Risk management - General points to consider
General points to consider
Resource level
When plans are put together one of the hardest aspects is trying to get people to consider that their estimates for planning may be wrong.
Things do not always go to plan.
People usually have a very good idea of how long they think a task will take.
They find it difficult to consider that it may take longer and thus to provide maximum estimate.
Perhaps this is considered to be an admission of failure either of the estimating procedure or the management of the task.
In general, there doesn’t seems to be quite the same fear of a cost over run compared to a schedule or deadline over run.
This is because cost changes are managed in house whereas schedule deadlines are customer related and are thus much more visible.
It is not always an easy matter to manage the resource for a task to make sure it finishes on time.
For short tasks there may be little time [see 'The Complete Time Management package'] to realise that all is not going well but for longer tasks it is perfectly feasible to do it.
If a task consists of 10 parts each taking 4 man weeks to complete there is a total of 40 man weeks of work.
If you have 2 men working on this task it should take = 20 weeks to complete.
If you check on progress after 4 weeks you should find that 2 parts are complete.
What if only 1 is complete?
This means that each 1 part has taken up 8 man weeks.
On this basis, to complete the task it will take a total of 80 man weeks which is 40 weeks (for 2 men).
It is clearly taking twice as long.
If we do not use additional staff the task will take 100% longer to achieve.
If we decide to add additional staff we have to consider how we calculate it.
Presently, we have used up 4 weeks and have 16 weeks to go (to remain on the original schedule of 20 weeks).
We have 9 (parts) x 8 (originally 4 but now 8 weeks per part) = 72 man weeks of work to go.
We could ask the men to work the equivalent of an extra day per week.
This would mean.
2 staff at 5 days per week = 10 man days
Extra day per week per man = 2 man days
Total man days = 12 man days in each week
Equivalent to 12 / 5 = 2.4 men per week.
We have 72 man weeks of work to go and now the equivalent of 2.4 men per week.
The other 9 parts will take an additional:
72 / 2.4 = 30 weeks.
This is still a lot more than the 16 weeks left.
If the 2 persons worked 7 day weeks we would have:
Equivalent of 7/5 x 2 = 2.8 men per week.
The additional 9 parts would take 72/2.8 = 25.7 weeks, still no good.
The only answer is to get extra staff.
To complete the task in the remaining 16 weeks we will need a total of 72/16 = 4.5 men per week.
We already have 2 men so we need another 2.5 or in reality 3 men. This could be managed more accurately by 2 men for so long and then 3 men to make up the numbers.
However, it is not quite this simple.
- How long will it take you to get the men?
- How long will it take you to train them?
- How much of the current 2 man team’s time will be taken up in the training?
You may need to assume, for example, that the men will not be available till week 10.
If this is the case you may need not 3 but perhaps many more.
After 10 weeks a total of 10/4 x 1 = 2.5 parts completed.
(we knew that the first part took 4 weeks but 8 man weeks).
This will leave 7.5 parts, taking 7.5 x 8 = 60 man weeks.
To complete in the remaining 10 weeks will require = 60/10 = 6 men
We already have 2 so need to appoint another 4 staff instead of the 2.5 above.
Even so it may be very difficult to control and manage tasks in this way.
A simpler way would be to allow enough staff to cover for the worst estimate.
If the task finishes early resource can be released elsewhere.
Control
Project control is treated in more detail elsewhere [see ‘The Complete Project Management package’] and [see 'The Complete Project Management plus PRINCE2'] in this series.
You realise that the project deadline will over run, what can you do about it?
There are only a few realistic options.
You may consider changing the scope of the project. In this way you produce something different for the customer in order to deliver it on time. You can only do this in liaison with the customer and other stakeholders.
Add extra resources to complete tasks more quickly (see above).
You will need to examine the ‘critical path’ more carefully as this will drive the completion end date. One option here will be to run some tasks in parallel that were originally in series.
If it is necessary to significantly modify a schedule to achieve end dates then you should consider reviewing the estimates in the scheduling.
Contractors (and subcontractors)
It is rare to carry out all of the work on a project in house.
Even in house parts of the project may be carried out by other departments.
In these cases, it may be difficult to not only control what is happening but to have any influence over the work.
When trying to build a schedule with the appropriate 3 point estimates it may be hard to get the required commitment.
If the information is not forthcoming it will be up to you to assimilate the 3 point estimates.
After all it will be you that will carry the risk of the overall project.
There can be a tendency to think ‘out of sight , out of mind’ and that once a section of the plan in in the hands of a contractor then it must be delivered on time.
After all you will be paying for their services. Then again the customer will be paying for your services and expecting his product on time. You expect problems so what is there that is any different for a contractor?
Nothing.
However, there are additional things to worry about.
- What if they go out of business, lose key staff or they prove to be incompetent?
- You will have to bear all of this in mind when setting the 3 point estimates.
Particular areas to consider from a risk perspective.
- If you do not manage the risks well and problems materialise this could lead to opportunities for the contractor.
- If relations between the client and the contractor are strained for any reason this could be one of the biggest risks.
- Both parties will generate risk assessments but communication between the two is essential.
Customer
Last but certainly not least is the customer.
Get it wrong and your reputation can suffer, which will have a negative effect on other potential projects.
If you can provide a bid which is backed up with a good ‘risk assessment’ then you will have a positive advantage.
Your customer will be confident that you can deliver.
Whilst the bid may only be seen immediately by the lower management personnel, the Chief Executive will still need to convince shareholders that their interests are being well managed.
You should be able to show where the key risk areas are and how they will be managed.