In recent years, the concept of ‘unknowns’ has become quite common in project risk management. It is based on the assumption that that there are always some project risks that can be potentially very damaging to the project outcomes but these risks are currently unknown to us and therefore impossible to add to the Risk Register.
In other words, some of the risks cannot be identified accurately at the time of the project initiation and planning stages. When masterminding these projects and identifying the potential risks we should always make provisions for something unexpected going wrong. There are several approaches available for project managers for successful management of ‘unknowns’ as well as minimisation of their destructive impact and costs of mitigation.
Four key strategies for managing the unknowns are outlined below:
1. Use of qualitative risk assessment tools
Quantitative risk assessment tools and applications are great for assessing probability, impact and cost of mitigation of known risks but are difficult to use for identification and assessment of the unknowns. Quantitative tools and methods analyse historical data and trends as well as the established project parameters, costs and limitations but the very reason the unknowns are unknown to us in the first place is because they are hard to establish based on the past track records and predictable kinds of challenges that the risk assessment applications can pick up comfortably.
On the other hand, qualitative risk assessment tools and methodologies enable project managers to sense potential project restraints and failures by incorporating experience and intuition into development of the project risk charters and registers along with the project data. The downside of this approach is potential for the managers to err in their estimations and assessments. Should the unknowns turn out to have little impact on the project’s lifecycle and fail to materialise, the project manager may be accused of being unprofessional for expanding resource allocations unnecessarily as recognising the unknowns as a probability is always a controversial call.
2. Identifying relevant project risk areas
While it may be too difficult to identify the unknowns early enough to cater for them directly such as during the Project Planning stage when the resource allocation is taking place, it may be significantly easier to at least identify specific project areas that have high probability for the unknowns to occur. This will enable project managers to treat these areas with greater care from the start and to allocate additional resources.
Furthermore, even for the unknowns – there are some fairly standard variations that could be considered in advance just to be on the safe side such as placing greater emphasis on the least predictable/controlled project areas.
3. Additional resource allocation
We cannot plan for the unknown events, but we can have additional human, material and capital resources available to deal with these unknowns. The challenge, however, is to convince the project sponsor that such ‘over-budgeting’ is justifiable and they are not overspending.
The unknowns generally tend to be more costly to deal with rather than the predictable project risks. It should be noted that additional human resources are likely to be needed to deal with the unknowns, along with the financial ones.
For example, if a project has a budget for a cheap service provider to outsource some of the tasks and all of a sudden the provider becomes unavailable to complete the work or is no longer reliable, money alone will not resolve the problems with service delivery, as we will have to either identify a new provider to outsource to or to put together an internal team to complete the tasks on a very short notice. Availability of such back-up teams can reduce potential damage from many of the service delivery-related unknowns.
4. Regular Risk Register reviews
Updating the Risk Register on a regular basis is yet another remedy for minimising impact of the unknowns. During the Initiation and Planning stages of projects, the unknowns are hard to convert into knowns. However, as the project goes on, additional risks should be added to the Risk Register whenever the unknowns become knowns.
In a nutshell, there is no need to be afraid of the unknowns. They are an inevitable part of every single project. The very objective of risk management is to minimise threats rather than eliminate them completely, since the total elimination is mission impossible. However, incorporating a strategy for dealing with the unknowns into a Project Charter is a must!