What does it take to deliver a transformational project – the type of project that redefines a business or community – like sending a man to the moon, hosting the Olympics or launching a next generation product? These projects require vision to foresee future project challenges, confidence to develop a plan to remove those challenges and courage to move forward despite the challenges. These projects require risk management.

As project managers, we use a rich toolkit with proven methods for identifying, analyzing and monitoring project risk. Our tools are anchored in the principles of financial risk management and are highly effective at managing stakeholder expectations, developing early warning systems and setting contingency budgets and plans. To mitigate risk, we often rely on traditional project control methods, contingency planning and risk transference. For the majority of our projects, these proven methods instill the vision, confidence and courage to deliver.

Transformational change, however, requires a much higher level of risk-taking. Projects like the Katrina clean-up effort balance significant financial, legal and social risks with the prospects of generating significant value across a large number of stakeholders. These high-risk projects have several challenges in common – they are highly visible, they have a sweeping impact inside and outside the organization and they pose significant threats to the project team’s ability to deliver.

In any project environment, the project leader uses a risk management toolkit to identify the challenges that will likely occur and what to do about them. But, these high-risk projects represent the Perfect Storm of project challenges. The project leader must fight through competing agendas, project silos, unrealistic stakeholder expectations, time pressures and public skepticism to navigate the project through the extremely rough seas of a transformational project. Beyond the risk toolkit, the high-risk project leader draws on three leadership behaviors for survival:

– The ability to navigate the project’s internal and external power network
– The ability to build integrative thinking into the project culture
– The ability to negotiate project goals and stakeholders’ personal agendas into alignment.

This paper will discuss the characteristics that embody risk management: high-risk projects, how these characteristics complicate the typical challenges that projects face and the role these three leadership behaviors play in successful risk mitigation.

Characteristics That Define High Risk Projects
As stated above, high-risk projects are highly visible, have a sweeping impact inside and outside the organization and pose significant threats to the project team’s ability to deliver. In line with this definition, we can classify project risk into three categories – political exposure, impact to core business and ability to deliver.

Political exposure (“highly visible”) encompasses how project outcomes affect the personal stock and creditability of key stakeholders. Rebuilding the space shuttle program in the face of the Columbia disaster was a project with significant political exposure. Like the space shuttle program, high risk projects face an entangled web of political stakeholders with individual agendas, challenging business cases, and, often, a hostile public perception. Managing the amount of political exposure inherent in high-risk projects can become a full time job for the project leader (Laird, 2007). The project leader has to evangelize a clear vision to stakeholders, understand the vision’s alignment with stakeholder value, and monitor how project decisions directly affect stakeholder value.

Impact to core business (“sweeping change”) addresses how project outcomes will affect an organization’s value chain, including but not limited to business processes, employees, technology architecture and supply chain. Like the break-up of AT&T in the 1970s, high risk projects contain direct and indirect effects that transcend the organization and sometimes shake up an entire industry sector’s environment. The AT&T break-up not only fractured the organization but spawned an entire new ecosystem of companies, technologies, and strategies. The project leader’s challenges in understanding the impact to core business are twofold – the depth and breadth of direct impact and the peripheral vision to identify the indirect or invisible effects.

Ability to deliver (“threats to ability to deliver”) focuses inward on the organization’s commitment and ability to deliver results. For example, the 2002 Olympic Winter Games posed significant threats to Salt Lake City’s ability to deliver. Infrastructure capacity, increased security requirements, funding availability and a time-boxed schedule posed seemingly insurmountable challenges that Salt Lake City overcame. Project leaders rely heavily on the traditional risk management toolkit to evaluate organizational experience, stability of requirements, resource capacity and competency, and schedule flexibility to evaluate the organization’s ability to deliver.

In isolation, each risk category is manageable. The project leader can identify specific risk drivers, triggers and metrics to understand and respond to project challenges. The project leader can develop sound contingency plans to deal with challenges as they arise.

The Perfect Storm project, however, presents additional and significant challenges and exposure in each area. A strategist, diplomat and judge, the project leader must understand the interaction between risk categories and must thread multiple risk mitigation strategies to keep each risk category in balance.

Strategies to Survive the High Risk Project
Today’s risk management toolkit provides a great framework to develop a playbook on what challenges to avoid and how to avoid them. The project leader tackling the high risk project also draws on several leadership behaviors to execute the playbook. Three important leadership behaviors are:

– The ability to navigate the project’s internal and external power network
– The ability to build integrative thinking into the project culture and
– The ability to negotiate project goals and stakeholders’ personal agendas into alignment.

Conclusion
To survive the high-risk project, the project leader combines proven risk management methods and practices with the ability to navigate the internal and external power network, to model and insert integrative thinking into the project’s culture, and to negotiate project goals and personal agenda into alignment. These leadership behaviors, when cultivated, build the vision, confidence and courage to deliver the transformational project.