Risk Management

by Doug Berube

 All projects are at risk, which requires project managers to indentify and mitigate project ricks to ensure project success.

“The problem with the future is that more things might happen than will happen” (Plato)

Risk management is the best preventive program to ensure success. Risk management is at the heart of project planning and is a continual process until the project is complete. The implementation of a risk management plan is a positive influence on creative thinking and innovation.

The first phase of risk management implementation is the preparation for risk analysis. This planning cycle is a tool to create risk awareness and the preparation enables the understanding of project risks which empowers the project team in aiding the decision makers regarding project development. Project development monitoring and risk exposure is prepared by using checklists, project history comparison, and even interviewing the stakeholders.

Risk identification and analysis should be accomplished during the same series of conceptual meetings. The first step is to identify all the processes of the project and then rate the risk factors according to the impact to costs, deliverables, and completion. Now that the risk factors are known, they have to be quantified. All the risks must be estimated for the risk impact on the project. These estimations must have a value that can be applied to the understanding of the project objectives. This newly acquired risk information can be used to draft a contingency plan that needs to be signed off by all stakeholders.

The risk response is the implementation of the contingency plan. The project manager and project team are the most qualified to identify which strategy is best for each risk because they understand the consequences of those strategies and how to react to the responses of the plan. The strategy is to reduce uncertainty by obtaining more information which will help re-evaluate the likelihood or impact of the risk. The response is to eliminate or avoid the risk altogether by taking actions that will minimize the effect. Another option would be to going outside the project by contracting out the affected work. The worst case scenario would be to replace the failed stakeholder.

Risk monitoring and control keeps track of the contingency plan tasks and identifies any new risks. Monitoring evaluates the execution of planned strategies and the identified risks and the plans effectiveness. A risk register should be used to view the effectiveness of the strategies and regularly review in the risk management meetings. The risk control involves choosing evaluated response strategies, implementing the contingency plan, taking corrective actions, and re-planning the project, if applicable. This part of risk management is to take the corrective action and maintain the risk management plan.

This next step is often not considered as part of the risk management plan, the project closure. The close out plan is critical to the reviewing the success of the project, completing the financial responsibilities, and report the feedback to evaluate the preparation for the risk management. This is the time to consider the results of investment against original objectives and compare the anticipated risk impacts.

Risk management establishes a clear understanding of the project objectives, all alternatives, and all issues that need to be considered during the design and construction phases. Effective risk management is an integral and required part of the project management, the team can not only predict possible future outcomes, the team can take action to shift the odds for project success. The big picture of risk management is to help senior management to understand what is happening with the project and the challenges the project had to overcome.

References:

Carbone, Thomas A., and Tippett, Donald D., “Project Risk Management Using the Project FMEA” (December 2004) pp. 29-32

AbouRizk, S., PhD, PEng, “Risk and Uncertainty in Construction.”

Mindtools, “Risk Analysis and Contingency Planning.” www.mindtools.com

PM Phases and Processes

by Doug Berube

When evaluating the initial project setup, the responsibility identification stage is crucial. The identification stage has three major components: stakeholders, phases, and processes. The identification process uses models that have been established to attribute the proper objects to be incorporated into a progressive image of the project. Once the model has been designed for the particular project, a responsibility document must be drafted to create to next step in the phase accountability. This is the start of developing a clear project vision.

The project vision is illustrated, documented, and track by the project schedule. There are many different types of schedules, but in construction, the critical path method is the most commonly specified. This article is not about critical path methodology, the focus is to discuss the project phases because the phase tasks reveal the responsibilities of the contract stakeholders. The phases of a project reflect the logical direction the construction process flows. The logic is the activities and the order of these activities. An example is that you can’t install the roof joist without installing the wall support structure, this is called workflow.

Each task has a list of preconditions that impact the performance of that task. The preconditions are:

·         Construction design

·         Components and materials

·         Manpower

·         Equipment

·         Space

·         Connecting tasks

·         External conditions

Each item in the above list is an input to be calculated into the activity sequence to determine the duration of that task. Once each task duration is calculated, it needs to be added to the schedule and sequenced into the logic of the schedule. A proper sequenced schedule shows a processed flow designed to ensure proper control of the project and to attain the desired objective. Each task in the schedule is assigned to a stakeholder who is responsible for the work and communicating its progress. The task communication is crucial to the sequence of the construction process. A risk to the outcome of the project and impact to the stakeholders are affected by a task not accurately reported.

Now that the schedule is complete and the construction process has started, the next project manager task is scope control. The PM tool is called scope creep management. A project can and will change because when the work begins situations are discovered and results that were not anticipated can impact the scope. For example, a more server winter than normal that exceeds the allowed weather days. Now the stakeholders have a decision to make about the control of the project. The scope change can be controlled or the scope can creep and end up controlling the project. The latter will lead to an undesired outcome for the stakeholders. Since a project can have unforeseen conditions, there is a change framework where each stakeholder can understand the cost and change involved to decide whether or not to act on this change. The framework is normally determined at the beginning of the project because scope creep is hard to prevent on large a project and these changes need to be kept under control. Also, too many changes will cause scope creep, which will control the project management.

Projects are very complicated and project management requires vigilance. The identification of all processes and framework of control at the initiation of the project is to assist in the process awareness for all stakeholders. The schedule building phase of the project reveals how critical the stakeholders influence the construction process. So to help insure the integrity of the project quality control, monitoring the scope, and process compliance, the stakeholders have to report their progress accurately and timely. This is why the proper process framework is implemented. The devil is in the details.

  

References:

1.    Mind Tools – Project Management; www.mindtools.com

2.    PMBOK 3^rd Edition pp. 19 - 32

Management in Design

Management in Design

by Doug Berube

I think the best way to start a dialog about project management and designing the processes is to reflect on a project where I was the project manager. This anecdotal account will be a good summary of the process and the interaction with stakeholders.

A construction project has very specific procedures because most projects are awarded by the bidding process. The projects are also guided by a specification document and these procedures must be followed, as it becomes part of the contract documents. The specifications identify stakeholders by responsibility and this group becomes the construction team. This particular construction manager issued the contracts and scheduled a meeting to start the construction process. The agenda for the first meeting was to set up dates for progress meetings, coordination meetings, and scheduling meetings. The first priority is to complete a project schedule.

The scheduling meetings were very challenging because there are different skill levels between the stakeholders. All scheduling information from the stakeholders was required to be in the form of the critical path method with milestones as stated in the specs. On larger projects, the number of scheduling meetings can drag on for months because the process turns into negotiations between stakeholders, as they did. This process of building a construction schedule is also an opportunity to identify who is going to be a real contributor and who may be an anchor.

Once the schedule was complete and the construction started, the most critical process for a project manager starts. The critical process is risk management. Tracking the progress on the schedule and monitoring schedule creep could not be any more vital to the success of the project and stakeholders. A project manager has to monitor the deliveries and manpower loading of their own company; they have to monitor all the other stakeholders to verify that all deliveries and manpower loading were being met. Now, the second critical skill to implement is communication. Communicating with all stakeholders was used from the very being of the project. Stakeholder truthfulness is an important path to success. It is not necessarily bad if someone gets in trouble on the project if it is caught soon enough and the stakeholders are truthful from the start. A recovery schedule and plan signed off by all stakeholders can always be implemented and the project put back on track. Unfortunately truthfulness was not used by all stakeholders and the project became a disaster.  

The management toolkit must be designed to the type of project that needs to be managed. The proper management design foundation is communication; this will assure truthfulness and that will allow the ability to influence the cause and effects that might creep the schedule. Project managers should design a management plan that will fit their personality and the traits of the project which will help reduce stress and to increase the comfort of the project. But, all stakeholders have to be truthful and are 100% committed to the success of the project, which is their success.