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Is Management by Projects Compatible with Organizational Risk Management?

When change management is aligned with management by projects, it is easy to overlook organizational and operational risk management. In fact, as a change management specialist, it is difficult to argue the importance of managing organizational risks that stretch far beyond those inherent to the project. Several examples come to my mind.

A manufacturing company wanted to implement SAP. The project team called for an implementation  during a long week-end in September.  Our operational risks analyses showed that the impacts on the plant productivity during the peak demand and vacation periods would put it at risk. We used numbers and facts to prove what seemed obvious: customer service would be severely slowed, which would be totally unacceptable in their industry. From a project perspective, it was imperative to implement the system otherwise a penalty of approximately $250,000 per month would have to be paid to the integrator. Fortunately, we had the opportunity to demonstrate the operational risks to senior management. The choice seemed clear: to risk losing a large customer base and therefore important future revenues in the millions or to pay a $250,000 per month penalty for a few months.

Another example.  A pharmaceutical company was implementing an ERP. For the initial deployment in the first plant, the organization followed the recommendations of the project team, feeling overwhelmed, like many, by the complexity of an ERP project.  Expecting on-time delivery, on budget and with requested functionalities, they neglected to consider the human impacts of the implementation. Results: the deployment of the system was followed by a huge loss of productivity. Three months later, they were unable to meet delivery deadlines and lost one of their major national customers.

Two similar stories, but with different outcomes. In the first case, the organizational risks were well managed; in the other, the risks were not assessed. Dare to use these examples to convince leaders to tie up loose ends before implementing a project in order to put an end to ever-lasting initiatives. Don’t you agree?

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