It’s hard to forget the devastating images of the BP oil spill in 2010 when the Deepwater Horizon drilling rig exploded in the Gulf of Mexico, leaving 11 dead and leaking 5 million barrels of oil into the ocean. The environmental damage was extensive with BP reporting clean up costs reaching $62 billion. In hindsight, what is hard to accept is that this tragic event was entirely preventable had a formal risk assessment been conducted.
Investigative reports* determined it “was the result of a series of decisions that increased risks and a number of actions that failed to fully consider or mitigate those risks,”. The investigative panel “found no evidence that BP performed a formal risk assessment of critical operational decisions made in the days leading up to the blowout”
The Deepwater Horizon incident has since become a popular case study in risk and compliance for project teams globally. It highlights the importance of best practice risk management, regardless of the project or company size and complexity.
Multiple Projects, More Complexity, More Risk
Today, it is not uncommon for companies to have a significant number of ongoing projects with diverse objectives. Managing risk and compliance across one project can be challenging without adding the complexity of a multi project environment, especially considering projects require risk management at a level appropriate for each individual project. With poor risk management being a common cause of project failure, it is worth knowing the maturity level of your project practice and identifying if it is showing symptoms of common risk management failures.
Common symptoms of risk management failure are poor governance, reckless risk taking, an inability to implement effective Enterprise Risk Management processes, non-existent, ineffective or inefficient risk assessment and failure to integrate risk management with the strategy and performance management.
The Deepwater Horizon incident is an extreme example of how failure to address these symptoms across projects can end in disastrous consequences. Ultimately, investing the budget and resources in best practice risk management processes from project initiation is more cost effective than accepting a high risk tolerance in the organisation.
Integrated Enterprise-wide Project Management Practice
A solution for improving risk management in a multi-project environment is to move away from a fragmented approach which typically results in poor execution, low predictability of performance and inconsistent decision making. A single integrated project management system is implemented to manage multiple project life cycles, drive costs and provide transparency, visibility and agility into business decisions. By creating alignment between the various disciplines and departments the organisation takes a proactive integrated approach to managing risks for the organisation.
An integrated enterprise-wide project management approach can deliver benefits to the entire organisation, rather than to individual projects only. For example, systemic risk identification (those risks that occur repeatedly across an organisation) are more easily identified. The top 10 risks across all projects are more visible rather than viewed as individual project silos. Process consistency between projects and resources focused on shared program risks instead of individual project risks create significant resource and costs savings. Contingency budgets can be lowered when applied to a whole program rather than individual projects.
An immature and inconsistent risk management practice will improve by taking an integrated and unified approach to enterprise-wide project management.
Applying Technology and Process Solutions
Projects can be integrated with tailorable enterprise software solutions that provide comprehensive projects controls and cost management functionalities. The value in technological solutions comes from leveraging existing data sources already used and bringing them together on one platform to provide a single view of schedule, cost and other vital project data. The agility of technology can provide benefits such as flexible data views and reports that adapt to specific needs of an organisation or project type.
Tailoring business processes with technology to share and manage information as an organisation bring create speed, accuracy and efficiency to the project environment, making risk management less of an administrative burden. Integrating and unifying large projects across one organisation could initially appear overwhelming and cost prohibitive but this is not always the case. Despite the various type, complexity and size of projects, organisations can adopt an enterprise-wide integrated project management system without a negative impact in cost and budget.
Integrate Your Projects and Reduce Your Risk
Investigations into BP and the Deepwater Horizon disaster found a culture of operating reactively with the aim of keeping costs as low as possible. It is clear from the outcome that upfront investment that considers risk management from a schedule and budget perspective will actually save money, time, and possibly even lives, in the long run.
When it comes to projects, of any size or complexity, a reactive approach to risk can be far costlier than planning in advance for risk. Especially considering that most risk events are cumulative and failure to respond early increases probability and impact of later events. An integrated approach to enterprise-wide projects management will increase project maturity and reduce the risk profile. Applying technology and optimising business processes to streamline operational practice in a multi-project environment can make it easier to implement an integrated and unified project program.
Do You Know The Maturity Level of your Organisational Project Practice?
To improve your risk management practice the first step is to understand your maturity level. If you’d like to know the maturity level of your organisations’ projects practice, use this complimentary self-assessment to identify any symptoms of potential risk management failure. By completing the assessment, you will receive a tailored report detailing your organisation’s maturity levels in three areas: process, human capital, and technology. It will include recommendations that will give you insights to advance your projects performance for your enterprise.
*The joint report by the U.S. Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement: https://www.boem.gov/BOEM-Newsroom/Press-Releases/2011/press0914.aspx