Project risks come in many different forms, from those the project team anticipates to the ones they discover when an unexpected problem crops up. In product development, there are many sources because you interact with so many parts of the organization in order to commercialize the product.
Learn how product development risk and project risk are different.
However, there are some simple steps you can take to identify and manage risk AND deliver a product development project to meet management expectations.
According to the Project Management Institute (PMI), risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.[1] In addition to what is commonly considered risk, things like uncertainties, constraints, and assumptions are all additional forms of risk.
While we don’t talk often about the positive impact of risk on a project, they can be very valuable to identify and prepare for. An example of positive impact could be a window opens in the production line so we can start our product verification runs early, saving 3 weeks on the project schedule.
Product development teams often believe they know the risks to a project. However, they tend to focus on the technical risks and perhaps customer acceptance risks, but miss other important risks. Properly captured and reviewed risks should become part of the project management process used by the project team. By anticipating what could happen and developing response actions, the team can respond quickly when a risk occurs, instead of losing time in hastily called meetings trying to figure out how to react to the latest crisis. In addition, many risks may already be known by someone on the team. They simply forget to bring it up, especially if risks are discussed infrequently. A process that regularly solicits and proactively manages risks leads to better project outcomes.
Before you start identifying risk for your project, determine whether there is an internal list or database of common risks in your organization. These could apply to all projects or just apply to your product category. You should also use lessons learned from other projects to help populate this list. If a list doesn’t exist, talk to other project managers to get their input based on their experiences.
Next you identify risks for your product development project. Below are the typical steps we recommend.
To learn more about identifying project risks in product development and incorporating best practices into your organization contact Mary Drotar at 708-829-7470 or mdrotar@strategy2market.com
Product development risk identification is not a one-time exercise when starting your project or getting ready for a management meeting. It needs to be part of regularly managing your projects. While the details depend on the specifics of your project, you should do the following.
You may also decide to track the risk reduction for your project. A product development risk burndown graph is very useful in monitoring the overall risk level for the project.
Product development risk is manageable. When you incorporate a risk process into your product development process, identifying and managing risk becomes a way to proactively address keep your project on track.
Our Exploratory PD™ process incorporates and prioritizes risk reduction to improve time to market and increase project success. Learn more by visiting https://www.exploratorypd.com/.
[1] Project Management Institute. Practice Standard for Project Management Risk. 2009. Newtown Square, PA USA. Project Management Institute
[2] Ibid.
Strategy 2 Market helps companies increase growth and decrease product development complexity. www.strategy2market.com
For more information or to speak with one of our consultants, please contact Mary Drotar at 708-829-7470 or mdrotar@strategy2market.com