Why risk efficiency is a key aspect of best practice projects

Chapman, Chris and Ward, Stephen (2004) Why risk efficiency is a key aspect of best practice projects. International Journal of Project Management, 22 (8), 619-632. (doi:10.1016/j.ijproman.2004.05.001).

Abstract

This paper explains what ‘risk efficiency' means, why it is a key part of best practice project management, and why it may not be delivered by common practice as defined by some guidelines. This paper also explains how risk efficiency can be addressed operationally using comparative cumulative probability distributions (S-curves). Further, this paper explains why risk efficiency provides a foundation for a convincing business case for:
• formal project risk management processes designed for corporate needs, • embracing the management of opportunities as well as threats, • measuring threats and opportunities to assist decision making, • developing a more effective risk taking culture, • taking more risk for more reward.
The argument uses linked examples from four successful cases: the first use of a designed project risk management process by BP for offshore North Sea oil and gas projects, the first use of a designed process by National Power for combined cycle gas powered electricity generation, a culture change programme for IBM UK concerned with taking more risk to increase the rewards, and a due diligence assessment of project risk management for a railway infrastructure project. The concepts and tools described are relevant to any industry sector for projects of any size.

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