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Project and Program Risks
From an early age we learn to identify the sources of risk, assess the
probability and consequences of risk, and learn to avoid or manage risk and
uncertainty. Yet, despite decades of training beginning at infancy, managers
within organizations have a poor statistical record of managing risks
effectively. For evidence, we need to look no further than the corporate fraud,
mismanagement and stock market irregularity cases in the news. ENRON, Nortel,
the power shortages in California, and the politically charged issues recently
uncovered by the Office of the Provincial Auditor and the Auditor General of
Canada closer to home is more evidence than needed.
Quality gurus, Dr. W. Edwards Deming and Dr. Taguchi somewhat later identified
that about 85 percent of poor quality is attributable to the process and only 15
percent is attributable to and controllable by the worker. Additionally, as the
saying goes,
*When you place a good person in a bad process, the process wins every time.*
As such, all measured performance variables affected by risk, whether quality,
financial return, client satisfaction, capacity utilization and so on; occur
within the context of an organization*s processes.
It follows then that the greatest portion of the risks we face are attributable
to the failing grade of processes throughout our organizations. This has long
been recognized by managers in manufacturing but perhaps less so by managers of
other sectors, including government, where processes are seen as more difficult
to measure.
The control of processes of organizations are and should remain in the
responsibility of its managers and not its workers. Staff consultation and
involvement does not diminish or delegate that responsibility. A process
requires management initiative and sustained commitment to assess against a
standard, make the needed changes, and monitor the effect of implemented change
upon intended outcomes. However, as process owners, managers need to review
their processes before a crescendo of client or staff complaints. Management
must be leading in establishing process expectations; benchmarks, measures,
accountability, contingency plans, and future improvement targets and
responsibilities.
Like policies, strategies, and plans; processes can be formal or informal, well
designed or haphazard. The point being made is that if a process does not exist,
is ad hoc or informal, or is undocumented or incomplete; it is of little value.
Worse yet, such a process gives the organization a false sense of security. Why?
A good process will accommodate most circumstances and prevent their negative
effects on intended outcomes these others do not. The framework of a good
process prevents undue variability in interpreting the situation and applying a
remedial response. It is the wide randomness of response to situations
encountered that inserts risks into projects and program outcomes.
Many mangers believe that training staff to enhance individual attitudes and
qualifications will improve their project and program outcomes. Others
reorganize their departments creating even more risk. With tightening budgets,
looking at your processes and targeting the 85 percent of the problem, would
seem to be the more cost effective way to achieving desired outcomes sustainedly.
Processes, like arteries clog up. Your processes likely are unchanged in spite
of changes within the organization, changes in the needs of clients, and the
leveraging effects of current technology. Most people have an annual cardio
stress test and their doctors monitor their blood pressure, blood sugars, and
cholesterol. Yet, can you remember the last time anyone reviewed the
effectiveness of your essential processes and implemented meaningful changes?
Jules Selymes
Managing Director
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αlpha consulting
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