had lots of problems. I describe the difference between good product development and bad product development as first having many of the same issues: mistakes, stress, defects, changes, and long hours. The key difference is that at the end of the tunnel, when the smoke clears, the product is still on time, on cost and on quality. In fact, when moving a team from poor performance to excellent performance this is generally what happens. (See also The Leap From Mediocrity To The Exceptional Is Shorter Than We Think.)
For example, schedule risk can be managed in various ways. In development environments where we repeat what we do on a regular basis (such as software development, consumer electronics development, etc.) I like to use past performance as the method of managing risk. The approach is typically to notice that it takes something like an average of 12 months to produce a new consumer product. While we would love to do it in only nine months, we manage our schedule risk by keeping the duration close to 12 months. This generally means we get started on the product sooner than we normally would (three months sooner), so that we can hit our market window. (For more on estimating schedules see Get The Project Management Tool Schedule Right!)
For smaller efforts, managing schedule risk is still about knowing our past performance and planning around it. When managing the defect removal process while developing consumer electronics software, we discovered that we were averaging 7 days to repair a defect. We also discovered that to complete repair on just about all defects (95%) we were averaging 28 days. We managed risk by first understanding these averages and then next planning our timelines and promises around these same numbers. Previously, risk had been managed by assertion. We asserted that we would fix all the defects by the end of the week! The problem with assertion, of course, was that we almost never met our commitments. (For more on managing defects, see Project Management Tool Defect Reports Are Your Best Friend!)
Managing to minimize risk is not about not having problems. It is about minimizing the impact of the inevitable problems that will occur. Initially a project that has good schedule risk management will still encounter all the typical things that have gone wrong in the past. The primary difference will be that fewer milestones will be missed and more milestones will be achieved early. Effective risk management in any area will see this same pattern. Problems won’t all go away but they will not have the serious consequences they’ve had in the past.