A risk management plan ensures that risks are managed properly. The goal is to reduce impact of negative risks and to increase the impact of opportunities. The risk management plan provides a tool for reporting risk to senior managements as well as the project sponsor and team. The risk management plan does not identify projects risks.
A Risk management plan details how the team will manage risk (Newton, 2015). It describes the level of risk that is tolerable for the organization (Newton, 2015). It ensures that the level of risk management is commensurate with the identified risks and the organization’s appetite for risk.
As a sub plan of the Project plan, the risk management plan includes the methodology that will be used to manage risk including the tools and data sources. It also identifies the owners of risks and what their responsibilities are to manage those risks. Budgeting for risk management is also included so that resources and funds are available to manage the risks. Risk categories are identified as well as definitions of risk probability and risk impact. The plan may also describe the reporting formats that will be used in the project as well as the process of communicating risk to stakeholders. Risk management plans will also include a probability and impact matrix to assess impact on project objectives (Newton, 2015).
A risk management plan is developed early on in the project, but is reviewed and updated throughout the project. The development of the risk management plan begins with looking at project assumptions including data, staffing, etc. (Kendrick, 2015). Risk identification is integrated into all the processes of the project to help uncover additional risks and to decrease the unknowns (Kendrick, 2015). It is critical to review stakeholder tolerance for risk in the beginning of the project so that plans can be made to address the stakeholder need for precise estimates, clearly defined deliverables, and frequency of communication (Kendrick, 2015).
The risk management plan is integrated with other project management plans. It needs to be aligned with the other documents beginning with the project charter. Certain kinds of projects have specific kinds of risks associated with them. The cost plan determines how risk may be carried into a project through budgeting, procurement and expenditure. The schedule plan will highlight risk that is carried into a project because of tight timelines or the level/complexity of activities. The communication plan has information about key stakeholders and their concerns about specific risks and the frequency with which they must be updated.
Defining risks is part of determining scope, budget and schedule. Project managers need to be alert to risks that may be hidden or unknown as these processes unfold. In particular, risks can be found where there are knowledge gaps or incomplete data. The risk management plan is integrated with all processes in the management of the project.
By, Ioan Gaitan, Non-Commissioned Officer in Charge of Civil Engineering Operations and Student in MPM Degree Program
Tech. Sgt. Ioan Gaitan, inspects aggregate brought on site for an airfield project at Suwon Air Base, Republic of Korea
Although the project management practitioners continue to be in high demand, the opportunities offered will vary by sector and location. Based on my research, I estimate that the energy industry will see the greatest need for project managers in the near and far future. Worldwide energy consumption is estimated to grow by 53 percent from 2008 to 2035, according to the U.S. Energy Information Administration’s International Energy Outlook 2011. The increasing demand for energy, combined with the high risk associated with these projects, translates into a significant need for experienced project managers (Hot sectors for project managers, 2010).
Although many nations are actively exploring renewable energy sources, traditional energy is still a hot sector for project managers. Some of the largest energy projects in the world are currently driven by the new oil-field discoveries and advances in fossil-fuel extraction technology. Let’s discuss about some countries that are experiencing this growth and have difficulty finding experienced PMs.
In Brazil, for example, the untapped oil fields off the coast of Rio de Janeiro could turn this country into one of the world’s leading oil producers. Moreover, the country’s 10-year energy plan intends to attract $133 billion in investments and triple its renewable energy by 2020. In order to get there, the nation will have to overcome a shortage of qualified project practitioners. According to PMI, more than 1.3 million new project management roles are expected to be needed by 2020.Despite this high demand, more than two-thirds of employers in Brazil report that they can’t find enough workers with the right skills.
In Norway, oil production has steadily declined over the last 10 years. Despite this fact, experts predict the fields still have 30 to 40 years of production left. The deep-sea oil drilling in the North Sea region is expected to need 100,000 new workers with college degrees in finance and administration by 2030. According to an industry survey released by Oilandgaspeople.com, the world’s largest oil and gas jobs board, found that 65 percent of North Sea oil and gas companies cannot recruit enough project engineers to meet the current and future demand. Because many workers will be retiring soon, the sector’s need for skilled project managers may reach “near-crisis levels.”
Australia has three operating liquefied natural gas projects and seven more under construction. This represents an investment of more than AU$200 billion. Here, a corresponding labor shortage translates to higher salaries for project managers. According to PMI, more than 375,000 new project management jobs are forecasted to be needed by 2020 (Sykes, 2014).
The developing countries will need project managers as well. Here, project management is still new for many energy organizations. Mr. Olaoluwa Ibilola, business development manager at Korea National Oil Corp stated, “The regions that have giant oil fields and facilities could be tagged as hot, including Libya, Kuwait, [and] Syria.” In this case, the demand for project managers will depend on the amount of discovery and development in these regions. For example, a significant gas discovery in a certain region will drive more jobs for project managers.
According to a U.S. Energy Information Administration report, renewable energy is estimated to produce almost one-third of the world’s electric power by the end of 2035. A survey of industry leaders conducted by Cooley LLP in 2012 stated that the U.S. investors, executives and entrepreneurs predicted that the renewable energy sector would play at least a moderate (57 percent) or significant (25 percent) role in U.S. job creation over the next five years. Additionally, the Solar Foundation’sNational Solar Jobs Census 2011 stated that “the solar energy industry has bright days ahead, with a 24 percent market growth and 24,000 new jobs predicted for next year” (Bowles-Jackson, 2012). I estimate that these impressive numbers will only continue to grow in the near and long term.
In the last portion of this assignment I will answer the question Why are skilled PMs in such a high demand in the energy sector? Today, skilled project managers are very difficult to recruit and retain in this sector because the large projects in the oil and gas industry become increasingly complex and technologically demanding. According to Nava & Rivolta (2013), “Schedules and budgets are tight, safety is crucial and every project faces a network of stakeholders concerned about its impact on the environment and communities.”
In conclusion, I would predict that the need for experienced PMs will only become more acute as a generation of experienced engineers will soon retire in many countries. Under this circumstance, companies cannot afford to bring second-rate talent into their organizations because projects will only get more complex and their scope will grow (Nava & Rivolta 2013).
Dr. Johnson specializes in the architecture, engineering, and construction professions. He has established a high level professional expertise in management science and project management on a global scale. As an inducted presidential member of the National Society of Leadership and Success (NSLS); he has also evolved his leadership skills to a recognized national level through the Sigma Alpha Pi chapter of Lawrence Technological University. As a subject-matter management expert and practitioner-scholar in the building industry, Dr. Johnson provides certified construction contract administration and other management consulting professional services to clients.
Tell me a little about your background in project management as it relates to the construction industry?
I have been working in the building industry for more than 20 years. Primarily, this has been as an architectural practitioner with project management responsibilities. Architectural practice inherently involves managing projects and I have been a PM on various types from single-family residential to high-rise commercial buildings. Many times I split the role of architect and project manager but this generally depends on the scale of the project. For many years I specialized in religious, retail, and healthcare facilities and each type required management of budgets, schedule, and other resources, which are all prime areas of traditional project management.
How is the construction industry using project management differently from other sectors?
The building industry is one of the primary industries in the world that uses project management in dominant ways. In fact, the PMI has developed a construction extension that is specifically focused on project management practices for this industry. It is similar to the PMBOK but has concentrated areas due to higher levels of risk, cost, and time constraints associated with building projects (Project Management Institute, 2007). Construction projects are unique—just like project management is based on unique projects. No two projects are the same so the path to completion of a construction project requires proper individualized planning in order for it to be managed successfully. Therefore, a prime difference is the integrated impact that the big three project constraints have on the client’s ability to continue or terminate a project before it is totally realized.
What type of innovation and creativity is coming out of your industry that project managers should be aware of?
The biggest innovative or creative project management development is the intricate interface between technological advances and the different ways that stakeholders stay involved with a project from beginning to end. PMs should be aware of the faster pace that projects are expected to proceed under while also understanding that clients expect more for less. This means that a contemporary PM should be very flexible, but also firm when it comes to following a well-developed project management plan.
There has been a lot of chatter on LEED Projects in the last few years. What are your thoughts on this?
LEED stands for “Leadership in Energy and Environmental Design”. As a LEED Accredited Professional (LEED AP), I have learned that energy and environmental concerns are more prevalent than may be immediately noticed by the general public. Within the design and construction industry, practitioners are expected to design and build with a minimal degree of thought given to the impact of inappropriate materials. However, LEED requires the practitioner to pay a much higher degree of attention to negative matters of energy and the environment that can be avoided all together. A lot of the discussion taking place today seems to be centered on the cost involved with developing a LEED project. Some owners do not understand the higher up-front cost compared to the perceived benefits they may have down the line. LEED has to be sold to those who do not understand these benefits and this can make the case for LEED more complex if a monetary decision is the presiding factor for acceptance. On the other hand, owners who already understand the benefits and the role they play in reducing their carbon footprint initiate these types of projects with minimal resistance. They need very little convincing in terms of cost and benefits associated with those costs.
Are there unquiet skills, certifications and certain type of knowledge that students should be seeking in their education to get a career in your industry?
Students in current day construction education programs should be seeking to learn what the true expectations of industry are. For example, many design programs must teach students how to design building projects using traditional drafting methods, but students must also be aware of the limitation of its use in daily practice. Technological skills are highly expected in practice and professional certifications such as those provided by the Construction Specifications Institute (CSI) would be fabulous for these types of professionals. For instance, the CSI’s Certified Construction Contract Administrator (CCCA) is one of the top professional certifications that a practitioner could have in this area (Construction Specifications Institute, 2011). This is comparable to having the Project Management Professional (PMP) credential as a project manager but specifically in the construction industry.
What are some emerging trends in construction project management that is changing the field?
One particular change in the field is something that is called “Integrated Project Delivery” (IPD). As defined by the American Institute of Architects (2007) “Integrated Project Delivery (IPD) is a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication and construction.” (p.1). Based on this definition, a gap is present that implies a need for a meta-management system that is capable of adequately measuring and organizing the program and overall scope of an integrated project. This can be complex depending on the scale of the total undertaking.
How can my readers contact you or search for more information?
Email: firstname.lastname@example.org | LinkedIn: Dr. R. D. Johnson |Twitter: @RJDoctorate
Dr. Terrence D. Duncan, holds a Doctor of Business Administration degree from Walden University. He also holds a Masters of Business Administration degree with a concentration in Health Care Management. Dr. Duncan has two of his works published in health care related matters. With 10 years of experience as a claims adjuster for a third party administrator and Director of Safety, these combined level of experiences have benefited clients in numerous industries.
As a Divisional Director of Safety for one of the largest private skilled rehab company in the country, he has managed the safety and worker’s compensation administration for 40 skilled rehab centers and assisted living communities in four states. Dr. Duncan also carries solid worker’s compensation experience and knowledge in the following jurisdictions: IA, IL, IN, KY, KS, MO, and NE.
Dr. Duncan currently owns and operates a risk management and human resources consulting company, J.I Enterprises. The company specializes in lowering costs by providing quality solutions from providing recommendations in risk management, human resources, and worker’s compensation. His efforts have produced thousands of dollars in savings to clients in claim costs and mitigating unnecessary costs found through litigation.
The workplace and its employees have changed dramatically in the 21st century. Due to the advent of numerous social technology apps, smartphones, and selfies, the typical employee profile has evolved to a more dynamic and diverse individual. A more dynamic and diverse employee understands the importance of self. As a result, their individuality is projected into the workplace. The challenge of management is to not only meet key operational objectives, but to retain employees and adapt new ways to promote leadership.
In order to identify and interact with this new age employee, management should rethink their ways of leadership as the speed of communication and expectations have evolved amongst the average employee. Leadership is not as linear as it was in the past. Despite many books, seminars, and lectures concerning how to lead, those in management should consider a style that is most befitting of their personality, as well as understanding the dynamic make-up of the workplace.
The typical healthcare system consists of multiple positions and skill sets. Each position is similar to a spoke in a wheel that can only move if the manager is willing to bring each spoke into a synergistic effort. For example, in a nursing home, staff consists of CNAs, RNs, laundry, maintenance, housekeepers, dietary, admissions, and business office personnel. Outside of providing quality customer service to meet each resident’s needs, as well as provide solid operational results, leadership is a quality that cannot be provided through company policies or manuals. For this discussion, I propose three methods of how managers can improve their leadership in healthcare organizations within different skill sets of employees.
Communication with Clarity and Purpose
As a leader of the healthcare organization, communication is vital in administering quality of care to patients. Communication is vital to employee as well. I recommend becoming clear in communicating your expectations of the staff collectively, and finding the time to communicate your vision and core objectives to each staff member. Staff are aware of most company policies and procedures; however, in healthcare, staff cannot provide quality care if the manager cannot provide quality care to their staff.
Effective Listening Means Patience
In healthcare settings, there truly is not a finite ending of a day. Once a task or project is completed, another one is on the horizon. Despite all the demands placed on a manager’s desk and related deadlines, you must set aside time to listen to your staff’s concerns and needs. Realistically, you will likely not be able to address all their concerns; however, listening to them with a clear mind sends a message of compassion to your staff. Use your open door policy to ask about their day outside of work to show that you place value into their world outside of the workplace. Even if staff is noncommittal about discussing their world outside of work, you show interest in their well-being. This concern plays an underlining role into developing a chemistry between you and the staff member which results in higher performance.
Remove the Title and Become One with Staff
Despite the title on your name badge, take time to become personable. Do not only walk the floor, make sure you take the time to interact with staff regardless of their position or title. Staff reacts to relatability and a genuine personality. By appearing more “common” to your staff, your actions provide a belief that you are on their side. Even when it becomes time to discipline staff, they understand that you are not doing this to be spiteful. Instead, you are doing so because you are required to do so, and they were required to do their job.
Although there are numerous strategies in maximizing the efforts and talents of your staff it is important that your staff needs your leadership and guidance in moving the organizational vision forward. In a world of selfies and individuality, management must learn how to lead by incorporating their individual strengths into an organizational benefit. In this current economy where wages are relatively repressed and raises are not guaranteed, the emotional value of their position should be maximized to improve your organization’s efficiency.
Dr. Wayne Richards serves as a PM Center Faculty teaching in the MPM Degree Program at Bellevue University. He is also the Program Manager of External Programs at Raytheon Intelligence where he leads the execution and supports the capture of internally/externally funded programs for professional engineering services and the buildup/integration, test of shelter systems for the External Programs PMO; responsible for an AOP of $10-20 Million annually. He earned a Doctorate in Business Administration (DBA) from Walden University, MBA from Troy University and BS in Business Administration degree from the University of Maryland UC. He brings over 10 years of project management experience. He brings over 10 years of project management experience having worked in the U.S Air Force, manufacturing and aerospace industry.
Project Management is known for integrating complex requirements to produce an intended outcome (e.g. product or service). The tasks of a project manager (PM) can be stressful if he/she does not properly manage the engagement level of his/her project team. Employee engagement is the foundation of productivity and is guided by an interpersonal skill set that is derived from emotional intelligence. As a result, PMs must display astute emotional intelligence while managing execution through the various life cycles of projects. The “Modern PM” must become versed in how to manage and address unwanted behavior, as well as providing a robust reward system to reinforce the behaviors that are needed to reach the intended outcome of the project. Sound behavioral management will enhance project execution and increase the satisfaction of the project sponsor and key stakeholders. Here are a few simple tips to increase the engagement level of your project team:
Communicate often in a transparent manner. This approach reduces the level of uncertainty that a project environment brings during the initiating phase and establishes a foundation of trust within the team that you will supervise.
Actively listen to the concerns of your team members and stakeholders. This approach will give your stakeholders and team members the willingness to communicate issues openly. Developing an environment that facilitates open dialogue gives the PM the ability to qualify and quantify risks. In addition, the PM will be able to challenge stakeholders and team members to find offsetting opportunities for the risks that are presented.
Invite constructive conflict. Once the foundation of trust is established, the team will be more willing to go through the storming stage; conflict. The storming stage is a huge barrier and prevents project teams from transitioning into high performance teams.
Take time to get to know your project team and key stakeholders personally in a genuine manner. You would be surprised at how engaged your stakeholders and project team will be after wishing them a happy birthday, wedding anniversary or remembering something about their personal hobbies. This practice helps to show your stakeholders and team that you value them as people.
Praise in public and handle disagreements or reprimands in private. Tell the world about the successes that your team has achieved and do it often. This reinforces the behaviors that you need. On the other hand, if you have faced the inverse of success handle that offline. Remain calm and work towards a resolution together and keep that communication to a small audience. Blasting team members for failures in an open forum will decrease employee engagement and cause the project to falter.
Invoke shared leadership on your team. When team members have skin in the game they feel more accountable for the overall success of the project.
Following these 6 simple steps will allow the “Modern Project Manager” to achieve success in maintaining high levels of employee engagement in any project environment. The project manager must use these tools in a genuine manner in order for these tips to work. Increasing the interpersonal skill set is a key tool that a PM must have in his/her tool bag. All projects require the application of interpersonal skills and becomes increasingly challenging as projects are geographically dispersed across multiple regions and cultural domains.
By Fahad Usmani, PMP®, PMI-RMP®, contributing blogger
When I was studying this topic, I saw everywhere that the expert and reward powers are the best powers for the project manager, and all sources were pointing this out. However, I was not convinced, so I researched it and gave a lot of thought to this topic to find the correct answer.
Now I have passed my PMP exam and own a blog for PMP aspirants; therefore, I’m going to post my understanding and view on this topic in this blog post.
Please note that the views expressed in this blog post are my own. You may or may not agree with it; however, I would appreciate it if you share your thoughts through the comments section.
Okay, let’s get started.
You can define power as an influence on stakeholder to make a favorable decision. You can influence stakeholders in many ways: for example you can force them, or you can attract them with your charisma, etc.
According to the PMI, a project manager can use five types of power to influence his team members. These powers are as follows:
Formal or Legitimate Power Reward Power Punishment Power Expert Power Referent Power
These powers can be grouped into two categories: positional powers and personal power.
Formal power, reward power, and punishment powers are examples of positional power because you get this power just by being a project manager. In other words, the position of the project manager has this power in itself.
Expert and referent powers are examples of personal power.
I agree with everybody that reward and expert powers are the better powers for a project manager
But do you really think that these two powers are equally good?
Or do they really share the top position together?
I don’t think so.
Let me explain this to you in detail. I believe that after going through this blog post you will also have the same thoughts as I do.
Now I am going to give you a short brief about all types of power, and then we will discuss which power is the best for a project manager.
Formal or Legitimate Power
Since you are a project manager, you have this power. This power comes with the position itself; therefore, this power is also known as positional power. Team members will obey orders from you because they know that you have the formal power and authority to issue orders.
This type of power is seen in a projectized organization or in a strong matrix type of organization. In these types of organizations, you are in charge of your team and decide their performance appraisal, work assignments, etc.
However, if you are working in a functional organization or in a weak matrix organization, you will lack this power. In this case you may have to use your soft skills to get the job done.
A reward is something people desire. Reward power is, up to some extent, tied to the formal power of the project manager. You will get the team’s support because team members think that you are capable of rewarding them if they perform well. Rewards may be monetary (salary increase, bonus, promotion, etc.) or non-monetary (recognition, professional development, appreciation letter, day off, etc.).
Giving monetary rewards is often difficult, because sometimes you may be working in a functional organization or the budget is tight. Therefore most of the time rewards are non-monetary such as recognition, training recommendation, or a valuable assignment.
A reward should be achievable and it should not be a win-lose type of reward. Reward criteria should be fair, clear and achievable for all.
Reward power is a positional power, and you can have this power if you are working in a projectized or in a strong matrix organization. Although you can have reward power in a functional or a weak matrix organization as well, here you can offer your team members only non-monetary benefits.
Nobody wants to get punished. Punishment power comes with the formal power of the project manager. Here, you will get your team’s obedience because the team members are afraid that if they don’t perform their duties efficiently, they may get punished. Here you use fear as a primary tool to get work done. Punishment power is also known as coercive power.
You will have this type of power if you are working in a projectized or in a strong matrix organization.
You will use this power when a team member is not performing well or is creating problems that affect your project objectives.
Being a subject matter expert itself is a great influential power. Team members will respect you for your technical expertise on the subject. They trust you because they think that you are an expert, have special knowledge on the matter, and know how to handle issues.
Expert power is considered to be a positive power that influences team members to follow your lead. If you do not possess expert knowledge then it would be difficult for you to gain respect from the team members.
If you are well associated with higher management, or have connections with some influential people in the organisation, you are said to possess referent power. Since you are connected with influential people, your team members want to connect with you as well.
This power may help you when you are a new project manager in the initial stages of the project when you may not have any other power except formal power; however, you may be perceived as being closely aligned with the top management.
You can have any or all of the powers explained here, but to successfully complete the project you need to have at least three of these powers; i.e. formal power, reward power, and expert power.
Formal power establishes your authority as the lead of the project, reward power helps you motivate the team members, and expert power will benefit you to gain trust and support for your decisions from the team members.
Punishment power works in some cases, and the effects of referent power are not long lasting.
Now, again, which is the best power for the project manager?
Let’s revisit some key points and see in which case the team member will be more motivated and committed to performance:
A willing team member will do a better job, and the motivation of willingness to work comes from reward power. Team members will be willing to work more efficiently if they know that they are going to be rewarded for their performance.
With formal and punishment power, team members are beaten into submission, which I don’t think can be a cause of motivation for the team members.
With expert power, though, team members respect you and they trust your decisions, but this trust is not going to translate into motivation. Expert power can be a hygienic factor but can never be a motivating factor. An increase in performance and efficiency cannot be found without a motivating factor.
I accept the importance of expert power; however, I strongly believe that reward power is better than expert power to motivate the team members and get better performance.
It is important for you to know all types of power that a project manager can use in different situations and in different types of organizations. Your management style will depend on the situation and the type of organization you are working in. If you are working in a projectized organization, you will have punishment and reward power. However, if you are working in a functional type of organization, you will have to depend on expert power and your soft skills.
Please note: If you are preparing for the PMP certification exam, keep in mind that expert power and reward power are equally best as per the PMI, and if you get any question on this topic then you can select any of two (and of course pray that both do not come up as an option).
Fahad Usmani, PMP®, PMI-RMP®, is founder ofPMstudycircle.com and the author of A2Z of PMP Certification Exam. He has over 10 years of global portfolio management experience, specializing in leading complex corporate projects. He currently serves as an Inspection Engineer in Kuwait and facilitates project management training programs throughout the Middle-East.