Crisis management

Revision as of 18:26, 19 February 2019

Developed by Tom Ruetgers

Abstract

Crisis Management in general terms defines how an organization or Individuum respond to an unwanted (suddenly) occurred event. The terminology gets used in several different contexts. The most popular are: politic, nature, financial and organization sector. This wiki article focus on crisis management within an organization in a project management environment. It will be introduced how project manager can identify crises and state varying approaches to deal with crises and how to recover a troubled projects. No matter how well a project is planed and prepared, due to the rapidly changing world and constraints it is impossible to eliminate all unknown variables. therefore, a special focus on risk management should be set in the preparation of a project to prevent events which could lead to a crisis as much as possible. Which sounds theoretical spoken quite simple is in the practical world often more difficult. Almost all projects run under tough conditions regarding all resources as budget, manpower and time. Subsequently, it is not surprising that approximately 70% of all major projects and programs fail to achieve their objectives. ^[1]

Initial Situation

A crisis can emerge in two different ways: On the one hand by a suddenly occurred fatal event, collapse of a construction for instance. On the other hand, a crisis can also occur slowly. Due to badly monitoring or even suppressed expenditures projects can get out of control and exceed objectives drastically. In such a situation it is necessary, that the project manager realizes that the current circumstances are no longer manageable to meet requirements of the project. A crisis in general is defined as a time of intense danger or when a difficult and important decision must be made. ^[2]. Related to project management, a crisis can usually be aligned to one of the following rubrics:

• financial crises (Project budget exceeded so drastically, that it's not continue-able)
• schedule crises (It became impossible to finish the project before deadline)
• legal crisis (the project is threaten to fail due to law changes)
• crisis caused by an accident (most common situation, which leads immediately to a crisis: construction accident with harmful consequences for humans and / or environment) ^[3]

A Crisis usually proceed in three stages: Pre-Crises Stage, Acute-Crisis Stage and Post-Crisis Stage.

Pre-crises Stage (also called "precursor stage" by some crisis management consultant firms)

The first stage is the pre-crisis stage, when someone on the project recognize pre-warning signs or discovers a critical situation. Mostly, the person escalates and shares the information with his supervisor. At this time, the information about the critical situation is not visible outside the project or organization. It is up to the project manager if he takes action to prevent the problem to eradicate the problem or not. ^[4]

Acute-crisis stage

If the authorized person underestimates, overestimates or is not aware of the pre-warning signs, the critical situation the critical situation develops to a crisis. As soon as the critical situation becomes known outside the organization, it gets considered as a crisis. Most likely, the project and the associated companies are attracting negative public attention, which harms the firms reputation and puts even more pressure on the project management team. Thus, managing and the project team may be weakened and infighting begins. The project management teams stops it's continuous process and starts to develop a crisis management strategy, which includes: defining a crisis management team, crisis communication team, developing a crisis management plan and execute it.

Post-crisis stage

Lastly, after the crisis is under control, the Post-Crisis stage begins. The responsible parties start to communicate with the customer, consumer or society and try to restore its faith. The crisis communication team is in charge for this task. Subsequently, the crisis will be analysed and evaluated to identify the root of causes. Additionally, the project will be canvassed regarding all aspects which were determined in lesson learned sessions. Depending on how badly the project was damaged, a project recovery team and manager will be determined to keep the continuous progress of the project back on track. ^{[5] [6]}

Crisis Management

Crisis Management Team

Crisis Communication Team

3R

Crisis Management Plan

Executing Crisis Management Plan

Data Collection and Analysis Root to causes

Recovery and prevention

back on track

Literature

• ^[1]: Is written by Stephen Carter, a Senior lecturer Professor in Project & Programme Management at Cranfield University. He worked on projects for the oil business before moving on to work at Virgin before working directly for a global CEO as head of Project & Programme Management Strategy.
• ^[4]: Is written by Mark Price Perry, who worked for 19 years as a business Driven project management consultant and contributed to over 1000 articles on the digital platform projectmanagement.com, which is powered by the Project Management Institute.

References

1. ↑ ^{1.0 1.1} Carver S. "Making projects fly", FT Handbook of Management, Pearson; 2004.
2. ↑ "Oxford Dictionary"; 2018.
3. ↑ Boris Hornjak "The Project Surgeon_ A Troubleshooter's Guide to Business Crisis Management", Project Management Institute; 2018.
4. ↑ ^{4.0 4.1} Mark Price Perry "PMO Tips: Ten Project Rescue Tips for PMO Managers", https://www.projectmanagement.com/blog-post/718/PMO-Tips--Ten-Project-Rescue-Tips-for-PMO-Managers, 2008.
5. ↑ Edward S. Devlin "Crisis Management Planning and Execution" Auerbach Publications ;2007.
6. ↑ Kerzner, Harold R. "Project Recovery" Case Studies and Techniques for Overcoming Project Failure, John Wiley & Sons; 2014.