Management Must Take the Lead in Avoiding Risk

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Thursday, October 29th, 2015
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Imagine if everyone spent as much time and energy in planning project works as they do defending the failure to do so.

It is human nature to defend our mistakes, especially in an industry where it seems people are not penalised for not learning from them.

We recently witnessed a change in management at the apex of our current work-in-progress, our Federal Government. Keeping in mind that this is the only long-term project in which the stakeholders actually have an input into the daily management of the project, it is not surprising that there has been a very robust and loud response from its beneficiaries, namely the citizenry.

As a stakeholder with project director experience, I voiced my concern as to the project governance and management over 18 months ago. When the project team finally got its act together and replaced the project director, the only line that interested me in the whole chaotic mismanagement was the outgoing director’s “I never saw it coming!”

What a load of unmitigated rubbish! Both construction and politics have been conjoined dating back millennia, so realistically there are not any risks to either of these industries that are unknown. Therefore the claim that “I did not see it coming” is an excuse for not having had one’s eye firmly on the ball.

And therein lies the rub: on any given construction or engineering project, the risk register ought to be chock-a-block with risks identified by all of the stakeholders on the project, as well as risks that are known to stakeholders from other projects, or industry knowledge. In other words, collectively on a project in today’s world there really are no unknown or unmanageable risks.

So let’s get to the events which contradict this supposed state of bliss – the dreaded Black Swan event. Firstly, for those less travelled in the dark arts of risk management, the definition of a Black Swan event is an event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict.

Failure through mismanagement is not a Black Swan event. It is predictable. In fact the mere happenstance that management never anticipated catastrophic project failure due to mismanagement is a predictable and much publicised risk!

Continually ignoring warning signs of impending disaster cannot be called a Black Swan event. That’s why you have warnings – to advise you that a disaster is looming if you continue along the way you are going, or don’t do something different.

Being autocratic in your project direction to the exclusion of your project team is a disaster in the making. There is no “I” in team. Either you have an I, in which case you stand and fall alone, or there is a team, of which you are the leader, and you have the obligations to consult with them on all matters.

Instilling the wrong culture on a project is another reason that lists high on the causes of project failure. Project culture is probably the highest risk of all project risks, simply because it underpins every thought and action of every single stakeholder, as it affects every single stakeholder.

A culture that is excessively “blokey” and harsh will deliver a high rate of sickies, no-shows and safety breaches. Productivity on projects with this type of culture are at the low end of the scale, with costs caused by delays at the high end. Projects with this culture very seldom are delivered on time, and if they are the quality of the works will be diminished.

Instilling a project administration that is restrictive and unconscionable to your subcontractors is another guaranteed recipe for disaster. Too often project management gets a bit creative with the interpretations of contractual clauses relating to variations and payment paths, which results in projects turning toxic very quickly. These risks are very well documented, so eliminate them now before you instil them.

Another killer risk is communication – or the lack thereof. Information needs to be shared, and it also needs to be delivered in a manner that makes it readily understood and accepted. One of the greatest project skills management can acquire is the ability to converse with people in a collegial manner. Far too many managers speak to people instead of discussing something with them.

I remember the challenge I had on a construction project in the Northwest regarding the site policy of all workers having to wear gloves. Convincing the owner’s representative to allow the steel fixers to be exempt for safety reasons was a lot easier than convincing the steel fixers not to blow numbers in the morning, yet we all prevailed and there were no hand injuries or D&A breaches.

So it really does come down to the project management’s capabilities of identifying and managing risk – which is not rocket science, it simply requires a bit of effort.

As for Black Swans, come for a paddle in the Swan River and you can view them in their natural habitat, benign and beautiful – as they should be.

As always, risk safely!

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