Day: October 8, 2010

Categorizing Project Execution Risks

Here is an interesting article in the Project Management Journal about types of risks in project management:

  1. Strategic risks: Those that relate to project goals (short-term or long-term)
  2. Operational risks: Those that relate to project operations, individual outputs and results
  3. Contextual risks: Those from circumstances outside of the project that may influence the scope of work and the performance of the organization. Examples are competing projects, change in ownership and management, legislation and governmental directives, media attention,  market conditions, and accidents.
As is the case in most activities, project managers tend to focus on operational risk at the expense of strategic risks:

In this study, risks are categorized as risks to operational, long-term, or short-term strategic objectives, and, by studying a dataset of some 1,450 risk elements that make up the risk registers of seven large projects, we examine how operational and strategic risks are distributed in the projects. The study strongly indicates that risks to a project’s strategic objectives rarely occur in the project’s risk registers, though project success and failure stories indicate their importance.


Portfolio management organization cultures

The article Using R&D portfolio management to deal with dynamic risk by Serghei Floricel.in the journal R&D Management has some interesting insights into why organizations adopt adopt specific approaches for project portfolio management.  Here is what I took away:

  • They theorize that portfolio management is driven by the competitive environment (characterized by velocity, turbulence, growth and instability). 
  • This competitive environment requires managers to develop  approaches to address it and learn some preferred approaches (what I would call  “gut feelings”).  
  • These approaches to portfolio management can be characterized in four dimensions (structure, commitment, emergence and integration).

They then surveyed 795 firms in a variety of sectors and on four continents to find the following results:

  • high-velocity environments favor structured as well as integrated portfolio management approaches
  • high-growth environments favor approaches that are structured but commit significant resources to each project as well
  • Turbulent environments favor approaches that are emergent, but also, contrary to our expectations, have high resource commitment levels
  • Finally, firms in unstable environments have a marginal preference for emergent approaches
Pretty good stuff to keep in mind when designing or improving product portfolio management processes.