How to manage project issues?

Today, we will talk about the subject of how to effectively manage project issues.

Either in our daily life or in our daily work, issue is always not welcomed. When an issue is emerged, it means we have to spend extra money for solving the issue, otherwise it would affect the realization of our objective.

But the reality is that we can not totally eliminate issue from happening. But from another point of view, we can lower the probability of issue from happening by judgment and plan in advance. Because issue comes from risk, and risk is almost everywhere. Therefore, when speaking of issue, we must talk about risk first. Risk and issue are usually inseperatable.

The source of risk is factor of uncertainty. Issue does not necessarily comes from risk, but many of the project issues are actually comes from risks. Therefore, the essentiality of managing project issue is to achieve high quality of risk identification and planning, which is to smother the issue when the risk is still in the stage of germination.

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1 Loss of billions of dollars due to an error

There is an old saying of Chinese: “Food and fodder should go ahead of troops and horses.”, which means proper preparations should be made in advance, especially in a war. Managing a project is actually somehow like fighting a war in this perspective.

The absolute principle for risk management is to “nip in the bud”. We all know that, as the project goes into deeper stage, risks would have bigger impact on the project, and the cost for responding the risk would be higher. If a risk being identified and responded as early as possible, then the possibility that the risk turns into issue should be lower, and the impact on the project would be smaller.

In the past, we have lots of experience of mitigating risk in time and succeeding projects, along with many serious issues due to the lack of risk management which lead to projects failure.

Here is a case of negative example.

Motorola Inc, the famous communication giant of USA, developed an ambitious strategic plan called “Iridium plan” but failed, which lead to Motorola company’s loss of billions of US dollar. Since then, Motorola was hurt badly and started to be on the decline. The root cause of the failure is that Motorola was unilaterally pursuing advanced and new technology, rather than effectively identifying and monitoring the cost risk, which lead to unimaginably high development cost and maintenance cost. In the end the high cost was imputed to the end users, which is why the price of a single Iridium cellphone was up to three thousand US dollars, plus expensive call charges.  At last, there are only ten thousand users of Iridium cellphone globally.

This case is a typical negative example: lack of risk management lead to serious issue, and finally affected the company’s operation.

Now, let us see a successful case of avoiding issue by effectively managing and monitoring risks.

In 2019, most communication companies focus on the development of 5G technology. If we go back to 2003, when 3G was on its way to commercial use, the competition of communication industry was in a white-hot status. Verizon, the biggest communication operation company of USA, was onboard and ready to launch 3G service by the end of 2003, which was three months earlier than their original plan. One of Verizon’s main supplier of technology and equipment had anticipated the risk of launching the service earlier, and already added an additional month as contingency reserve. But when Verizon decided to launching the service three months earlier, the supplier had to deliver to Verizon the full set of equipment and software three months earlier, which turned out to be huge issue for the supplier.

If the supplier could not deliver the deliverables in time, that would be a huge loss for both Verizon and supplier itself. And the negative impact which came after would be incalculable. As for a project manager, how should we response to this risk?

At that time, the supplier’s project manager held an emergency meeting with marketing and development divisions to discuss the response action. The first plan was like this:

First, because the project duration had been shortened by three months, it would be almost impossible to deliver all Verizon’s requirements by once. Suggestion was to sorting all the required functions by priority. For those low priority functions which would also have little impact on client, suggestion was to postpone their delivery. After the plan was developed, project manager should negotiate and communicate with the client as soon as possible.

Second, at the mean time, project teams also consider that even if they cut out part of the requirements, developers also had to work overtime in order to finish the project in six month. Therefore, communication and motivation should be done for all relevant team members, and compensation strategy should be developed by human resource and finance departments.

For these two steps of response plan, the supplier develop corresponding project modification plan and signed every work items to relevant employees. Finally, the response plan was approved by the company’s leader and client. The project was delivered successfully.

2 How to perform project under huge risk?

Looking back to the upper two cases, after comparison and analysis, we can discover that the core reason of the first case’s failure is that only purchasing high functionality without identifying and managing relative risk of high cost, which lead to lack of effective response action during the risk’s realization.

On the opposite, let us see what factors lead to the second case’s success.

1. Identify the risk as early as possible, and plan the relevant risk response plan, add additional contingency reserve for the risk.

2. Communicate and cooperate with relevant stakeholders once the risk happen, and develop a best response plan to lower the possibility and mitigate the impact of the risk.

Having an entire mechanism of project issue and risk management, once the risk turns into issue, or new issue is encountered, the project team members would be able to coordinately and effectively clear away all the obstacles and finally achieve project’s objective.

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