IS Project Risk Management: Risk Factors in IS Project Management

Author: Eashani Rodrigo

The success of a project depends on how it is being managed. Organizations across different industries use formal project management methodologies and best practices for the successful management of their various projects. One of the most critical project management functions is the ‘Project Risk Management’. Every project comes with inevitable risk factors that impact the success of the project. In any project management environment, either it is construction, information technology, telecommunications and financial services etc., proper project risk management should be followed in order to reduce and eliminate possible unexpected project risks and to help resolving problems if they occurred.

According to Schwalbe (2009), risks are “uncertain events that may occur to the detriment or enhance of the project”, therefore the project risk management is aimed at “minimizing negative risk events and maximizing positive events”. In recent years, with the increasing complexity of the projects and changing business environments, the uncertainty of the project outcomes is in continual increase. This has resulted in making the risk management an important function in project management. Many researchers have found that process of risk management is a critical function for the success of the projects and it is essential to the development of profitability, especially in large-scale projects. To achieve success in IT projects, the IT (Information Technology) industry is increasingly adopting risk management processes in their IS (Information Systems) project management practices.

In IS project management, risk management involves all processes concerned with risk identification, risk analysis, and response to project risks. From these processes, most critical process is considered as the ‘risk identification’ or identifying the risk factors; which is the first step in managing successful IS development risks. Even though there are considerable attempts of academics to identify, classify, and compare IS project risk factors, there are not enough evidence to support the idea that industry practices use these frameworks in practical project management. Industry experts argue that these IS project risk factors identified by academics are not always applicable in the practical scenarios and there are other aspects to be considered when identifying IS project risks.

By studying the project risk related academic literature, industry practices and industry case studies, it was evident that academic risk identification frameworks have been updated periodically due to the increasing complexity of the projects. Initially the risk factors’ was on the project resources such as people, process and technology and the internal factors of organizations that can affect the project. However, as the complexity and the inter-dependencies of factors have increased, the researchers have attempted to identify framework and structures that present all possible risk factors in IS projects. These factors have focused not only internal factors but also external factors such as Commercial and legal relationships, Economic circumstances and Political circumstances. Therefore, due to complexity of the project the academic frameworks continued on updating on the risk identification categories to support the practical adoption of these frame works in to the different industry contexts.

Moreover, it was seen that projects risk factors can change depending on the cultural and organizational factors. Each country may have additional unique set of risk factors that needs to be considered in cultural and organizational aspects. They have also identified that in practical IS project risk management, most organizations focus mainly on the technical issues of the project and tend to neglect people aspects when identifying risk factors, which leads to IS project failure. Therefore, in practical context the organizations should focus on all aspects of risk identification categorizations without solely focusing on technical aspects.

In practical scenario of project management, there are common risk factors or frameworks that can be adopted by practitioners; however, still there are unique risk factors to different countries based on their socio-economic context. Therefore, all these aspects should be considered when identifying risk factors in different IT project in practical context. Moreover, the common risks factors may have different impact on various countries and various projects, therefore the risk identification should be carried out individually for each project considering all the possible aspects depending on the context. 

As the final note, current industry practices adopt common risk identification frameworks for their IS project risk management practices and there are common risk factors that are similar to the industry identified risk factors. However, the success of adoption of these frameworks are questionable as there are unique risk factors that can majorly impact the IS project. Therefore, in practical IS project risk identification practices, the project managers should consider the common risk factors as well the unique risk factors that can impact the specific project. However, there can be implications when identifying unique risk factors in practical IS project management in different context. The complexity of the project and lack of knowledge in every aspect of the project or the context may limit the successful identification of accurate risk factors. Another implication is the time limitation. The risk identification is the time consuming process, the project stakeholder involvement in project risk identification and the requirement to consider many aspects of the project may not be practical with the project time-frames.

Read the full industry research essay here. 

References

Schwalbe, K. (2009) Introduction to Project Management, 2nd edn. Boston, Mass.: Course Technology.

How to Achieve Effective Communication for the Successful Management of Your Organization

Author: Eashani Rodrigo

The previous article on effective communication, discussed why “effective communication is essential for the smooth running of the business”.  It highlighted the relationship between effective communication and company performance, and it also discussed how the benefits of an effective communication can lead a company to drive the performance.

Relating to the previous article, this article will discuss how to achieve this effective communication in workplace for the successful management of the business. This will highlight five aspects to consider when practicing effective communication.  They are: 

• Have a culture where clear and honest communication is present

Employees want to feel their ideas are welcomed and considered, and this positively affect employee loyalty, employee satisfaction, innovation and customer service levels. The company culture largely effect on the employees’ freedom to share their ideas and to build the trust on company management. By instilling practice of clear and honest communication in company culture, can create better work environment for the employees to share their ideas, avoid conflicts, and build trust and respect, as well as to build strong work relationships among individuals, teams and departments. 

One way of creating clear and honest company culture is to involve employees in decision-making, getting their feedback, and keeping them properly informed on current business status and any other changes to the business. 

For an example, if a company is going through a merger it should be properly communicated to the employees. Without keeping them properly updated about this change, employees will resist to work with newly merged employees or the new management. Employee feedback is necessary to resolve conflicts that can arise due merger. If a clear and honest communication did not take place, it will demotivate the employees that could result in higher employee turnover.   

• Have an open or flat structure

Having an open or flat structure enables organizations to have few layers of management. This makes it possible for the communication to be from top down and from the bottom up, making every employee approachable by the top management and vice versa. This means communication can be done from top-level management to front-line employees and from front-line employees back to top management. Moreover, flat structure facilitates horizontal communication, which is the communication across functional/departmental areas. This communication flows enables organization to effectively communicate throughout the organization.

Example of a flat structure and the communication flow

For an example, the CEO of a company can appoints product development team to lead a data-gathering project to recommend product improvements. Having a flat structure enables the department manager to easily gather data from other department managers (horizontal communication) and most importantly, it allows him to gather data from sales employees (bottom up communication) which is a critical input for the project since they are the front-line employees who talks to customers individually. Similarly, once the product improvements are done it can be easily communicated to other department managers through horizontal communication, and directly to the sales employees. This makes it possible to rapidly communicate the change to the entire the company easily.

• Importance practicing empathy

Effective communication requires understanding emotions in others. Practicing empathy is one way of recognizing emotions in other people, and understanding the other person’s perspective and reality. 

Active listening is one of the key aspects of empathy. Listening to the employee’s ideas and viewpoints helps for the effective two-way communication.  Therefore, the company leaders and all the managers should practice empathy in order to establish effective communication in the organization.  

Some aspects to consider when practicing empathy:

—     Try to see things from other person’s points of view

—     Acknowledge the other person’s perspective

—     Have an open mind and attitude

—     Listen to the exact message the other person is trying to communicate

—     Ask the other person to explain his/her position for the better understanding

• Give and get feedback

Effective communication requires a cycle of feedback .Getting a feedback from the receiver helps to ensure that the message is properly understood by the receiver. Depending on the receiver’s feedback, the communication can be improved or enhanced in order to communicate more effectively without misunderstandings.

For an example, a CEO of a company can hold a meeting for the department managers regarding a new project that has been planned to be carried out. After the meeting done, in order to get the feedback from the managers CEO can request each department manager to send action plans highlighting their role in the project. The drafting of action plans requires each manager to communicate the new project with their department’s employees, and the feedback of employees are essentials to agree on responsibilities and timelines. Once the CEO receives all the actions plans by every department, it allows him to ensure that the information about the new project has been properly communicated and understood by the entire organization. If the action plans does not match the message he wanted to communicate he can have another meeting or a discussion with particular department managers to make sure they understand it properly. 

• Make distinction between internal and external communication

Effective communication at workplace should be practiced on internal communication (communicating with employees), as well as external communication (communicating with customers, suppliers etc.). Company management should make a clear distinction between these internal and external communication, as because for the effective communication the message that needs to be communicated, and the communication channel needs to be selected depending on whether it is internal or external communication.

For an example organization often use emails or meetings to communicate with employees (internal communication), and it generally involves getting direct feedback from employees. To communicate with customers organizations often use narrow set of communication channels such as mass media that does not allow the organization to get direct feedback from the customers. Therefore, the mass media advertising campaigns should support the conversations between customers and sales agents, who can provide the company indirect feedback from the customers.

Communicate or Your Business Will Die!

Author: Eashani Rodrigo 

Effective communication is considered to be one of the critical factors in the successful management of businesses. Companies today are increasingly seeing the importance of achieving a culture of effective communication as it delivers benefits from performance, productivity, and stronger employee relationships and customer relationships.

A study conducted by Towers Watson in 2009 (2009/2010 Communication ROI Study Report "Capitalizing on Effective Communication") found effective communication as one of the drivers of performance, especially during the times of economic challenge and change. Their report states, “Companies that communicate with courage, innovation and discipline, especially during times of economic challenge and change, are more effective at engaging employees and achieving desired business results." According to Watson term “courage” implies, when people are told what they need to know they will reward the company with performance; “innovation” implies, when employees are encouraged for creative thinking they will contribute with innovation; “discipline” implies, call for accountability during troubles times where a proper communication plan is needed to keep employees updated about company’s performance. Moreover, their report revealed that the companies that communicate effectively had 47% higher total returns to shareholders over a five-year period compared to the least effective communicators.

So What is this effective communication?

The purpose of any communication is to share information, which involves getting the message across to others clearly and unambiguously.  At work, effective communication is about knowing the employees (receivers) and choosing the right message to convey and the right channel for transmission. 

In general, communication is the process of exchanging information, thoughts and feelings through verbal (e.g. speaking) and nonverbal (e.g. writing or body language) channels. Extending this concept, an effective communication requires the transmitted content to be received and understood by the receiver (e.g. employees) in the way it is intended; this requires the understanding the emotion behind the information.  Therefore, the goals of effective communication are to create a common perception, to change behaviors and to acquire information.

For an example during an organizational change such as automation of businesses operations, people may resist the change due to the fear of losing their jobs or changing job roles. In a scenario like this, it is the leader’s responsibility to communicate the new change to the employees, as the communication is more effective when the employees receive accurate information from one reliable, credible spokesperson within the company.   Moreover, for this communication to be effective the leader should clearly explain with all required details making employees understand the intention of the organization to do the change. Similarly understanding the employees’ concerns is also important for this two way communication, and that helps to discuss and provide solutions for the employees concerns and to clear out the misunderstandings which normally occur due to lack of information sharing. At this situation, if a company effectively communicate their change to the employees in a such a way it will benefit in getting the employee support and commitment for the organizational change to be a success.       

So how effective communication can increase your company performance? 

As Watson’s study suggested, there is a strong link between company performance and effective communication. This linkage can be clearly understood by looking at the benefits it delivers to the businesses.  

• Employee motivation

Effective communication helps for better understanding of people and situations. This can be achieved through listening to the feedback from employees and practicing empathy. In return, this will help to build trust and respect in employees toward the company management. The trust in management can build employee loyalty towards the company, and will motivate them to support company long-term and shirt-term goals.

For an example, when a company go through a crisis situation it might require cost reductions in business operations and increments in sales within a short-term.  If the company management imposed rules and new plans without proper information of the crisis situation, this can result in employees objecting new plans without knowing the real situation. Therefore, if the company management clearly communicates the current situation the company faces and gets the feedback from the employees, it will build the trust between the company and management and it will motivate the employees to work on new plans to overcome the crisis situation as a one unit.  

• Company productivity

Effective communication helps to communicate a message clearly and unambiguously making the receiver to understand the intended message. This helps organizations to save time on repetitive communication, to avoid misunderstandings and to immediately start acting upon the message.

For an example, emails are popular channel of company communication. When writing emails the message should clearly written with proper information considering the receivers.  If the same email needs to be sent to different receivers, the email should be written in a way that every receiver could understand the message (e.g. avoiding jargons). If the message is not clearly understood by the receivers this will end up in lengthy email conversations costing time and frustration due to conflicts, which will result in losing daily productivity of operations.     

      

•  Workplace harmony

Effective communication helps to clearly convey messages and for better understanding of people and situations. Workplace conflicts happen due to misunderstandings among people. Therefore, effective communication helps to reduce workplace conflicts and frustrations. This can be achieved through creating a company culture where clear and honest communication is present. Having workplace harmony can create a better environment for the employees to work and to perform.

For an example when working in projects as teams, the lack of effective communication can create conflicts among team members resulting poor performance, costing more time and effort leading to failures in projects.

• Building strong relationships with company internal and external parties

Effective communication in work place does not only limit to the communication with employees. It also should be practiced when communicating with external parties of the company such as, customers, company suppliers, partners, shareholders etc.  By avoiding conflicts and misunderstandings, effective communication helps organizations to build strong relationships with internal and external parties of the company. It is also important for the communicators to make a clear distinction between internal and external communication.

For an example, getting the right message cross to the customer and getting the customer feedback is important to resolve customer complaints and to bring new ideas for the improvement of the products and services. Similarly, suppliers also should get clear and unambiguous information to provide continuous services and products for the company requirements.  For an instance, if the company did not clearly communicate and agree on supplier delivery dates and the quantity of orders it will result in conflicts between the supplier and the company resulting delays in production.

This shows that all these benefits of effective communication ultimately link to company performance. Therefore, for any company effective communication is essential for the smooth running of the business.

The next part of this article on effective communication will discuss about, “how to achieve effective communication forsuccessful management of your organization”.