The scope of the Impact Analysis

This post is dedicated to the quantitative aspect of the issues and then the risks. Therefore, it serves to give the price tag (i.e. impact on the budget) that will be multiplied for the likelihood. The qualitative aspect is managed through sifting the event through the categories .

Working with the Newton’s laws of motion

Dealing with the future requires prefiguring the effects of our actions. It is absurd to deem all the implications; for them there is still available our ability to react and adapt. It is instead possible to create some working models that will help us to devise the new scenarios using the first one, offers good hints for understanding the consequences of our decisions within the project.

Inertia – people hate changing

“Doing nothing” remains an option that is almost impossible to wipe off the negotiation’s table.  It can be used as the benchmark for the other options. Moreover, including it as a standard option, makes the whole case stronger.

Energy becomes (angular) “momentum”

The risk formula includes both likelihood and impact. This post is focused on working out the monetary value of the impact. The school-time formula:

Force=mass * (Δvelocity / Δtime)[i]

can be read as follows:

1. Force is the impact of the effect (if it happens) on the budget.
2. Mass is the “actualized” (in cash flow terms) cost of the effect.
3. (differential) Velocity is the current trend in whatever is the analyzed area. It obviously includes speed – production’s pace – and direction (i.e. policies).
4. (differential) Time is related to the velocity. This value has to be considered in timing the review of the Risk Plan.

Velocity can be only measured having a firm reference and reliable data. Therefore, there are two processes that need to be working efficiently:

1. Changes need to be evaluated in their “distance” from the last versioned baseline (i.e. versioning system).
2. Continuous flow of information about the production, both in volume and quality

Nevertheless, the process of measuring the resulting vector (some references to fractals are still interesting). This vector lives on a Cartesian graph, where time and money are the only references. However, Once the decision has been taken and formalized, there is still a long difficult way for its full application.

Follow-ups, for not being confused with micro-management, need a reasonable interval of time for being effective. This elapsing times summed with the normal rumors in communications make less linear (sometimes angular – i.e. stepper) the momentum. In other words, there always be some differences between what has been decided and what/when this decision will be applied.

The bigger the energy more important the result

It is a loose translation of the famous concept. The quote is referred to the importance given to the result. Therefore, the (lack of ) leadership (to be inclusive of the ability of involving senior management) has to be considered as collateral risk.

Reciprocal actions

Like said in the previous paragraph, the lack of an objective result (i.e. a change toward the new policy) does not correspond to a mere loss of PM’s energy; very often, it is transformed into friction (more in the next posts).

Any action (e.g. rejecting the issue) that is not properly explained and accepted is destined to create some resentment.

Conclusion

The Issue and Risk Management need to strike the balance between the correct allocation (Qualitative one) and its pricing of the risk (Quantitative Analysis) with the ability to sell it both to the proposer and who shall implement it.

“Insanity: doing the same thing over and over again and expecting different results.”

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[i] In the daily practice, it is suggested to adopt discrete values on time for making simpler calculations.