Risk Management is Project Management for Adults

Tom DeMarco, Principal Atlantic Systems Guild Inc.

Abstract

Project work is a risky business. Avoiding risk is a no-win proposition because risk is usually an indicator of value; when there is no risk there is no value. We need to learn to run toward risk, not run away from it. (If a project has no risks at all, don’t do it!). But when you‘re running toward risk you also need to take certain reasonable precautions. These precautions make up the heart of the discipline called risk management.

Companies that don’t manage their risks reasonably can only afford to take small risks. That presents a paradox: risk management is not so much a way to banish risks as it is an enabler for aggressive risk taking. The companies that will succeed in today’s frenetic business climate are the ones that can confidently take the biggest risks. Their confidence is not the same as foolhardiness: they don’t count on never being beaten by a risk. What they count on is winning big when they win and losing small when they lose.

The distinction between confidence and foolhardiness is key. Managers for years have been taught to instill a “Can Do“ attitude in themselves and everyone who works for them. When Can Do is the rule, any concentration on the possible project pitfalls is frowned upon. Everyone is expected to think positive and not get all bothered over things that might go wrong. Running a Can Do operation is often portrayed as hard nosed management, but it’s really more like kid stuff. It sets a date for completion and then refuses to consider any other alternative. Can Do is another term for foolhardy management.

A short list of the skills of risk management would include the following: risk assessment, risk discovery brainstorming, exposure analysis, uncertainty diagramming, contingency planning, risk mitigation, monte carlo simulation, handling of unmanaged risks, incremental implementation, Earned Value Running (EVR) metrics, mastery of the five core project risks.

In this 60-minute presentation, Tom DeMarco lays out the how-to‘s of risk management and makes the case for including this new discipline in your organization.

Curriculum Vitae

Tom DeMarco is a Principal of the Atlantic Systems Guild, a systems think tank with offices in the U.S., Germany and Great Britain. His consulting activity focuses on project management and litigation involving software intensive endeavors.

He is a past winner of the Jean-Dominique Warnier Prize for “lifetime contribution to the information sciences.” He is a founder and past-president of the Pop!Tech Conference and a Fellow of the Cutter Consortium.

DeMarco is the author of nine books on management, organizational design, and systems development. The most recent is called “Waltzing With Bears: Managing Risk on Software Projects”, written with co-author Tim Lister. (If you think waltzing with a bear is risky, try managing a software project.) Before that there was “Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency”, published by Random House, Broadway Books Division, in 2002. It addresses the question, Why are we all so damned busy? and offers some unsettling answers. In 1997, he wrote “The Deadline: A Novel About Project Management” published by Dorset House Press, the story of a veteran software manager who finds he has bet his life on a project deadline. The book is about managing as though your life were on the line.

DeMarco’s career began at Bell Telephone Laboratories where he served as part of the now-legendary ESS-1 project. In later years, he managed real-time projects for La CEGOS Informatique in France, and was responsible for distributed on-line banking systems installed in Sweden, Holland, France and Finland. He has lectured and consulted throughout the Americas, Europe, Africa, Australia and the Far East.

DeMarco has a BSEE degree from Cornell University, an M.S. from Columbia University, a diploma from the University of Paris at the Sorbonne, plus an honorary Doctor of Science from City University London (2003). In 1999 he was elected a Fellow of the IEEE. He is the winner of the 1999 Stevens Award for his contribution to software engineering methods. His first work of mainstream fiction, a comic novel called Dark Harbor House, was published by Down East Books in the Spring of 2001. His short story collection, Lieutenant America and Miss Apple Pie was published in 2003. He makes his home in Camden, Maine.