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Risky Business: Risk Management for Localization Project Managers

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In his first article on localization (L10n) project management, The Life, or Lack Thereof, of a Localization Project Manager, Willem Stoeller provided five critical success factors for localization project management and placed them in context for the overall project lifecycle. In this second article in the series, Stoeller presents the case of incorporating the “kittens, puppies, alligators and tigers” of risk management into the L10n Project Manager’s “toolkit.” A simple spreadsheet is enough to get started; and the payoff in retaining long-term customers will far outweigh the initial effort required.

Willem Stoeller Risk management is the means by which uncertainty is systematically managed in order to increase the likelihood of meeting project objectives. Although risk management is one of the most important tools available to Localization Project Managers, it has been ignored due to a lack of awareness and training.



What is Risk Management?

Risk management is the systematic process of managing an organization's risk exposures to achieve its objectives in a manner consistent with public interest, human safety, environmental factors and the law. It consists of the planning, organizing, leading, coordinating, and controlling activities undertaken with the intent of providing an efficient pre-loss plan that minimizes the adverse impact of risk on the organization's resources, earnings, and cash flows.

The American Risk and Insurance Association

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A more practical definition for our purposes is:

The systematic process of proactively managing uncertainties, constraints and assumptions in order to increase the likelihood of meeting our project objectives (e.g. quality, budget and schedule).

Two words in this definition draw our attention: systematic and proactively. Most project managers deal with risks in a passive manner, i.e., “when the event occurs we will deal with it.” Being proactive is the only way to plan for risks and their potential negative impact on the project. As for anything else in Project Management, a systematic process for risk management avoids reinventing the wheel on each project. It also allows for easier transfer of lessons learned from one project to the next.

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Although risk management in the narrow sense focuses on uncertainties, it is important to include project constraints and assumptions. We need to evaluate how constraints impact our ability to successfully complete the project. Additionally, many practitioners include in risk management the ongoing assessment of the validity of our project assumptions.

Where Does Risk Management Fit Into the Project Management Lifecycle?

In a previous article, The Life, or Lack Thereof, of a Localization Project Manager, I introduced a set of Localization Project Management Phases and Activities, based on A Guide to the Project Management Body of Knowledge (PMBOK® Guide), published by the Project Management Institute. I will now use this framework to identify where risk management takes place in the project life cycle.


Localization Project Management Phases and Activities

Localization Project Management Phases and Activities (Click to enlarge.)

  • In the Statement Of Work (SOW) formulation phase, the project manager (PM) identifies and documents all known project constraints and assumptions as part of the SOW. Also, any prominent uncertainties are identified for discussion with the customer.
  • During the Project Approval phase, the customer acknowledges the documented assumptions, constraints and uncertainties in the SOW by signing off on this document.
  • In the Project Initiation phase, risk management planning takes place: risks are identified and analyzed together with the development of risk responses (see the next section for further details).
  • During the Project Execution phase, a risk audit can be performed to determine if the project is healthy overall. The details of such a risk audit are outside the scope of this article, but readers can find more details on this subject in Project Risk Management, A Proactive Approach by Pail S. Royer.
  • In the Project Control phase, the PM conducts ongoing risk monitoring:
    1. Are all project assumptions still valid?
    2. Can the project still be completed successfully within the specified constraints?
    3. Has the probability or impact of any documented risk changed? If yes, the PM will document the changes and possibly revisit the related risk strategies.
    4. Are there any new risks to document?
  • In the final phase, Project Closure, the PM documents the lessons learned so that future projects build on them. For risk management, we focus on transferring knowledge about identified risks, related risk responses and to what degree these risks impacted the project.
How Is Risk Management Conducted and What Are Its Components?

Risk management planning takes place during the Project Initiation Phase. The deliverables from risk management planning are updated on an ongoing basis (risk monitoring) in the Project Control Phase. Risk management includes the following tasks:

  1. Risk identification involves determining which uncertainties, assumptions or constraints might affect a localization project. There are three complementary approaches to obtaining this information:
    • Interviews and/or brainstorming sessions with the project stakeholders (the project team and the Customer).
    • Reviewing lessons learned from prior projects through archived risk management planning data, customer satisfaction records, etc.).
    • Thoroughly inspecting the budget and schedule for the project. Any activity that was hard to estimate most likely contains uncertainty and therefore represents risk. Schedules and budgets usually have their own set of assumptions that should be carefully reviewed.
    • Reviewing the SOW for assumptions and constraints.
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  2. Qualitative risk analysis involves categorizing the risks, assigning a probability and impact to each risk, and finally, prioritizing all risks.
    • The use of risk categories helps in prioritizing risks and risk response planning. Typical risk categories and examples for localization are:
      • Customer-associated risks:
        • Unclear/incomplete requirements
        • A customer making frequent changes to project requirements during a project
        • A customer not being efficient, effective or complete in meeting its project responsibilities
        • A customer being insufficiently available or insufficiently knowledgeable to provide real input into requirements and/or the review process
        • A customer having unrealistic expectations about the outcome of the project, resulting in high-risk constraints
        • Contractual constraints such as penalties for not meeting deadlines and/or termination penalties
      • Schedule-associated risks:
        • Missing tasks or milestones
        • Inaccurate estimates
        • “Crash-and-burn” schedule (A schedule based on substantial amounts of overtime for the whole project team)
      • Resource-associated risks:
        • Unclear roles and/or responsibilities
        • Resources not available
        • Non-matching or inadequate skills
        • Missing or inadequate equipment
        • Staff turnover
      • Experience-associated risks:
        • New language(s)
        • New technology
        • New development environment
        • New hardware
      • Product-associated risks:
        • Incomplete internationalization of the product to be localized
        • Incomplete localization kit(s) from Client
    • By using a qualitative approach to estimating the probability and impact of each risk, the PM can prioritize the risks and relate them to specific responses.
      • On localization projects, there is normally no historical data available to create a quantitative estimate of the probabilities involved. Instead, the PM can follow the simple approach of assigning a high or low probability to each risk.
      • The same approach is used to quantify impact, i.e., each risk is assigned a high or low impact.
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    • Combining risk probability and impact allows risk prioritization. A graphic way to remember each category is described by Robert Tussler in his 1996 article:
      • Tigers are risks with both high probability and high impact. These are dangerous risks and need to be neutralized as soon as possible through a combination of risk mitigation and contingency planning (please see below for further details).
      • Alligators are risks with a low probability, but high impact. Alligators require close monitoring and a contingency plan. Project assumptions are treated either as alligators or puppies, depending on the project impact if the assumption fails.
      • Puppies are risks with a high probability and low impact. The main concern is to insure that they do not evolve into tigers. This typically requires monitoring, but no risk response plan.
      • Kittens are risks with a low probability and low impact, and therefore, can be ignored at the PM’s discretion (and peril!).
  3. Risk response planning employs a number of different techniques to reduce risk on localization projects:
    • Risk acceptance boils down to “address it when it happens” and is used for kittens.
    • Risk avoidance involves changing the project scope, schedule or approach such that the risk no longer exists. This is used for big tigers.
    • Risk mitigation involves a mix of techniques aimed at either reducing the probability or impact of a risk. One example of probability reduction, although not often used on localization projects, is redundancy. Risk mitigation is used for tigers.
    • Risk contingencies or backup plans are used in case the risk still materializes. For tigers, the PM may want to actually invest money and time to put the plan in place. For alligators, the PM can simply prepare a plan outline.
    • Risk reserves are buffers in our schedules and budgets set aside for alligators or puppies.
    • Risk protection involves insurance to cover certain business risks, e.g., errors and omissions. This approach is generally not applicable to localization project risks.
    • Risk transfer involves contractual transfer of the risk to another supplier. This is commonly used if no staff with the right skills is available, e.g., subject matter experts or technical specialists.
  4. Risk monitoring and control involves closely monitoring tigers, alligators and puppies to confirm whether the probability or the impact of any prior identified risk has changed. It also includes checking that all project assumptions still hold and if achieving the project objectives within the current constraints is still feasible.
How Can I Start to Apply This as a Localization Project Manager in My Daily Activities?
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Now your question at this point is probably, “This sounds interesting, but where do I start?” The very first step in risk management involves the following activities:

  • Make sure errors and omissions insurance is in place for you as a localization vendor.
  • Carefully review Terms and Conditions for each customer with an eye on your liability.

In the SOW (contractual agreement), explicitly list (1) all known constraints, assumptions and uncertainties, and (2) all customer responsibilities describing the project.

  • Always conduct at least one meeting to ensure that customer expectations are fully understood before completing the SOW. This will reduce the risks of unclear/incomplete requirements and will allow for early flagging of unrealistic expectations.
  • Throughout the project, review all assumptions and constraints on a regular basis. Immediately address the issue of failed assumptions.
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Once the above has become standard practice, it is time for proactive risk management in the form of risk identification, risk analysis and risk response. The main focus should be on tigers and alligators. Establish your own list of risk categories and related risk responses, and use that list as a guideline for risk identification on each project. No sophisticated tools are needed; a simple spreadsheet is sufficient to document all risks and risk response planning. It is important to involve customers in risk planning. It will greatly increase their trust and train them to be better customers.

References for Further Study

I have not found any publications addressing risk management within the context of localization projects. The following general resources can be used for further study of risk management for project management in general:

Willem Stoeller, a certified Project Management Professional, has been active in localization and internationalization since 1992. He has frequently taught localization topics at the Localization Institute. Stoeller is also a board member of the Silicon Valley Chapter of the Project Management Institute and a visiting professor at the Monterey Institute of International Studies. He can be reached at willem.stoeller@Welocalize.com.


Reprinted by permission from the Globalization Insider,
23 September 2003, Volume XII, Issue 3.7.

Copyright the Localization Industry Standards Association
(Globalization Insider: www.localization.org, LISA:
and S.M.P. Marketing Sarl (SMP) 2004

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