risk

The Contribution of a Project Manager to Enterprise Risk Management

Risk management is about people and processes and not about models and technology – Trevor Levine

I

n every industry, projects are being designed, executed and ultimately evaluated. In the nascent stages, much time and effort is spent determining objectives, scope, schedules, and arranging for capital. Unforeseen events are bound to occur, and anticipating them can be a challenge. For minimizing their impact one needs a clear understanding of risk management processes. ERM practices within an organization are crucial for enhancing the project delivery scheme and smooth implementation. Linking ERM systems with project management works perfectly for any enterprise. Beyond the regular lifecycle of a project, ERM offers the project manager (PM) a logical approach to handle all the risks associated with the project. ERM and project management are two entities between which efficient communication must prevail.
 

What is a project manager?

PM RoleTraditionally, a project manager would be involved in the following stages of a project

  • Understanding the objective of a project
  • Allocation of roles and responsibilities
  • Creation of the risk register
  • Risk identification
  • Methods of risk analysis
  • Implementation lifecycle
  • Schedule and budget allocation

The role of the project manager (PM) is critical for developing a realistic implementation plan. The term ‘implementation plan’ covers a gamut of project activities.
At the outset, an organization should establish the type of project managers it needs. It should commit resources to the project managers for ensuring success. Resources include qualified personnel, equipment, critical data and information. Standard operational practices and procedures should be clearly defined regarding the project flow. After the foundation is set, the role of the project manager at various milestones becomes indispensable. Each of the stages might occur multiple times in the duration of a single project.
 

Role of a project manager in ERM

Let’s pinpoint specific contributions that a project manager can make to an existing ERM system.

  • Contract development: Project managers are involved in the development of contract agreements and should be completely aware of the scope of services. Keeping a contract up-to-date is the best way for minimizing the risks of defaults.

  • Profitability: The main duty of a PM is to make sure that the project is a revenue centre. A vigilant PM who has complete control of the schedule, budget and all additional costs that could impact the bottom line, is usually able to manage risks adequately.
  • Quality assurance: A conventional ERM model includes checkpoints in avenues like job management, in-built processes, performance and integrity criteria, and identification of records. PMs need to ensure implementation of these quality checkpoints at various levels of the process.
  • Reporting: A client communication plan should be implemented at the beginning of every project. Moreover, a pre-set frequency of communication should be determined to meet the client’s expectations and project requirements. Documentation of progress, meeting minutes, decisions, directions, and assignments accepted during the course of a project play vital roles in the overall health of a project.
  • Collections: A healthy cash-flow cycle is the backbone of any organization. ERM allows one to keep a check on inflows and outflows, and lets a project manager have complete control over account receivables.
  • Project completion: A project close-out confirms that the services stated in the contract have been performed, ascertained the level of satisfaction of services, and ends all liability exposures. The project manager can take the help of an ERM application to review the details of the terms of the contract. That helps to discuss all remaining issues with the client and resolve them.

 
The role of the project manager continues to evolve and redefine itself. Successful firms realize that an investment in their project management program helps in the overall success of the organization. An effective project management system used in accordance with the existing ERM ensures optimal project performance, profitability, client satisfaction, and above all, risk mitigation. Alongside enterprise level developments, enhancing the PM skill set is crucial.
 

Mohammed Nasser Barakat
Consultancy Director at CAREweb Corporate Governance Consultancy offering Governance, Risk & Compliance (GRC) software used by the well known global business organizations. Nasser is Certified Control and Risk Self Assessment Practitioner (CCSA) and has 8 years experience in Internal audit solutions and consultancy. He has contributed to a consultancy services of risk management strategies and worked as a Risk manager.

Categories

Latest Tweets

How hostage negotiation and project management are interrelated - via @SaverioLosito #pmot bit.ly/1BsfvQK

Donate € 5,00

Help the growth of this blog