Watching changes (risks and opportunities)

Sometimes these two words are sold as two sides of the same coin.

If this concept could be useful on operational basis (similar management techniques) the strategic approach shall be very different.

While “new” (unspotted) risks are inseparable from the wanted benefits, opportunities shall be framed within the (reviewed) balance between benefits, costs and risks. This process should be integral part of the “Issue Management”. The reason for this choice is based on the need on four arguments:

1. Simpler and stronger method and related techniques can reduce the bureaucracy.
2. Focusing on familiar tools makes available more energy for a thorough analysis of dependencies among various elements of the whole system (or at least the part that has already been delivered).
3. Standardized procedures for evaluating the impact of such modification either on the output (single work-package) or the outcome.
4. The presence of a panel responsible for judging the importance of “issues” offers the right place for the stakeholders’ management, especially when commercial considerations are brought in.

Same scale, different ranges

Any action aiming to change the actual status implicates risks. During the whole project’s life, their number should decrease (when the event that would have triggered the problem has been avoided). The impact, on the outcome, of each risk does not change during the whole project’s life, sometimes it could go beyond it (thinking the relation between the production and its market acceptance).

On the other side of the coin, once the benefits (biggest and most important opportunities) are set and then the major decisions about strategies are taken (e.g. architecture’s elements), both the room and the windows time will decrease each time the outputs are delivered and accepted by the customer.

Managing stakeholders expectations

It requires a certain dose of flexibility. One available tool is based on a carefully managed system based on allowances. When the impending problems need more resources (e.g. time, money, skills or changing strategies), an Issue Management based on (Prince2) “Exception Report” can help everyone involve in the project (from producers to senior managers) to devise a proper response.

The adequacy of the response can only be measured against the reviewed benefits.

The very same system shall be used for opportunities, once they are spotted. Instead of spending energies on devising plans that should deal with any potential problem, the team works in a “ready condition”. Therefore, the Risk (and opportunity) Monitoring will be part of the production culture.

Conclusion

A policy privileging the search of opportunities can seriously hamper the whole project. In an environment where risk management is perceived as a negatively focused activity, at the best dedicated to maintain the status quo, the idea of enabling most of the stakeholders to improve the business could be enticing. However, this introduces the following topic:

how much resources have to be deployed for maintaining the necessary discipline on the agreed targets?

More readings

http://www.betterprojects.net/2009/08/business-requirements-versus.html

http://herdingcats.typepad.com/my_weblog/2009/08/probablistic_ri.html

http://hbswk.hbs.edu/item/6235.html

www1.dau.mil/pubscats/PubsCats/atl/2008_03…/conr_ma08.pdf

“Opportunity is missed by most people because it is dressed in overalls and looks like work.”

From a Risk Management viewpoint, before preparing a “contingency plan” (perhaps together with the “fall back plan”) it is essential to establish and allocate the correct amount for risk budgeting (as explained in previous posts).

A oxymoron to be pondered

Contingency: something liable to happen as an adjunct or result of something else. [2].

Plan: an orderly arrangement of parts of an overall design or objective [2].

In essence, the idea of spending energy for reducing the effects of an uncertain event could seem a waste of resources.

“Contingency / workaround plans”, or “Exception plan” [3] should be viewed as a stem of the Risk Plan. A bud, which can sprout quickly and strongly, because it has all the information (DNA, if you have a boy who loves biology) is contained in the trunk.

For post reasons, the PID[4] (Project Initiation Document) is reduced to the Master Plan. Therefore, any reference to Quality, Acceptance Criteria etc. are included in this document.

Using Gantt for preparing the Risk Plan

As described in the previous posts, it is insane to think Risk Management as a marginal activity of Project Management.

The Main Plan[3], which includes all work-packages without details, should be used as blue-print for entering all structured information produced during the Risk Analysis (this requires that all risks – excluding the Critical Path – have been identified). Obviously, this process shall be repeated for each work-package, which could be deemed worth it (especially if it is on the CP).

MS Project offers all the features for setting a good Risk Tracking system and then attaching all necessary documents for preparing the various “contingency plans”.

The “resources” named beside each task could be the natural “monitor” for checking the triggers’ status. Therefore, for each point that can touch off the event, then a threshold value shall be assigned alongside the method to verify it. All these items will be taken as notes and attached documents, to become integral part of the whole plan.

Contingency Plan is not enough

Hospitals are indispensable institutions. This is not a valid reason for a reckless behavior.

The Risk Analysis shall include the Risk Quantification and the Control / Response.

The forms of response are:

1. Avoidance. When the root of the potential problem can be eliminated.
2. Acceptance (it is not about ignoring the event, just keep it monitored for controlling the if the impact is within the set tolerances)
3. Transference. Any form of hedging, including the outsourcing of the item.
4. Mitigation. When the magnitude of the impact can be reduced within tolerances.

This means that the first issue of the Main Plan shall be reviewed on the basis of the information produced by the Risk Analysis.

This is the first action classifiable as “Mitigation”; others will be implemented during the review of the Gantt chart (e.g. “Leveling resources”).

“The budget evolved from a management tool into an obstacle to management.

Conclusion

I suppose it is in the blog’s nature leapfrogging from one topic to another that should be placed ten chapters later. For me is a wonderful discover, the chance for tackling issues on the spur of the thread.

More readings – References

1. PMBook Guide
2. Merriam Webster
3. Prince2 – 2005 Edition
4. Prince2 – 2005 Edition (see link)