Four primary project risks

By Nick Crawley on February 14 2011

Over the weekend I had a lot of time on my hands to ponder my favorite subject, Projects!

I was considering and mind-mapping the full spectrum of risks that face a ‘project’, regardless of industry, location, sponsor, banker or investor. I concluded that all possible risks fall into one just four primary categories. Over the years I have heard and read about frameworks with 20+ categories all of which of course have a home amongst these four – however, distilling it I arrived at something easier to remember

• Location
• Human corporate framework
• Equipment
• Market Forces

My conclusion is that overall the chosen “Location” and the “Human Corporate Structure” putting the project together outweigh the risks associated with the “Equipment” and the “Market Forces”. I will put together some examples and in the meantime welcome your thoughts, suggestions of risks that might prove an exception to the rule.

So you can understand where I am coming from, I go as far as to say that if say the reserves in an oil and gas project are not what are expected, then well guess what, among other things, you’ve put the oil project in the wrong place (location) ! Sure there are factors that we maybe could have done better such as better surveying, the selection of different consultants with better / different experience but fundamentally….we sunk the hole in the wrong area! Distilling problems down this far may be too simplistic but I think it offers a great way of focusing the risk assessment of a project on the fundamentals.

Risk categorisation and mitigation is covered on the IPF course and watch out for the Navigator 360 degree risk assessment checklist coming to the website soon.