by Jurie Smith

A Risk-Based Approach to PM

PM Pointers

A Risk-Based Approach to PM
A Risk-Based Approach to PM
“Fools you are . . . to say you learn by experience . . . I prefer to profit by others’ mistakes and avoid the price of my own!” - Otto Von Bismarck, a German Statesman.

In the numerous years as a project management professional & CEO at PM Academy, I have come to realise that projects don’t fail, people do. The high failure rate of projects can be attributed to a combination of human factors, namely the lack of support from business leadership, incompetent project managers and the firms’ unwillingness to treat a project as they would a start-up business.

According to a survey conducted by the PM Solutions Group, an American project management, consulting and research firm in 2011, organisations on average manage $200 million in projects each year; and, in the course of that year, these organizations will realise that more than a third of their projects ­­– $74 million worth – are at risk of failing. Jobs, and maybe the business itself, may be in jeopardy if nothing is done to mitigate the risks and actively attempt to recover these troubled projects.

Projects can be classified, amoungst other categories, as challenged or cancelled.
A challenged project may be operational but over-budget or running beyond the estimated time. It may also be delivered with fewer functions than originally specified; otherwise, the general perception may be that the project is a failure. A cancelled project is considered to be a failure if the project is called off at some point during the project life cycle, for whatever reason.


The CHAOS Study conducted by the Standish Group in 2011 shows that 66% of projects are either “challenged” or absolute failures, meaning just 34% of projects can be considered as lucrative.

In view of that, project failure is virtually guaranteed when senior management is not visibly and vocally behind the project. Multiple consultations conducted at PM Academy indicate there is a direct correlation between the lack of project sponsorship and project failure. The project sponsor and senior management must appreciate and be committed to the success of the project. Without support from the top, other senior managers, who may have their own priorities, could derail the project and prevent it from reaching its destination in any number of ways, not excluding the setting of unrealistic deadlines. Moreover, support from the higher echelons of the organisation cannot replace a highly skilled project manager and team. Taking into account the skill, expertise and experience of the Project Manager, nonetheless, the project’s success is ultimately about teamwork.

A good project manager must display business acumen, project management dexterity and a certain level people skills. While industry-specific knowledge is not essential to the success of the project, it increases the chance of success because it reduces the learning curve and improves decision-making.

The project manager must create a structured and disciplined environment throughout the project, from inception to implementation, and must be able to operate at a strategic and tactical level during the course of the undertaking.

Companies should adopt a risk-based approach to project management, as when starting a new business, and encourage the team to identify obstructions early on as well as to install comportments that will mitigate the ensuing challenges. Furthermore, to diminish risks, organisations have to make sure they have a robust, contractual relationship with the strategic stakeholders; namely- the suppliers; before embarking on a project.

Moreover, risks need to be assigned to risk owners and be systematically re-assessed throughout the lifecycle of the project.


Based on my experience at the PM Academy, a good business case is an essential ingredient in defining a project. Do not just consider return on investment, but calculate the true value of a project by means of a balanced scorecard approach, covering the tangible and intangible aspects.

Normally business benefits are evaluated post-implementation; this must also be done throughout the lifecycle of the project. If, after careful analysis, the project is not meeting expectations, don’t be afraid to pull the plug. Projects are about delivering business benefits and should therefore be dropped the moment it becomes clear that they are failing to do so.

While rapid technological and business change continues to challenge the effectiveness and even the survival of firms, companies must choose their project management team carefully.

Ultimately, corporations must endeavour to work with accredited and professional project managers who can drive the project to attain its targeted goals via a managed portfolio of projects. They must also be able to display their ability to align and integrate the project with the overall organisational strategy.

Jurie Smith (MBA, PMP®, PRINCE2® Practitioner, and MSP®) is the CEO at the PM Academy. He is an experienced business executive with over 24 years’ experience in project management consulting and training. He is a Project Management Assessor registered with the Services SETA, an Executive on the Steering Committee of the Project Management Standards Generating Body and has held various executive positions at Project Management South Africa (PMSA). For further details, visit
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Issue 29


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