Application of effective measures for auditing project performance is the key to any project’s success. There are several ways to track a project’s progress, making sure it is on time and within budget. One of the many approaches includes forecasting, risk management strategies and auditing.
Risk management is built into the audit process as it enables project managers to identify and evaluate concerns, problems and challenges that may have surfaced during the course of the project. When inefficiencies are identified, root cause analysis can be performed, and corrective or preventive recommendations can be included in audit reports for future reference.
Poor risk management has the ability to severely impact your project’s success. Whether that’s through a delay to project benefits impacting your revenue and profit streams, poor risk management has to be avoided at all costs. In this article, we outline 3 of the most significant impacts of poor risk management and what you can do to avoid them.
- Delay in Project Schedule
Unforeseen risks affect the project’s timeline as it takes time to understand, analyse and respond to them. Hence, risk management plans have to involve monitoring, responding and tracking them to best mitigate it’s impacts.
What To Do: Besides having buffer time added into the project’s timeline, another way to manage this is through early identification. This can be done by conducting risk assessments throughout the timeline where project managers set aside them to assess and identify potential risks before they occur. Successful risk management strategies help to minimise delays to the project schedule.
- Overspent Budgets
While risk management strategies incur high costs, the cost of dealing with a risk that has occurred far outweigh the former. The common causes of budget overruns occur when these risk management strategies are not budgeted for in the initial phase.
What To Do: Set up a contingency fund to cover for any risk mitigation activities. This will help keep the project budget on track and prevent it from exceeding.
- Project Failure
In the worst case scenarios, poor risk management will cause your project to fail. In other words, the time, effort and cost invested in the project are wasted and project objectives have not been met.
What To Do: Incorporate risk management in your project controls so that you have early warning of when a risk could potentially cause a project to collapse. Implement robust escalation processes so that project teams know what to do when a serious risk is identified and who should be making the decisions about what to do next.
Auditing Project Performance & Controlling Projects is a 3-day training course where you will learn how to audit your baseline performance using the triple constraints of project management. You will also receive hands-on training and experience, practicing the art of auditing your project against the project requirements documents, risk management plans, and budget estimates.
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Interested to read other articles on Project Management? Check out: 3 Reasons Why You Should Be A Certified International Project Manager