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The Risk of Inaction (ROI)

Investopedia explains Return on investment (ROI) as a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.  This post is not about that.  I am here to talk about the Risk of Inaction, a different kind of ROI.

One of the first exercises done during the pre-project phase of a project is to determine to proceed, analyze alternatives or assess what happens if we do nothing. I found this to be just a ‘tick the box’ exercise early in my career. I started managing projects in the late ’90s. In all my years in the field, it was more common than not that by the time a project reached my inbox, the decision to proceed was a foregone conclusion.  

As I sit here typing this, I can recall several times when a project core team was first assembled to plan, and the discussion would begin. It would often go something like this:

Me: “Are we all clear on the business case?”

Team: “Uh-huh” [Heads nod while looking at each other for reassurance]

Me: “What are the alternatives?”

Team: [Blank Stares]

Me: “What if we do nothing?”

Team: [Blank Stares]

Me: “Ok then, we proceed.” [Proceeds to tick the box and mutters to myself “alternatives assessed”]

Today though, the notion of “doing nothing” has a much different meaning, depending on how you look at it. When an opportunity to develop a project is presented, high-level planning is conducted to get the ball rolling. There are a thousand ways from an approach standpoint to begin. In PRiSM, the first significant step is for the Project Manager and Project Sponsor to be selected. Then the process continues as shown below.

 

The GPM PRiSM Pre-Project Phase.

 

One of the activities that we encourage is a P5 Impact Assessment. Note that this is a free tool that we offer. 

The P5 analysis is conducted at a high level when alternatives are being analyzed to assess the impact on the environment, society, and the economy (macro and micro) based on the high level business case. Once this is conducted, it helps frame the “do we proceed” discussion as there is more information available to make an informed decision. 

When deciding to proceed, the decision must consider the risks, opportunities, and benefits. No one would argue that (except maybe a few people on LinkedIn who love to quarrel about everything.)

Looking back at my career, not once did I hear the words, “If we proceed, we must ensure that we take all measures to safeguard biodiversity ensure we are mitigating or at the least offsetting CO2 emissions while ensuring that we are being socially and economically responsible.” Why? I could say we didn’t know any better, but we did. We were either not paying attention, didn’t care, or felt that it was someone else’s problem. Maybe it is a combination of all three.  Normally, the emphasis was placed on a needs analysis, available budget, time and resources and social/environmental considerations were only given to the extent of not breaking any laws or staying within bounds… 

We recently published research that among 30,000+ respondents from 94 countries that 38% of projects are being adversely impacted by extreme weather events related to human-induced climate change. This was up from only 4% a few years prior. 

This number should frighten you. Without a stronger commitment to start practicing project management in a manner that ensures biodiversity gains to combat climate chaos directly, our Risk of Inaction will exacerbate the problem and life as we know it will look nothing like it does today for our children.

According to the WEF, Respondents to the Global Risks Perception Survey (GRPS) 2021–2022 rank “climate action failure” as the most critical threat to the world in both the medium term (2–5 years) and long term (5–10 years), with the highest potential to severely damage societies, economies and the planet. Most also believe too little is being done: 77% said international efforts to mitigate climate change have “not started” or are in “early development”.

Unfortunately, we can no longer bury our heads in the sand. The Risk of Inaction or “ROI” is too significant.

For more, download the P5 Standard for Sustainability in Project Management or take a short course on the subject at courses.greenprojectmanagement.org

 

Dr. Joel Carboni

Dr. Joel Carboni has over 24 years of experience in project, program, and portfolio management, having led Aerospace, Finance, Government, and Technology initiatives. He has a Ph.D. in Sustainable Development and Environment, is a Certified Senior Project Manager (IPMA Level B®), and Certified Green Project Manager (GPM®). He is the founder and president of GPM Global and the President Emeritus of the International Project Management Association USA (IPMA-USA) He is a medal of honor recipient from Universidad Autonoma Lisboa, AI Media's Leading Advisor Award 2017, the 2015 World CSR Congress Leadership Award, 2014 HRD Leadership & Training Award, and 2013 IPMA Achievement Award. He has lectured on or taught sustainable project management in 50 countries worldwide.

One thought to “The Risk of Inaction (ROI)”

  1. Outstanding post! This type of ROI ought to be ranked with Very-High probability and impact especially for medium-to-very large/megaprojects (tactical-to-strategic ones), the latter type being the most impacted by the most critical threat “climate action failure”. Consequences arrive with severe issues to be solved in such cases and risk response plans should be tailored in special ways for such issues/problems.

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