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GRC Professional : GRC Summer 2012
37 Hudson says that one of the biggest risks to the economy are projects that don’t deliver their outcomes, on cost, and on time. “The reason we keep giving companies more compliance is that we don’t know how to manage truthful outcomes. But if we had people that could manage the projects on the ground then we’d get the right outcomes instead of relying on financial compliance to guarantee better organisation operations,” Hudson states. Tips from The Risk Doctor Dr David Hillson, known worldwide as ‘The Risk Doctor’, says that all projects are risky because they are unique, complex endeavours based on assumptions and dependencies delivering change through people. “Obviously a lot of risk can be, and should be, foreseen at the planning phase of a project, and we need to build resilient risk-based plans that take into account the risks that we can see as we are planning the project,” says Hillson. “Unfortunately, we can’t see all the risks at the planning stage and new risks will emerge as the project progresses. It is important to stay alert and vigilant, looking out for new risks and developing appropriate responses throughout the life of the project.” Dr Hillson also says that risk management is a constant activity that should direct the focus of the project team onto the things that matter. It should be an integral part of the project management approach rather than an optional extra, built-in not bolt- on, informing management decisions throughout the life of the project. The human element The ‘people’ factor is one of the most important considerations when it comes to project management. Dr Hillson says that there is a lot of focus on the ‘three T’s’ in risk management, with people trusting that tools, techniques and training will deliver effective risk management. But all risk is managed by people, not by processes. “People set risk thresholds, identify and assess risks, and develop and implement risk responses. Each of these steps is driven by the risk attitude of the people involved,” he says. “It is very common for projects to miss types of people risk, such as a person with a needed skillset leaving the project, and focus instead on technical, time or cost risks.” ACI’s David Lawrence agrees with this, stating that project management as a discipline shows a greater grasp of exactly what is at stake. “With a project management plan, you’re effectively demonstrating to the board and stakeholders that you have the correct processes and protocols in place,” he says. ••• Case study: Leighton Holdings Leighton Holdings is facing a class action from national law firm Maurice Blackburn over concerns that the company failed to disclose to investors the problems it faced on key infrastructure projects. On 14 February 2011, Leighton announced an estimated a full year profit of $480 million. Then, on 11 April, this had turned into a $427 million loss. Three projects were blamed as the source of this loss: the Brisbane Airport Link, the Victorian Desalination Plant, and Al Habtoor Leighton Group. AIPM CEO David Hudson says that proper project management at the senior management level and at the director level ensures that knowledge is shared. “ That’s why the AIPM focuses on the competence of buyers and users of project management services,” he says. “ It ’s vital to ask the right risk and compliance questions around a project management framework, and whether people are in fact competent.” It is very common for projects to miss types of people risk, such as a person with a needed skillset leaving the project, and focus instead on technical, time or cost risks.
GRC Spring 2011
GRC Autumn 2012