Friday 31 December 2021

Why is the project manager also a risk manager?

Excerpted from pm circle network - project management, product management, agile development

In recent years, with the deepening of economic globalization and information, capital, talent, technology, commodities and other activities are accelerating day by day, so that the whole society, the economy of various relations are becoming more and more complex, these changes to our society, economic activities have brought many uncertainties, but also to our construction enterprises to bring many aspects, multi-level risks.

The source of the project risk

As the production front line of construction enterprises, the project encountered in the production process of risk accidents, can be said to be endless, invincible, the common risks of engineering projects are mainly reflected in the following aspects: safety risks, quality risks, duration risks, labor management risks, material management risks, as well as cost management, contract management, per-settlement management, technical management, equipment management, personnel management, logistics management and other aspects of risk, so many risks to be effectively avoided and controlled. the key also lies in the configuration of the main position managers in the project department.

The mis-configuration of the main position managers in the project department is the biggest risk in project management, which will lead to the management of various elements such as safety, quality, schedule, cost and so on in the project management into a very passive situation. as a project management personnel in the project contract management mode, it has always been a difficult problem for the development and expansion of a project department. the selection of key position personnel in the project is always in a situation where there is not much choice, the risk in the appointment process is mainly reflected in the lack of comprehensive quality, lack of technical experience, lack of practical experience; there is also the performance of the stability of personnel is also low, capable managers are always easy to leave and so on.

The project manager the responsibility of risk management

The first person responsible for the project, the project manager should also be the first person responsible for the risk management of the project. project managers to do a good job in risk management, first of all, should have the corresponding ability, mainly in the following aspects: with a strong sense of responsibility; strong internal and external coordination and communication skills; have a good level of professional and management theory knowledge; have a strong ability to observe and analyze things; have strong self-confidence; have a good ability to innovate. the project manager has the main responsibilities in the project risk management work.

The main responsibilities are as follows:

The participate in the identification, analysis, estimation and evaluation of project risks; develop project risk management measures, select project risk management plan, prepare project risk management plan and emergency work plan; organize the implementation of the project risk management plan, and fully arrange the project insurance services. in the risk management of the production process, the project manager can invite relevant experts or career risk managers to complete the risk management work, or rely on the strength of the enterprise, the project manager's focus is on the preparation of risk management plan and the organization to implement risk management plan.

The prepare a risk management plan. 


The purpose of the plan is to prevent the emergence of risks, to prevent the occurrence of. its main contents should include: risk management objectives, risk management organization, risk analysis, risk early warning, risk response measures, emergency standby. its core content is risk response measures, risk response measures include risk aversion, risk transfer, risk mitigation, risk retention four.

risk aversion. eliminate risk or conditions arising from risk by changing the engineering plan, or protect the project objectives from risk. risk aversion has three more approaches to our production process:

One is engineering. 


To eliminate the threat of material risk by means of engineering and technology. for example, in the construction process of deep foundation pit earth excavation, the construction person in charge found that there are obvious subsidence and cracks on the foundation pit slope platform, should immediately order excavators to stop earth moving excavation, and local earthwork back filling, and then notify the company's technical department, construction, pit containment design, supervision units to study and discuss the containment reinforcement program, to avoid problems and even accidents.

the second is procedural law. use standardized, institutionalized, standardized methods to engage in engineering activities to avoid risks or unnecessary losses. project managers in the construction process of the project should not only emphasize the construction according to standards, standards, but also to develop their own project department characteristics of the construction methods, standard atlas to guide the construction, including management activities to establish some workflows and procedures to avoid risks. for example, in the project progress management, for the project changes, construction units and other factors caused by the delay in the duration, should be to the supervision, construction units in a timely manner to apply for the extension of the visa procedures, such procedures should be established in the management workflow.

third, the education law. extensive risk management knowledge education and training to improve people's awareness of risk prevention and risk management level. for example, employees can be regularly organized to study engineering economics, technology, quality, safety standards, laws, regulations, and targeted risk management knowledge training.

The risk transfer. 


When the risk cannot be avoided, the engineering manager can transfer some of the risk losses to others in some paid way. in the production process, the way of risk transfer mainly includes engineering subcontracting and the purchase of engineering insurance. due to the particularity of the project and the limitation of the ability of the project contractor, some risks are difficult to control, but by looking for some good professional subcontracting enterprises to cooperate with us, so that we can achieve win-win cooperation. for example, as a project manager mainly in the construction of housing and civil construction to encounter curtain walls, steel structures and other sub-projects, you can take a subcontracting approach to transfer the sub-project risk.

The risk mitigation. 


A risk management process that reduces the probability or consequences of engineering risk to an acceptable level. risk mitigation measures include the following:

take a variety of defensive measures to reduce the likelihood of risk. for example, bad weather during construction can lead to duration risks, we can reduce the impact of bad weather on the duration by understanding the weather forecast for a certain period of time and preparing for construction in advance. in the construction programming stage, we should prepare various seasonal construction technical programs or construction management measures such as winter, rainy season, typhoon season and lightning season.


Contingency measures to control risk losses. 


Where risk loss is unavoidable, various measures are taken to control the risk and continue to expand or limit its scope of expansion. the measures that can usually be taken are: preventing the emergence of risk sources; reducing the factors that pose a risk; prevent the spread of existing risks; reduce the rate of risk diffusion; limiting the impact of risk space; isolating risk from protected objects in time and space; quickly deal with the risks that have been created and control their continued spread. for example, if a safety accident occurs during construction, the accident contingency plan should be activated immediately to minimize the loss of the accident.

The risk dispersion. 


By increasing the number of stakeholders, in order to reduce the overall risk pressure. it is generally used in the bidding phase of the project, but it can also be used during the start-up phase of the project. for example, a project manager has a new bid (company arrangement), the project volume is large, but the project manager would have a larger, high quality objectives of the project under construction, in order to do a good job of the project, reduce the risk of the project, he can choose to find another project manager to complete the new winning project.




The risks cannot be avoided 100 per cent, and in some cases they are inevitable. so there are some risks, and we have to accept the consequences. risk self-retention includes both self-risk and self-insurance risk. as the project manager mainly involves the former, at his own risk refers to the loss caused by the risk by the project subject directly bear, when the loss occurs, directly amortize the loss into the cost and expense. at his own risk, he must take into account his financial affordability, i.e. the project manager should arrange a certain amount of financial preparation.

Conduct project risk monitoring. 


Another key focus of the project manager in risk management is to effectively monitor the implementation of the risk plan during the production of the project. only when the monitoring measures are in place can the risk be truly controlled and the goal of risk control can be achieved. the main contents of risk monitoring are: 


Closely track identified risks, monitor residual risks; identify new risks; refine risk response strategies to eliminate or mitigate risks; analysis of the degree of achievement of engineering objectives; changes in risk factors and the effect of the implementation of risk response measures. risk monitoring is divided into two aspects: monitoring and control:


The risk monitoring. 


The common methods are: audit check method, earned value analysis method, risk chart notation. audit and inspection method is to audit or check to identify errors and problems in the project implementation plan or the work completed. and the problem is communicated to the person in charge in a timely manner, take immediate measures to solve, and then sign the acceptance. 


Earned value analysis is a risk analysis that compares the cost of actually completing the project with the cost of the completed project plan and should be updated when significant deviations occur. the risk chart notation is based on the results of risk assessment, selecting the most serious of all the risks in the project, including the scope of monitoring, monthly inspection, write out a risk aversion plan, explain the risk aversion strategy and implementation effect.

First, we should set up a project risk management agency to carry out risk control activities. select risk managers with certain qualities to form risk management organizations; to clarify the responsibilities and division of labor of risk management organizations and related personnel; establish relevant systems for risk management, including risk management implementation rules, performance appraisal and incentive system; invest the necessary financial and material efforts to meet the requirements of risk management; timely inspection and appraisal of risk management work, and carry out the necessary bottoming and education work.

As a construction enterprise corporate level, the risk management of engineering projects should be managed by corresponding organizations and personnel. not only that, but also to establish a sound risk management system. because the quality of risk management has become one of the important work that directly affects the success or failure of enterprises' production and operation. a company may have a dedicated person in charge of risk management at the top and may appoint a risk manager (or be concurrently appointed by the top leader of the enterprise). 


The risk manager is the core of risk management organization in construction enterprise, its main responsibilities are: to investigate, forecast, confirm the risks in the production process, analyze the causes of risk, identify risk factors; estimate the probability of risk occurrence, measure the possible consequences of risk, evaluate the impact of various risks on enterprises; develop risk response measures, select risk management plans, prepare risk management plans and contingency plans; organize and implement risk management plan, and make comprehensive arrangements for all insurance affairs of enterprises; do a good job of risk management records and summary, coordinate risk management actions of various departments, promote the exchange of risk management information; responsible for the administration of enterprise risk management institutions.

We should establish a project risk management appraisal mechanism to promote risk control. the impact of project risk on the whole enterprise is considerable, so that project risk management has become one of the main work of enterprise risk management. 


Therefore, enterprises should establish a complete set of incentive, assessment and training mechanism for project risk management in the project department. specific can do the following aspects of work: first, enterprises on the project risk management to develop a unified management standards. its main content should be clear how the project department establishes the risk management system, what the risk management responsibilities of the project manager are, and what the responsibilities of each risk management position are; and develop risk management performance appraisal system. 


The performance appraisal system should take into account the enterprise risk management performance and project risk management performance in the design of the appraisal standard, and evaluate and evaluate according to the characteristics of different engineering projects.

Second, strengthen the audit of risk management in the production process of engineering projects. in the production process of engineering projects, the relevant personnel of enterprise risk management organization should conduct in-depth review and guidance in the project department to facilitate the monitoring of risk management in the process. in particular, the monitoring of the pre-production process should be strengthened, with a focus on risk prevention. third, effective incentives for project managers with excellent risk management. 


Through the project manager risk management assessment, evaluation, the outstanding performance of the project manager to stimulate, the specific measures are: projects as a unit of better risk management projects, in the management fees charged by enterprises to give preferential treatment. individual assessments of risk management are conducted each year to reward project managers who are at the forefront of risk management performance. 


Fourth, regular risk management training and education for project managers. regular reporting of project risk management standards developed by enterprises, and the hiring of risk management experts to conduct unified teaching for enterprises, so that project managers can participate. in addition, project risk management seminars are often organized within the enterprise to allow people to share and exchange good risk management experiences.

Why is the project manager also a risk manager?

third, we should strengthen the construction of the project manager team and play the key role of the project manager. project risk management, in addition to good mechanisms, the most important is the talent factor. the position of the project manager in project risk management is obviously the most important, how to select, appoint and evaluate the project manager is the key to grasp the project risk management. 


Specific from the following aspects to grasp this work: first, the establishment of a good project manager's personnel management account. the personal information, project performance, management ability, economic strength and other information of each project manager in the enterprise will be summarized and completed. second, according to the project manager's relevant information, in the enterprise internal organizational level review, the overall can be divided into three to five levels. 


Level reviews can be conducted annually or every two years, similar to those for technical titles. then clarify the treatment enjoyed by project managers at each level within the enterprise, the level of treatment can be distinguished from the allocation of projects undertaken by enterprises, management fee rates, corporate equity and various benefits. 


Third, the project manager's assessment can be organized once a year. the appraisal index mainly evaluates and evaluates the project quality, safety, project management efficiency (e.g. duration management, cost management), risk control ability, customer relationship coordination ability, team cohesion, technological innovation ability, etc., and selects outstanding (or advanced) project managers within the enterprise. fourth, the selection and training of project manager talent team. 


In the process of expanding the scale of business, the number of project managers is increasing, and there is also a bottleneck of talent. at present, enterprises have two ways of introducing from the outside and their own training, it is difficult to say which is better, which is worse. however, the external introduction of the way the risk is certainly greater, which is the most noteworthy issue. therefore, the external introduction of the way to do a full investigation, as well as strengthen the run-in period of monitoring.

As a domestic private enterprises, the vast majority of project management model for the project manager contract system, this model and management system has entered our country for more than 20 years. from the beginning of the introduction to the present, this model has played a very large role in promoting the development of the construction industry, but also exposed a lot of problems, especially in the quality of the contract management, project manager has become more and more prominent at this stage, these problems make the quality of the project, safety, duration, subcontract management and other risks difficult to control. 



Whether or not such a system will still apply in the future, or for how long, is a question that deserves to be discussed together. but it is certain that any kind of management mode or system in time and space have a scope of application, with the change of china's social and economic development, this management model should not be static, which requires everyone in the future work of research and exploration, but also to advanced countries and regions to learn from.

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