“Can-do thinking makes risk management impossible. Since acknowledging real risk is defeatism, the risk management function in a can-do organization is restricted to dealing with those smallish risks that can be mitigated by quick action. That means you confront all the risks except the ones that really matter.” (Tom DeMarco, Why Does Software Cost So Much? Dorset House 1995)
Of the many, many quotes from Tom DeMarco that I’ve used over the years, this one is near the top of my favorite list. I’m reminded of a major airline that launched into a comprehensive—hotel, car rental, etc.—reservation system long ago. After a $100 million expenditure, the project was cancelled and a half-dozen project managers were fired, for “lying” about progress. I have always wondered whether or not the company “culture” forced the project managers into an untenable situation in which “shading” the truth became the only escape.
“We’re going to be over budget by about 10% and will need an additional 4 months to get this project finished,” states the project manager in a status meeting. “Unacceptable, fix it, make the numbers work out!” the executive in charge shouts. “Or I’ll get someone who can,” he rages as he stalks out of the room. Now, as a project manager, even the most dedicated and ethical one, how many times will you be willing to endure this kind of tirade? Who is at fault here, the project manager who begins to shade the truth of a project’s progress, or the executive who refuses to listen to reality? I can imagine a similar conversation going on in the halls of Enron.
In working on a project plan at a major software developer, a young, gung-ho project manager responded to a suggestion to develop a risk management plan, “We don’t need a risk management plan,” he emphatically stated, “because this project can’t be allowed to fail.”
Project teams and project managers are loath to admit to uncertainty and not knowing, because the prevailing culture in many organizations doesn’t allow for it. Voicing concerns is tantamount to negativism, concerns are seen as a failure of willpower, as if will alone could overcome all obstacles. Again, it seems that Enron’s executives suffered from the hubris of thinking that they could make anything happen by sheer force of determination and will.
Risk management is a critical part of good project management, as experts like Tom DeMarco vividly explain. But effective risk management begins with a culture in which reality isn’t overwhelmed by hubris. No project manager can be a good risk manager in a political environment where executives are so gung ho that it blinds them from the reality. Effective risk management requires that executives and project managers make hard trade off decisions as the speculative hypotheses we call plans are smashed against the reality of the rough and tumble real world. If the seventh largest company in the country (well, maybe even this rating was the result of accounting tricks) can’t “control” events, it’s unlikely that your project team will be able to either. When actual performance doesn’t conform to the plan, when unforeseen (or foreseen for that matter) risks attack your project, the ability and will to acknowledge reality and make good trade off decisions will ultimately determine success.
Risk management and politics go hand and hand. Trying to implement sophisticated risk management practices in organizations that refuse to accept reality are an exercise in futility.
Agreed. I have personal experience with this scenario. Senior managers want to know what the project risks are, however, they do not want to hear about organizational issues. They want the risks to be narrowly focused on the project. When told about company-wide issues and impediments, senior managers often reply with something like ‘…do the best you can’. In other words, ‘sorry, I’m not going to help with that’.
It’s too bad, really. We can do better.
Totally agree, Jim.
I have found that the PMO, if they are agile, can and should help. To me it is about the sustainable delviery of business value.
Rod Claar, CST
http://bit.ly/PMOofFuture
“sustainable delviery of business value” – err ill just throw that against the wall, think outside the box, etc etc
This is wise advice. As an entrepreneur, sometimes I think that we can accomplish anything if we just want it hard enough. But in reality, we cannot. Good planning requires thinking about risks. Often, in such discussions, I have found that we come up with ideas that make our product simpler and better.
Good article. Common sense thinking about a topic people run from.
Having just left the National Defense Industry Association Program Management Systems Committe, here I sit on the Risk and Opportunity board, I’m always amazed to hear not only 1995 stories but recent ones as well for failure to provide a credible plan for the success of the project. It is literally a violation of the Federal Acquisition Regulation to not have a Risk Handling Plan.
As Tim Lister says “risk management is how adults manage projects.” Without a credible risk handling strategy, the project is doomed from day one.
What’s missing from the development domain for this to occur?
I can’t agree more, “can-do project and risk management” puts projects at risk. After 30 plus years of project management, in pure project engineering, pure manufacturing, real property appraisal, and financial investment management, lack of attacking the real problems exposes those projects to pure unmitigated risks. On two separate $300M high-rise building sale-lease back transaction evaluations (architectural engineering); one had a basement that extended underneath the adjacent street (25’) which was surcharged by a new “Light Rail Line”, and another had an abandoned fuel storage tank in the basement, 6 floors down (requiring in-situ remediation). In either case, not identifying these existing circumstances would expose our evaluation team and our consulting company to pure risk. Telling the buyer about the conditions eliminated our risk, but exposed the transaction to nullification, and risked future contracts. But the fact is, all the buildings on the one street had a basement surcharge against protruding basements, and in the other, constant pumping of basements is typical in the area and represented no undue hardship. In other words, there was no additional risk to the context of the transactions, only our limited understanding.
This is relevant for the acceptance of agile management at senior and intermediate levels in the business world. If the corporate culture is significantly challenging and focused on the immediate results of profits, then an agile implementation can be hindered by bottlenecks of silos and raging micro-leadership patterns from stakeholders. A budget of significant amount for a project is likely viewed as the sacred cow which is too big to not be allowed to fail. Sponsors will channel their energy towards extracting maximum results of economic gains, rather than see intrinsic value of better procurement or process improvement which most than likely will lead to better performance in an agile environment.