This is a continuation of Using PIRCAD Approach Part 1.
If one thinks about it deeply, an analysis is only required because of change. A problem is brought to fore by something that has changed. It is solvable while an issue is a problem that continues to become a problem, even after administering a solution or arriving at an answer. Issues take more time to fix because the solution usually does not fix the underlying problems accompanying the main one. While a problem is something that has a clear answer, the issue does not (Frago, R., 2015.Risk-based Management in the World of Threats and Opportunities).
Both issues and problems can cause debates, arguments, and conflicts that divide or unite people. Issues are relatively larger and can be broken into smaller problems. If the problem cannot be resolved and people end up divided over it, then it becomes an issue (Phelm, 2013).
If there is no change, why conduct an analysis. Problems and issues represent change that people and organizations have to cope with. These changes bring risks. Managing risks is necessary to increase the chances of success. The end objective, even the greatest of them all, is a risk. Digesting the common definition of risk makes it clear.
Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one business objective such as time, cost, scope, or quality, and others anyone of you wants to pursue. Risk does not discriminate between bad and good objectives. Risk is dual and is relative. It is relative to the objective. Risk consequence can spawn a wide range of problems and issues (Frago, R., 2015).
I have called this the risk cycle in some previous write-ups (Figure 2). The challenge is to break or enhance the continuance of the cycle in some way. If the problem brings an opportunity risk, enhance it. If the risk is a threat, one has to prevent, mitigate or to transfer. This risk management process provides the right avenue to making the right decision. The book Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective brings readers to understand the duality of risk.
Since problems and issues are themselves sources of risk indicators, the next step is to identify risks. The analyst embarks to dig into the qualitative aspect of risk. On this stage, the major focus is to separate the threats from the opportunities. The time proximity of the risk is a worthy component to consider (Frago, R., 2015.WordPress Article\Risk as a Function of Time). Whenever possible, start correlating identified risks with each other at this stage. Time proximity causes one to appreciate the urgency, scope, and responsibility of the action plan and decision. If a risk is to occur after the project is completed, then it is obviously not the project’s responsibility. The project will probably transfer the responsibility for the risk to the operating group. It can find its way to the corporate risk register.
We now go to the third stage which “Categorize” (Figure 3). It is the stage where the analyst assigns groupings, and labels identified risks. There is a possibility that a good number of risks are secondary risks, tertiary risks, and so on. It is relevant because management of the primary risks addresses in full or in part, the risk branches. It follows the root cause analyses concept where a solution is applied to the root cause in order to prevent or enhance the cascade of effects. Formulation of categories has no fixed boundaries or limit. It is a fit-for-purpose design in support of the following analysis stage. It can include risk rating of High, Medium, and Low, quality rating, priorities, and many others. Any well-thought risk matrix is an excellent reference.
The engine of the analytical report is in the analysis stage. It is where the analyst group and sort the identified risks. It is where one separates, groups, sorts and validates data. It is the stage when an analyst has all the information to identify the real root cause of problems and issues. Connecting the dots between current concerns and the risks identified happens mostly at this point. Objectives and analysis can now be place together under one microscope to identify final methodology. It is the time for quantification, calculating probabilities, measuring impact magnitudes, as well as simplification. As mentioned earlier, we only need to answer the question on the table unless it is something with serious consequence if left unattended.
The DECISION stage is the culmination of all the other stages. It is the process of assimilating the result of the analysis to form a conclusion and a recommendation. The decision ties up with the question or questions. It must satisfy the objectives. A decision comes with risk action plans that revolve around acceptance, mitigation/enhancement, prevention/exploiting, transferring or giving, and the assignment of responsibilities.
So next time your organization wants to make a relatively quick decision or wants to answer pressing questions, try using PIRCAD. It is simple and easy to remember. It is already unconsciously built-in within people’s mind. Tapping into the concept consciously, will generate better decision result.
Rufran C. Frago – Author (090815)
Other articles authored by Rufran Frago:
- Risks Surrounding Canada’s TFW Part 1
- Risks as a Function of Time
- Project Schedule: P50, Anyone?
- Changing the Culture of Your Organization
- A Person Perceives Others Based on His Own Interest
- How Can Management Motivate and Empower?
- How Can Managers Increase Leadership Effectiveness
- Risks Surrounding Canada’s TFW Part 2
- Scaffolding Hours: What are they? Directs or Indirects? Part 2
- Oil Price, Recession: Causes, Issues and Risks
ANNOUNCEMENT! The paperback and Kindle edition of the book “Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective” are now available. Please follow the hyperlinks for more information.
The book provides new/additional knowledge to project management practitioners (beginners to experts), risk management specialists, project controls people, estimators, cost managers, planners and schedulers, and for students of undergraduate courses in Risk Management. The sectional contents offer practical and common sense approach to identifying/managing risks. It is a must have for company managers, directors, supervisors, aspiring industry professionals, and even those students fresh from high school. The material is especially design to start with the foundational principles of risk gradually bringing the reader to deeper topics using a conversational style with simple terminologies. Check it out!