Customer Driven Risk Management

A customer-driven, new product project team is a team that responds to customers and manages customer satisfaction as a regular team function. Risk management is an overall obligation of the customer-driven project team. The team continually assesses risk at the project level as well as in each task of the project, not only in terms of time and cost, but also in terms of the technical feasibility. Again, the customer-driven lead team establishes the system for risk management. This risk management system influences the use of the other project management tools and techniques.

No new product project is without risk; that is the probability that a given process, task, subtask, work package, or level of effort cannot be accomplished as planned. Risk is not a question of time; it is often a question of feasibility. It pays in the development of the WBS to assign risk factors to each element of the WBS, separate from the assignments of schedules and milestones for the work. Risk factors can be assigned based on uncertainty, technological feasibility, availability of resources, or competition. Later, the elements with high risk factors are given close attention by the project manager, whether or not they are on the critical path itself. Special attention is given to customers, users, and clients.

One of the most effective ways to deal with risk is to develop customer-driven contingency plans, or parallel courses of action that come into play if the task cannot be accomplished as the customer sees it. In other words, if Six Sigma cannot be accomplished, alternatives are available. Contingency planning is based on "satisficing," as Herbert Simon called it (Hebert A. Simon: AI Pioneer Andresen S. IEEE Intelligent Systems & Their Applications 2001). Satisficing is finding solution that is most acceptable to all parties to the process.

Customer-driven contingency plans are carried out by the project manager, based on the level of risk assigned to a particular element of the project work breakdown structure. When testing a new technique or approach, for example, a manager might estimate a 15 percent chance of successfully completing task 1 and satisfying the user because few new techniques work well the first time they are attempted. Similarly, there may be only a 10 percent chance of successfully completing task 2 because of the organization's previous experience with a similar problem. Hence, there is only a 1.5 percent probability of even reaching task 3 if its performance depends upon successful completion of the preceding tasks. After task 3 is completed, however, it may be implemented again and again, depending on how many problems have to be solved.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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  • murron
    What is customer driven risk management system?
    2 years ago

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