RISK MANAGEMENT STAKEHOLDERS & COMMUNICATION

Objectives

After completing this lesson, you will be able to:

Explain individual and overall project risk

Identify stakeholder risk attitudes

Explain iterative process

Define communication

Describe responsibility for Project Risk Management

Recognize the role of project manager

Individual and Overall Project Risks

The project risk is an uncertain event or a condition that has a positive or a negative effect on the

project objectives. Project risk is classified into two levels:

1. Individual risk

2. Overall project risk

Understanding individual risk helps in overcoming the project-related risks and increases the

probability of project success.

The overall project risk represents the effect of uncertainty on the project as a whole.

The assessment of project risk helps in decision-making at strategic level and in turn at program,

portfolio, and project governance levels to decide priorities.

Stakeholders

Stakeholders are entities who have interests in your project, such as the project team,

sponsor, the public, governmental authorities, the client, subcontractor, etc. The project

sponsor is one of the most important stakeholders, because the sponsor is the one who

provides the financial resources.

Stakeholders can affect the project and the project can affect them as well. These

effects can be positive or negative.

The project team is responsible for identifying the stakeholders and their requirements.

Stakeholders too have responsibilities; the most important of which are to participate in

the project meetings and communicate their concerns in a timely manner.

How NOT to go Wrong with Stakeholders?

Be active not reactive (you invite them, call them and reach out to them)

You need to identify them

Rank their level of power and interest to influence the project

Collect their requirements

Invite them to participate in meetings, brainstorming sessions, etc.

Give attention to them and incorporate their requirements in line with project

objectives

How NOT to go Wrong with Stakeholders?

Make sure that you include them in the communication plan and share information

with them

Look into their issues (don’t ignore them)

Adopt a “win-win” strategy

Understand that they have different interests and what might be important to one

might be trivial to another

Stakeholder Risk Attitudes

It is important for a project or a risk manager to understand stakeholders’ risk attitudes. The risk attitudes of the project stakeholders determine the extent to which an individual risk or overall project risk matters.

It usually result in a desire for increased certainty in project outcomes and it may express a preference for one project objective over the other. Understanding stakeholders’ attitudes towards risk is an important component of risk management planning.

The priority of the risk depends upon the risk attitudes and tolerance levels of the stakeholders.

Stakeholder Risk Attitudes

• Stakeholders are risk seeking in nature.

Risk seeker

• Stakeholders are neither risk averse nor risk seeking.

Risk neutral

• Stakeholders who does not take risks.

Risk averse

Communication

Communication is essential while conducting Project Risk Management. Important

points to be kept in mind to make the risk management informative or to create

awareness are as follows:

Project Risk Management cannot be conducted in siloes.

Risk identification and analysis depends on stakeholders’ input.

Effective and honest communication among the stakeholders.

The result of the communication should meet the need of each stakeholder as

well as the overall project objectives.

Communication….

To have effective communication in your project, you need a plan called a

‘communication plan’. This plan will include what will be communicated, to whom it

will be communicated and when it will be communicated.

Communication is the process of sending information between two or more people.

Communication is quite often infected with misunderstandings. Let’s draw a

communication model and see the possible causes of misunderstandings. The

model consists of:

Communication …

Sender

• The person initiating the communication by sending a message

Receiver

• The person or people receiving the message

Message

• Usually verbal, but can also be in the form of signs and gestures or be written

Medium

• The way a message is being sent and with what technology (e.g. voice, picture, advertisement, phone, internet, etc.)

Communication Methods

These methods are:

Interactive Method

• This is the best way to communicate because both parties are sending and receiving information, thus allowing opportunities for clarification. Interactive communication is usually done face-to-face but also can be done via video conferencing and telephones.

Pull Method

• The project manager makes all information available and accessible in a designated resource center or venue and the stakeholder(s) “pull” the data as needed. For example, the project manager might make the information available via a server or a secretariat. Can you think of risks associated with this method? Will all stakeholders be motivated to make the effort to get the information?

Push Method

• This is the opposite of the pull method. In this method, the project team pushes (sends) information onto the stakeholders. This is often done via email attachments and memos. Here, you have the risk of information being lost in transition; however, you can make a system to track delivery.

Manage Communications is the process of

creating, collecting, distributing, storing, retrieving,

and the ultimate disposition of project information

in accordance to the communications

management plan. The key benefit of this process

is that it enables an efficient and effective

communications flow between project

stakeholders

Definition

Communication …

It also provides opportunities for stakeholders to

make requests for further information,

clarification, and discussion. Techniques and

considerations for effective communications

management include, but are not limited to, the

following:

1. Sender-receiver models. Incorporating feedback

loops to provide opportunities for interaction/

participation and remove barriers to communication.

Overview

2. Choice of media. Situation specifics as to when to communicate in writing versus

orally, when to prepare an informal memo versus a formal report, and when to

communicate face to face versus by e-mail.

3. Writing style. Appropriate use of active versus passive voice, sentence structure,

and word choice.

4. Meeting management techniques. Preparing an agenda and dealing with conflicts.

5. Presentation techniques. Awareness of the impact of body language and design of

visual aids.

6. Facilitation techniques. Building consensus and overcoming obstacles.

7. Listening techniques. Listening actively (acknowledging, clarifying, and confirming

understanding) and removal of barriers that adversely affect comprehension.

Communication…

Project managers spend the majority of their time to communicate.

Some potential dimensions of communication activity:

Internal – external

Formal – informal

Vertical – horizontal

Official – unofficial

Written – oral

Verbal –non-verbal

Communication…

Oral/VerbalPersonal contactGroup meetings (presentations, teleconferencing)TelephoneAudio

Non-VerbalBody languageCharts and graphs

WrittenCorrespondence (letters / memos / reports / emails)

The Project

Sponsor, Functional ManagersAnd Team Members

Other Stakeholders

Other ProjectsOther Project Managers

10.1 Plan Communication: Tools & TechniquesWho needs project information?

Communication network models have been devised to try to explain the relationships between

people and the number or type of interactions needed between project participants.

What you need to know is that network models consist of nodes with lines connecting the

nodes that indicate the number of communication channels, also known as lines of

communication.

10.1 Plan Communication: Tools & TechniquesCommunication Channels

Communication channels grow at a greater than a linear rate and are represented by the

following formula:

Example: If a team of 6 people adds two more persons, how may more communication

channels are there?

(6X5)/2 = 15 and (8X7)/2 = 28 so the answer is 28-15 = 13

10.1 Plan Communication: Tools & TechniquesCommunication Channels..

N (N-1)/2 where N equals the number of people

Includes communicating in all directions

Determine and limit who will communicate with whom and who will receive what information.

Customer, sponsor, Functional managers, and Team Members

Other Project

Managers

Other Projects

Other Stakeholders

TheProject

2

)1( NN

• Consider the number of potential

communication channels or paths

• Formula:

Communication Requirement Analysis

Communication Method When Used

Formal WrittenComplex problems, project plans, project charter, communicating over long distance, contract

Formal Verbal Presentations, speeches, negotiations

Informal Written Memos, e-mail, notes

Informal VerbalMeetings, conversations, initial conversations about performance

To have clear, concise communications, the project manager must handle communications in a structured manner by selecting the form of communication that is best for the situation.

Communications occur internal and external to the core project team and vertical and horizontal within the organization.

A decision regarding whether the communication needs to be formal or informal, written or verbal, needs to be made for each instance of communication.

Additional Notes

Communication Methods Exercise

Situation Method Used1. Memos………………………….…….. Informal Written

2. Project Plans…………………………. Formal Written

5. Presentations…………………………. Formal Verbal

3. Communicating over long distance… Formal Written

6. Conversations………………………… Informal Verbal

7. Complex Problems.………………….. Formal Written

4. Meetings………………………………. Informal Verbal

Informal Written8. E-mail…………….…………………….

Formal Written11. Project Charter.………………………

Informal Written9. Notes……………..…………………….

Formal Verbal10. Speeches.………………………….…

Responsibility for Project Risk Management

Since project risks can affect project objectives, anyone with an interest in achieving

those objectives should play a role in Project Risk Management. Some of the

responsibilities for Project Risk Management are as follows:

Project Risk Management should be an integral part of all the other project

knowledge areas.

Roles and responsibilities like owner, should be clearly identified and

communicated.

RACI model can be used to define the roles and responsibility.

Responsibility for Project Risk Management (cont.)

R: Responsibility A: Accountability C: ConsultI: Inform

Role of Project Manager

Project Manager

Develop and Approve Project

Management Plan

Facilitate open and honest

communication

Audit Risk Responses

Document Lesson Learned

Escalate Risk that go beyond tolerance

Oversee project risks by team members

Determine acceptable

level of risksPromote risk management processes

Participate in all risk

management processes

Monitor efficiency and effectiveness

of risk processes

Regular reporting of risks statuses

Approve risk responses

Apply contingency

funds

Encourage Senior

Management Support

Iterative Process

Risk management is not a one-time activity. Some important pointers, which must be kept in mind when discussing the iterative processes of risk management are as follows:

Risk identification is repeated throughout the project life cycle.

Periodicity should be determined.

Risk identification can be repeated at a key milestone or when there is a change in the project or its operating environment.

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