Project success is often measured by the extent to which it meets the predefined objectives, timeline, and budget. However, there is always an inherent risk involved in any project that can affect its outcome. Risk can be defined as the probability or likelihood of an event occurring that can negatively impact the project’s objectives. Therefore, managing risks is a critical component of project management, as it can significantly affect the success or failure of a project.
Risk can impact a project in various ways. One of the most significant impacts is the potential delay in project completion. According to a study conducted by the Project Management Institute (PMI), about 39% of projects experience schedule delays, and the primary cause of such delays is the risk involved in the project (PMI, 2018). These delays can be due to various factors, such as unavailability of resources, technical issues, and other unforeseen events that can significantly affect the project timeline.
Another significant impact of risk on project success is the cost overrun. Risks can lead to unplanned expenses that can exceed the project budget. According to a study conducted by McKinsey, approximately 66% of projects experience cost overruns, and the primary cause of such overruns is risk management (Flyvbjerg, 2014). These overruns can impact the project’s profitability and can also lead to project termination, which can ultimately result in project failure.
Risk can also impact the project’s quality. Risks such as inadequate testing or failure to identify the project’s requirements can lead to poor quality deliverables, which can impact the project’s success. Poor quality deliverables can lead to customer dissatisfaction and can negatively affect the project’s reputation.
Effective risk management is crucial to minimizing the impact of risk on project success. Risk management involves identifying, assessing, and mitigating risks to reduce their negative impact on the project. Some of the risk management strategies include risk avoidance, risk reduction, risk sharing, and risk acceptance (PMI, 2017). Effective risk management can help to identify potential risks and plan for them accordingly, which can significantly impact the project’s success.
In conclusion, risk management is a crucial component of project management, and its impact on project success cannot be overstated. Risks can lead to schedule delays, cost overruns, poor quality deliverables, and even project termination. Therefore, it is essential to identify, assess, and mitigate risks to reduce their negative impact on the project. Effective risk management can help to ensure project success by minimizing the impact of potential risks.
Flyvbjerg, B. (2014). What You Should Know About Megaprojects and Why: An Overview. Project Management Journal, 45(2), 6–19.
Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition. Newtown Square, PA: PMI.
Project Management Institute (2018). Pulse of the Profession® 2018. Newtown Square, PA: PMI.