with the aid of a Risk Maturity Model
ADVISORY ARTICLE
By Dr. Robert James Chapman
United Kingdom
Introduction
To gain sanction within an organization for the adoption and application of a risk maturity model (RMM) to understand the current and desired project risk management (PRM) capabilities and the gap to be bridged, it is sometimes necessary to prepare a business case. In simple terms business cases are critical project documents that outline a business problem and provide an option or options to solve it. The use of the model should be considered as a project in its own right with a defined timeframe, budget, resources, participants and deliverables and most importantly the anticipated benefits.
Application
Any investment in the application of a maturity model must be predicated on the notion that (i) risk management is an enhancer of project performance; (ii) its contribution is determined by how well it is implemented; (iii) an understanding of effective implementation requires a clear grasp of the drivers of successful risk management; and (iv) once knowledge of current capabilities is established the findings will be used to develop an improvement plan. However, acceptance of the need to employ a maturity model can fall at the first hurdle. Recognition by senior management within an organization that risk management as a discipline is critical to successful project delivery cannot be treated as a given. A foundation must be laid that paves the way deployment of a maturity model.
The importance of risk management
It can be argued that effective risk management is at the heart of successful project delivery and achievement of value-for-money. While project failure can result from over ambitious objectives or unpredicted radical changes in the business environment, poor risk management implementation is a common driver. Although the raison d’être of the discipline of project management is the management of risk, one the prime reasons why projects fail is as a result of poor risk management. There is now a wealth of knowledge that pinpoints inadequate risk management as the cause of project delays and or cost overruns, the primary measures of project success. In successive reports, the National Audit Office has attributed poor risk management to a skills shortage in experienced risk management personnel (where risk management needs to be implemented from business case development through to project closure). These reports point to the need for independent assessments of risk management practices. Repeated project overruns attract the attention of the C-suite and in particular finance directors who seek answers to deteriorating bottom line performance. The primary tool that could be used is a PRM maturity model. The assessment provided would be an independent, objective and evidence-based measure of risk maturity. The outputs would be built into an improvement plan with discrete actions, owners and timelines.
Background information
As with all organizations they have a number of common core objectives such as profitability, maintaining cash flow and reserves, increase in market share, stakeholder engagement, preservation of reputation and longevity. Projects which lead to cost overruns, schedule delays or do not deliver all of their objectives are harmful to an organization’s primary objectives. While a business may currently be managing its projects relatively successfully, past performance is no guarantee of future success.
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How to cite this article: Chapman, R. J. (2021). Business Case for assessing the maturity of PRM capabilities with the aid of a Risk Maturity Model, PM World Journal, Vol. X, Issue III, March. Available online at https://pmworldlibrary.net/wp-content/uploads/2021/03/pmwj103-Mar2021-Chapman-assessing-maturity-of-prm-capabilities.pdf
About the Author
Robert J. Chapman, PhD
United Kingdom
Dr. Robert Chapman is a Director of Dr Chapman and Associates Limited. He is the author of “Simple Tools and Techniques for Enterprise Risk Management, 2nd Edition”, which is recommended reading by the UK’s Institute of Risk Management. A discount of 30% can be obtained for the hardback version through the publishers John Wiley and Sons using the promotional code RMD30 and the URL: https://www.wiley.com/en-us/Simple+Tools+and+Techniques+for+Enterprise+Risk+Management %2C+2nd+Edition-p-9781119989974. Select country of residence in the tool bar. The discount is available from: 4 February 2021 to 28 February 2022
Dr. Chapman can be reached by email at riskappetite@outlook.com
To view other works by Robert Chapman, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/robert-j-chapman-phd/
