Published in mani.philica.com
Why threats tend to arise more frequently than opportunities in project risk registers: a conjecture
In practice, project Risk Registers are dominated by events that could damage a project. Such events are called threats. Opportunities (events that could enhance a project’s performance) appear rarely. Many people find this situation puzzling because superficial examination of the risk model suggests that beneficial effects should occur as often as those that are damaging. I propose that the reason lies in the nature of the business objectives established for projects.
There are two broad approaches to objective setting:
• Treat the project as an optimising (that is, a maximising or minimising), problem—such as “minimise procurement costs”. A target outcome expressed in this way cannot be tested for success.
• Treat the project as a satisficing problem (after Herbert Simon http://www.economyprofessor.com/theorists/herbertsimon.php) where target outcomes are set in terms of thresholds—such as “reduce procurement costs by 25%”. Success is readily decided here—by asking whether or not the threshold was reached.
Accepted practice in the formulation of business cases generally follows the second of these two approaches—based on satisfying each of five criteria (one objective and four constraints). A project will be unambiguously successful if:
• The objective (expressed as measurable target outcomes) is realised.
• All outputs are delivered fit for purpose.
• The project budget is not exceeded,
• Timeframes are met.
• No unexpected disbenefits are generated.
Each parameter involves a clear focus on a threshold, and so we become preoccupied with events that could cause underperformance (threats) rather than events that result in overperformance (opportunities).
As a professional consultant and academic working in the field of project management I, like many others, am intrigued that real-life risk registers rarely contain “positive” chance events (opportunities). Why should “negative” factors (threats) preoccupy the key stakeholders in a project?
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This Observation was published on 18th November, 2006 at 08:33:44 and has been viewed 10293 times.
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The full citation for this Observation is:|
Smyrk, J. (2006). Project threats and opportunities—a conjecture. PHILICA.COM Observation number 29.