Poorly executed risk management can lead projects to fail spectacularly, but well-executed risk management helped the $23 billion Crossrail project in London succeed. The article argues that on complex projects, risk management works best when kept simple. Crossrail's head of risk management found that using established tools and only later introducing innovations led to effective risk management. Independent risk review boards also helped prioritize the top 100 risks each year. By keeping risk management simple and making it a key performance indicator, projects can deliver on time and budget.

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to suffer when risk management
techniques are performed just
to comply with organizational
standards. This is when risk man-
agement turns into mere “risk
appreciation”—the creation of a
long list of risks without thought-
through action plans to address
them, or a narrow focus on finan-
cial consequences without regard
to delivery.
In short, bad risk management
happens when it is implemented
without meaning and without vis-
ible benefits to stakeholders.
On projects with added com-
plexity, strategic oversight in
risk management grows increasingly difficult. Megaprojects, by
the very nature of their big scale and budgets, often require joint
ventures for funding. That’s a lot of stakeholders with numer-
ous—and possibly conflicting—views at the top. With so many
hands in the pot, such collaboration spurs ever-changing legal
conditions and complicated supply chains.
But while there’s much noise at the top, the project focus
remains on delivering an end product that makes customers
happier. In Crossrail’s case, that’s providing a rail service that
improves the travel time for London commuters.
Such challenges can sometimes place risks in the back of project
professionals’ minds, and risks will just vanish into a process black
hole. Rather, project professionals must be able to provide visible
evidence that the risks are under control. “Good risk management
supports delivery, provides assurance and enables informed decision-
making,” says Rob Halstead, Crossrail’s head of risk management.
Can ItAll Be So Simple?
No “one-size-fits-all” solution exists to achieve strategically driven
risk management, but lessons have already emerged from the
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Len Pannett is a London, England-based project and
program management consultant focused primarily in
engineering and technical industries in Europe, Brazil and
the United States.
Voice
Inthe
Trenches
When faced with complexity, keep risk management
processes simple, says Len Pannett.
Poorly executed risk management can result in spectacular project failures. Think deep-water oil spills and
nuclear reactor meltdowns.
But well-executed risk management on megaprojects can lead to incredible success stories—and great
examples for future projects. The US$23 billion Crossrail project, a 73-mile (118-kilometer) transit line
being built through and underneath London, England, is a great case in point.
The Forces Behind Bad Risk Management
With so much potential for greatness, where does risk management go wrong? Usually, its benefits begin
Simpleminded
Crossrail project. The overall takeaway: When faced with com-
plexity, keep risk management processes simple.
The market is awash with tools to help collate, analyze and
report risks. But Mr. Halstead has found more success by effec-
tively using established approaches and tools at the outset, and
only introducing innovative solutions once everyone is comfort-
able with the basics.
Conventional methods also allow experienced team members
who already have a project management knowledge baseline to
detect and handle risks in a consistent, immediate manner. In
turn, this promotes greater reliability and clarity of risk informa-
tion from the beginning.
Another simple and effective part of risk management is risk
review boards—comprised of independent, senior-level technical,
operational, financial and organizational representation who chal-
lenge project managers to recognize, understand, prioritize and
control risks by supplying an objective, third-party input.
Because it isn’t feasible to tackle all risks from every source
with equal focus, these boards help project professionals home
in on the risks most directly impacting the project’s objectives.
These can then be tied to team and individual incentives for
added impetus. For instance, Crossrail identifies the top 100
risks every year, using this process as a key performance indica-
tor to help determine bonuses and thereby engaging project
managers in the risk management process.
By ensuring that risk management is kept simple and making
it a process that project stakeholders strive to excel at, projects
will increasingly be celebrated for providing the right deliverable
at the right time with the right budget. PM
In short, bad risk management
happens when it is implemented
without meaning and without
visible benefits to stakeholders.