Risk Management in Program Environment

As we continue the discussion of risk management concepts in the PPG Risk Line we will continue to talk about risk management at the portfolio, program and project levels in more depth.  There are many different views on the purpose of the Portfolio, Program and Project Management (PPPM) in their functions.  When the Project Manager (PM) and the project team try to manage their deliverables within the constraints this is when the understanding of the PPPM concept becomes important.

MCLMG uses the concept described the PPG articles on Portfolio, Program, Project Management (PPPM) which you can find under the PPPM Roadmap column.  The program level is not just another layer of management above the project level or a collection of projects under a program umbrella as many current practices will indicate. It is important to understand the program level does not just execute toward “fit-for-use” deliverables, but has a different function.   It is at the program level that the focus is on the tactical and the primary objective is the improvement of the overall efficiency of resource utilization. This is the main difference from the project level which is focused on the optimization of producing fit-for-use deliverables.

From a risk perspective, it is critical for the sponsor, the PM and the project team to understand the purpose of the program level in order to understand their responsibility in the risk management and risk mitigation strategies of each risk potential.

As a review in July’s PPG article: the basics for Risk Management at the PPPM levels are the same: risk identification, risk assessment (quantitative and qualitative) and managing of the risk environment.  It is not the management of risks that is of concern, but the identification of the right risk potentials themselves at the right level.   The risk environment at the program level will look for risk potentials that threaten the efficiency of resource utilization to align itself with the purpose of the program level.  The program level should write its own risk management addendum to the projects’ risk management plan that focuses on risk management for the program level as it impacts each project.  It is also recommended that the program level include a clear risk escalation and communication processes to explain how risks are moved to from project to program, and program to portfolio.

Gathering risks at the program level will ensure each project is managing their project’s deliverables, and aligning the project constraints that are impacting the program’s projects with the organizational constraints.  If PM does not understand the focus their project risk management has at the program level, they might miss many risk potentials or spend valuable resources managing the wrong risks. 

Program managers should think more widely about risks that might affect their programs to produce a holistic view of risks early in their life cycles. Below are some areas to think about:

  • Focus is on the tactical level perspective
  • Component utilization centers primarily on organizational resources to support project activities
  • Objective is to achieve a higher level of resource efficiency than would be possible without programs
  • Goal is to maintain alignment to organizational constraints while completing component projects.

If the main focus at the program level is the tactical level then the risks potentials should also be defined for this perspective.

Risk potentials at the program level will be risks to:

  • Effective and efficient organizational resource utilization, and
  • Organizational constraints impacting the program’s component projects.

Many factors influence PPPM performance such as schedules, resources and funding; however, one factor stands out above all others that can make the difference between success and failure: identifying and managing the risk potentials of each of the PPPM levels at the right level.  Organizations need to manage risk more effectively — understanding the program level’s risk environment is critical towards achieving this objective.

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