Project Management Institute

Innovations in risk management


Assurance Management

It's not just enough to respond to identified risks, it is also required to respond to identified opportunities.
It's not just enough to respond to opportunities, it is also required to create them (where none exists).

This paper brings out a practical approach to steering Projects to success and profitability. It delivers a practical and innovative framework encapsulated as ‘Assurance Management’ for converting unprofitable projects into profitable ones and profitable ones into excellent ones. ‘Assurance Management’ is complimentary to the traditional practice of Risk Management that takes care of the uncertainties in a project. The paper answers basic questions as to why projects fail, what is being done now to face the Project related challenges and what more needs to be done to make projects better.

Practical illustrations that will help in explaining this novel school of thought have been carefully selected and included. The idea is to render this simple yet highly effective approach an indispensable element of Modern Project Management.

Statistics related to Project Performance

The 2004 Chaos results show that only 29% of all projects succeeded (delivered on time, on budget, with required features and functions); 53% are challenged (late, over budget and/or with less than the required features and functions); and 18% have failed (cancelled prior to completion or delivered and never used). (Standish Group, 2004) Apart from this, the 2004 Chaos report found that the total U.S. project waste amounted to $55 billion. This comprises of $38 billion in lost dollar value and $17 billion in cost overruns. (, Jan 15, 2004, ¶7)

The oft-quoted and trusted source while talking about IT Project performance is the Standish Group's Chaos Report. There are many other survey reports as well, like the Conference Board Survey, Mc Kinsey Survey etc. All these reports paint a dismal picture about IT Project performance with the help of truly staggering statistics. Now what are the major reasons given for Project failures?

According to a study performed by KPMG Information Technology, (Hamil, 2003) the major reasons can be summarized as: 1) Poor planning, 2) Lack of corporate management support, 3) Poor project management, and 4) Lack of customer focus and end-user participation. The Standish Group gives us a long list of factors, the lack of which contributes to Project failure (The Standish Group International Inc., 2001). Some of these are: Executive support, User involvement, experience of the Project Manager, Clear Business objectives, Minimized scope, Standard Software infrastructure, Firm basic requirements, etc.

While we got an overall understanding of why projects fail, there can still be unexplained reasons as to why this happens. Projects are often very much wrought with uncertainties. How do we make sure that we minimize these and steer projects to greater success?

Risk Management in Projects

Traditionally, Risk Management has been the solution. Project Risk Management is defined as the systematic process of identifying, analyzing and responding to project risk. What is risk in a project? It is an uncertain event or condition that will have a negative or positive effect on the Project objectives. Risk Management thus improves Project performance by proactively dealing with threats as well as capitalizing on opportunities.

The various phases of Risk Management, as outlined by A Guide to the Project Management Body of Knowledge (PMBOK® Guide) are Risk Management Planning, Risk identification, Qualitative and Quantitative Risk Analysis, Risk Response Plan and Risk Monitoring and Control. Risk Management works well as long as Project Managers are able to identify risks and take action accordingly. But let us ask ourselves the following questions

Many projects fail in spite of process maturity, knowledge management, historic data availability and new tools and technologies. What are the reasons for Project failure in this situation and how does one manage this grey area in which the problem itself is not defined?

What does it take to think beyond the Project and overcome some of the Project challenges as a by-product? Is there an objective greater than the Project objectives as spelt out by the customer? What are the opportunities and the factors to be leveraged upon?

Can there be an evolution to Risk Management which ensures that a majority of the risks become irrelevant?

Assurance Management

It is in the above context that a new School of thought called Assurance Management was conceived. It can be best summed up as follows:

‘Assurance Management provides a framework for enhancing the leadership mindset by visualizing and utilizing all opportunity spaces to the fullest potential in a real-time manner to steer a project to success.’

In these times of unlimited opportunities and globalization, it is more rewarding to the stakeholders to identify and further the opportunity spaces as a complimentary approach to Risk Management.

We define Opportunity Spaces as ‘situations that can be used to improve project outcomes’ and will be explained elaborately in examples in this paper. Opportunity spaces are created or visualized by defining assurance levels in the project (see Exhibit 1). Like different levels of risks exist, can we also define Assurance levels? Assurance being the positive indicator of a project being on the right track, can we think of ways for taking Assurance levels to the next state of maturity? What are the action points that would take the project to the next assurance level?

Assurance Levels

Exhibit 1: Assurance Levels

Principles of Assurance Management

There are 4 principles that can effectively explain Assurance Management:

  • Seeding
  • Ecosystem Engineering
  • Pre-emption
  • Innovative Paradigms


Seeding is the first effective principle of Assurance Management. It can be defined as any activity performed in order to create opportunities that will positively affect the project and also the relationship with the customer. Significant portion of a Project Manager's time should go into Seeding, that is, sowing seeds of information, opportunities and those of shared appreciation. Keeping all project stakeholders informed about the objectives of the project and also the strategies adopted at each stage will definitely steer the project towards realizing its objectives.

It is also the task of a Project Manager to sow seeds of opportunities that the team can utilize for the betterment of the Project relationship. These seeds will sprout into actionable opportunities that need to be connected together at the appropriate time so as to contribute to Project success.

In the context of Projects, Seeding refers to continuous Customer and Team education and partnership in which the team proactively shares past experiences and learnings with the customer in order to create a smooth and productive atmosphere. It is important to adopt an approach of partnership as opposed to a strict supplier-customer relationship. Productive feedback sessions are essential for retrospection by the team as a whole.

Ecosystem Engineering

Ecosystem engineering is the second effective principle of Assurance Management. The term is borrowed from nature whose ‘ecosystem engineers’ like the beaver brings about vast changes in the ecosystem in order to make it conducive to its survival (Haemig, 2006) These activities sometimes bring about changes in the distribution of other species as well.

There are several lessons to be learnt from nature's ecosystem engineers such as the ‘beaver’. The ecosystem needs to be engineered in order to make the context and the situation most favourable to the growth of the initiative or project. In the context of ‘Assurance Management’, it means the focused modification of the Project conditions and situations so that it is most conducive to the smooth execution of the project. Ecosystem engineering also involves the creation and maintenance of this favorable ecosystem to assure real-time buy-ins by the relevant stakeholders.

In reality, how do we engineer the Project ecosystem? Broadly, there are three components – Perception Management, Real-time ecosystem scanning and Dynamic methodologies to achieve buy-ins.

Perception Management

This principle rests on the fact that there is no such thing as reality, there is only perception. The perceptions of each stakeholder in the project have to be deliberately assessed and managed as far as possible. As part of Perception Management, it is necessary to first list down all possible stakeholders, whether direct, indirect, internal, external or extended.

Some of the opportunities for Perception Management are Weekly status reports, sharing of plans and escalations, piloting and prototyping. All these serve to steer the perceptions of the stakeholders in a positive manner.

Real-time ecosystem scanning

Ecosystem engineering also involves the continuous scanning of the ecosystem in order to be on the look-out for fresh opportunities for strengthening the Project relationship. While looking for such opportunities, it is important to realize that the project is just a part of the bigger picture of long-lasting partnership with the customer. An issue should always be viewed with the possibility of establishing a trend. Any change in the project circumstances, any external or internal factor that is likely to affect the project in a positive or negative manner - all these are detected as a result of scanning the ecosystem continuously.

Dynamic methodologies to achieve buy-ins

In executing a large project involving a number of stakeholders, it is extremely important to attain the buy-ins of each of them in order to achieve Project success. ‘Chainge Management’ is one such dynamic methodology and is an important element of Assurance Management. It refers to the implementation of ‘change’ in the form of a chain. It is a dynamic method to assure buy-ins from the stakeholders of a project. ‘Chainge Management’ takes into account the significance of the human factor in the execution of projects.

The ‘Chainge way’

The first and foremost activity in Chainge Management is to create a chain structure of linked employees who are involved in or are affected by the project. The concept of ‘Chainge management’ is inspired from the idea of multilevel network marketing. Each fractal of the chain consists of one leader and three others (See Exhibit 2). This is a self replicating unit which can multiply n times.

The basic chain structure

Exhibit 2: The basic chain structure

As a multi-level network, the chain starts with a chain-leader. The chain-leader in this case is the Change Implementer and is facilitated by a Change Strategist. The chain-leader has the mandate to drive the change to a certain number of associates i.e. Change Recipients as per the plan. In this illustration the chain-leader facilitates three associates. If the batch duration is 10 days, then within one batch the change reaches to total four associates.

The Chain provides an enabling structure for disseminating any communication required as a part of the rollout. The purpose of each dissemination packet may be tailored to suit the needs of the rollout during various instants of time. This information may need to be re-sent along the chain as there is continuous evolution of the components of the roll out. To generalize, each flow across the chain is called a Pass (So we have a Forward Pass and in case of a feedback it flows as a Reverse Pass). Each content passed is called a Packet.

The following image describes a chain that has grown to 6 batches (See Exhibit 4). The potential of chainge management can be realized from the fact that with just every employee facilitating only 3 other employees, 1093 employees can be covered within 6 batches. Thus the exponential reach of such a change implementation methodology can be leveraged in large projects.

An advanced chain structure

Exhibit 3: An advanced chain structure

The utilization of a hard structure such as the ‘chain’ in the implementation of change has its advantages. It has certain in-built assurances of Project success in terms of involvement of all stakeholders in the Project activities, distributed leadership, slicing of effort and time, transparent and predictable tracking of Project tasks etc. The beauty of this structure is that each associate in the Chain is responsible for only a 1:3 fractal. The time, effort and mind-share required of each associate in the Chain are limited and amenable to getting executed. This innovative implementation strategy is a radically new approach because it converts “Change Recipients” into “Change Implementers” as the change progresses across the organization.


Pre-emption is the third effective principle of Assurance Management. It refers to the deliberate creation of the right circumstances that will ‘pre-empt’ or negate any troubled situation arising in the project. Pre-emption can be likened to Crystal ball gazing in terms of honing our visualizing faculties to foresee the impact of various ‘what-if’ scenarios. The Pre-emptive processes get triggered as a result of reflecting on the past and current situations of the project.

These inputs give further ideas when we deliberate on what can be the worst things that can happen to a project and also what are the best things. What sets Pre-emption apart from the Risk identification phase of the conventional Risk Management model is that it takes into account the Human frailties that lead to the many project-related challenges. The deliberate consideration of the human frailties makes it possible to ‘pre-empt’ many of the issues that are likely to arise in a project.

Pre-emptive Actions

What are the various Pre-emptive actions we can engage in? Spend a considerable portion of your time with your crystal ball in planning how to create conditions so that problem situations don't arise at all. For example, consider getting ‘go-aheads’ or ‘buy-ins’ from all stakeholders involved so that the issues that could have been raised by them are ‘pre-empted’. Anticipatory skills are also to be used in managing team-dynamics and in addressing sensitive issues such as attrition.

‘Innovative Paradigms’

‘Innovative Paradigms’ is the fourth effective principle of Assurance Management. It is all about having a framework in place that enables stakeholders to break out of the existing paradigm of doing things. It is important to recognize that innovative paradigms need to account for the human factor and the simplicity associated with it. A methodology becomes innovative when it is specially tailored for the human factor that will be involved in it. In ‘innovative paradigms’, it is important to realize that the art of execution requires innovation as much as or even more than the planning phases. Take for example, an innovative tool designed for propagation amongst the stakeholders. If the propagation itself is not innovative enough, the assurance that it will be absorbed fully is likely to be less. Likewise, innovation is recommended in each and every detail of the project to result in customer delight.

Innovative Paradigms What steps to take?

There are various innovative action points that Project Managers can indulge in. The first step is to come out with new queries that frequently take one out of the comfort zone. This forces one to question what has been taken for granted. Next, stakeholders are to be encouraged to break out of the boundaries to discover new ways of doing things. Innovative paradigms also ensure that a continuously evolving situation is created, keeping the stakeholders interested and excited all the time.

Application of “Assurance Management” in Projects

The application of the four principles of ‘Assurance Management’ in the context of Projects results in phenomenal benefits in terms of customer delight and a long-lasting relationship. While the results are excellent and beyond expectations, the effort required is of a minimum scale. We will now look at different Project scenarios involving the application of the four principles.

1.   Application of ‘Pre-emption’ and ‘Innovative Paradigms’

The Project Manager propagated a practice within the team that each team member must, on a real-time basis, update and mentor another team member on all aspects of the module that he/she owns. Everyday time was apportioned for this activity. Also, it was made measurable and mandatory to abide by this rule. As an assurance check, the back-up would take care of the concerned member's job for a few days.

As seen from the purview of Assurance Management, the PM had established conditions so that the problems that would arise from attrition were considerably minimized. Also, the innovative arrangement snowballed into other benefits such as ‘pair programming’, regular collaboration and feedback. This is an example of using innovative mechanisms to ‘pre-empt’ issues that are likely to arise from attrition.

2. Application of ‘Pre-emption’

The project Manager pro-actively prepared a Project plan that contained activities that were to be completed by the team as well as the customer. Although the customer had not requested for it, he exchanged this plan with him from the start of the project through weekly status reports. This emphasized Customer ownership to maintain his side of the schedule.

Having a buy-in of shared ownership through an integrated project plan induces smoother execution. The ‘Project Plan’ was submitted in order to pre-empt any delays in future (by the customer) which could jeopardize the project schedule. It also served as reference in case the customer could not respond as per the schedules. Thus, it served as an innovative tool for pre-empting issues. This is a classic case of how action-points can be executed without an identified Risk item in the first place. This illustration reinforces the fact that simple practices can result in ‘pre-empting’ uncertain and unknown issues in future.

3. Application of Innovative Paradigms, Ecosystem Engineering

A relatively new programming tool was used in two critical Project modules on the customer's insistence. This was an emerging skill and the customer was investing a lot to train and maintain skilled resources. The team proactively developed the same programs in COBOL and demonstrated with metrics the profits for the customer. The cost savings of over three times and ease of maintenance was appreciated by the customer. This resulted in customer absorbing the cost of this proactive pilot and signing a larger conversion project contract. The proactive step taken by the team in ‘breaking out of the boundary’ imposed by the client resulted in a win-win situation for both parties.

This illustration presents the proactive spirit shown by the Project team in convincing the customer to move the Project from Maintenance to Conversion.

4. Application of Ecosystem Engineering

A Japanese Auto major outsourced its first project to the vendor at a very competitive cost. The vendor accepted this project as a business decision, foreseeing the Japanese market potential and expecting more projects from the customer. On project completion, the PM documented and dispatched the overall project learnings to the customer. The Total Project Metrics defining actual project effort, which tallied with the original quotation of the vendor was also shared. Based on the data, the customer chose the vendor for three more projects with higher volume and profitability. This was due to the efforts taken by the Project team in creating a positive ecosystem for future transactions with the customer.

The illustration emphasizes the importance of Perception management. It also demonstrates the ability to visualize an issue as an opportunity to establish a trend.

5. Application of Innovative Paradigms

A project involved responding to a Request for Proposal (RFP) for high volume transaction-based systems such as travel reservation, online bill payments for Government agencies. The vendor gave the customer a proposal to build the system at no development cost, while charging a transaction commission fee on each transaction during operational stage. This approach was an attractive one for the customer as the transaction commission fee offset the investment cost. It was profitable for the vendor as well. The chances of winning the proposal over the competition were thus higher. The learning from this is that a proposal need not always be competitively priced. It can also use an ‘innovative paradigm’ that makes it a ‘win’.

This illustration describes how the Project team suggested an innovative proposal to the customer to overcome competition.


Project Managers of Satyam Computer Services Ltd who have applied ‘Assurance Management’ on a continuous basis have been able to reap its rewards of better Project profitability. The illustrations given are also indicative of the simplicity and uniqueness of the four golden principles that make up ‘Assurance Management’. It is also experienced that dealing with Opportunities is often more positive, engaging and energizing, and decreases the need to engage with Risk Mitigation. The advantages thereby extend beyond the identified Risk Management objectives. In these times of unlimited opportunities and globalization, it is more rewarding to the stakeholders to identify and further the opportunity spaces as a complimentary approach to pure Risk Management.


Gladwell, M., (2002) The Tipping Point, New York, NY:Little, Brown & Co

Hamil, D. L., PMP, MESA Solutions, Inc., ‘Your Mission, Should You Choose To Accept It: Project Management Excellence’, retrieved on 4/11/06 from

Haemig P. D, (2006)Ecosystem Engineers: Organisms that Create, Modify and Maintain Habitats, retrieved on 4/11/06 from

Prahlad, C. K., (2004) Fortune at the Bottom of the Pyramid, Upper Saddle River, NJ: Wharton School Publishing, (2004 January 15), Standish: Project Success Rates Improved Over 10 Years Retrieved from

Standish Group International (2004) Third Quarter Research Report, Retrieved on 4/11/06 from

Standish Group International (2001) Extreme Chaos, The Standish Group International Inc. retrieved on 4/11/06 from

© 2007, Madhavan S Rao
Originally published as a part of 2007 PMI Global Congress Proceedings – Hong Kong



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