Do you understand how to show you understand? (Part 2 of 2)

Show you understand risk in your proposalDescribing potential risks and proposed mitigations is an excellent way to show proposal evaluators you understand project complexities. In Part 1 of this blog post, I discussed six common pitfalls to demonstrating understanding and how to avoid them.

An insightful risk approach identifies risks to successful project performance from the customer’s perspective, which requires that you know the customer. However, it also requires that you have experience. Based on your experience, you can describe risks you’ve encountered and how you mitigated them successfully.

Here are five common pitfalls and five tips to a great risk mitigation approach that demonstrates your understanding of the customer and the contract.

Pitfall #1: Your risks don’t matter

Often bidders cut and paste risks from proposals for similar contracts. They give little thought to what really matters to this customer in terms of risks to successful schedule, budget, and quality performance.

Tip #1: Identify risks that matter. Knowing which risks matter to the customer is predicated on knowing the customer. You certainly want to include risks known to the customer and describe how you plan to mitigate or manage them. However, you can show real insights when you identify risks that the customer did not anticipate or know. Tie risks to lessons learned from similar projects, industry research, or even results achieved in a prototyping lab setting.

Pitfall #2: You don’t explain your methodology

The customer needs to understand your methodology for analyzing risks and potential mitigations with proof as to its effectiveness. In fact, presenting the pros and cons of different approaches and why yours is the best can rise to the level of a true discriminator.

Tip #2: State the how. Your risk management approach will be much more persuasive when you present results. Explain why your methodology offers the best approach. If your approach aligns with a specific methodology such as PMI PMBOK, CMMI, ISO, NIST, or others, cite the applicability and strengths. Lessons learned from similar projects are another great way to substantiate that you mitigate or manage risks successfully.

Pitfall #3: You don’t prioritize

Projects do not have unlimited time and budget. A customer presented with a long list of risks may perceive your approach as risky because it shows a lack of understanding of project resources.

Tip #3: Analyze probability and impact. Show that you know how to prioritize risks by presenting your assessment of probability and impact of each risk. Quantify and rank risks from high to low based on likelihood and resulting impacts on project success. Even better, present the risk ranking both before and after your proposed mitigation to show positive results. I like to use a red (high), yellow (medium), and green (low) scorecard for maximum effect.

Pitfall #4: You don’t explain risks convincingly

As I stated in Part 1, bidders often state a risk topic such as schedule slippage, but fail to specifically state the risk and its consequence. Even worse, some bidders fail to present a specific mitigation and instead use generalities like, “We will assign skilled resources.”

Tip #4: Use if, then risk statements. Use if, then statements to make risks clear, and then present your mitigation approach. For example:

Risk: schedule slippage. If developers deliver the code late, then software testing time will be reduced, thus resulting in potential errors that will decrease user satisfaction.

Mitigation: Use Agile Sprints to deliver code on schedule and allow time for adequate testing.

Pitfall #5: You try to control everything

When brainstorming potential risks, you are likely to identify quite a few that are out of your control or out of the customer’s control. You need to decide whether you want to list these risks and, if so, whether you want to counsel the customer to manage around them or to accept them.

Tip #5: Be a Buddha. Take a Buddhist approach to risks. In other words, if the risk is within your control or the customer’s control—and the risk is actionable—then suggest a mitigation. If it is not, then explain why the customer must accept the risk.

Warren Buffet said, “Risk comes from not knowing what you are doing.” Make sure proposal evaluators perceive your bid as lowest risk based on your strong risk mitigation approach.

by Lisa Pafe, APMP-NCA President, CPP APMP Fellow, and PMI PMP

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