Risk Management: Your First Line of Defense

What’s the starting point for successful risk management in projects and project portfolios? Most of us assume the risk register as one of the main vehicles for effective project risk management. Very often, the existence of a risk register works as a safety net for project teams who assume that all project risks have been well identified, properly classified, and hence risk can be easily monitored throughout the project lifecycle. However, in many cases, execution problems and related delays are being caused by a variety of drivers, which might not be covered within risk register items. Most of those delay drivers could have been spotted way before project teams initiate project risk reviews and workshops.

Use schedule quality metrics and details to validate the plan

Believe it or not, having risk management practices can restrict proactive schedule assessment in early phases of the project lifecycle (pre-funding or project set up stages). This is because project teams assume that the presence of a risk team and risk review processes would address potential issues. In these cases, schedule quality management might be ignored or postponed, and the opportunity is missed to validate schedule realism and executability. A high-level schedule review (see Figure 1) against quality related metrics provides a first level of assurance that the project is developed based on a robust plan.

Figure 1: Ribbon/horizontal analysis*

However, the assessment should continue by focusing on a time phased analysis (see Figure 2) across a combination of metrics that exceed the boundaries of schedule quality. Examples of those key metrics include a number of critical path vs non-critical path activities, completions vs. starts/period, activity hotspots, units/per day and resource distribution. Project teams should identify those key metrics that are applicable to the nature of their project and use them as a benchmark of schedule realism and execution confidence.

Figure 2: Time phased/vertical analysis*

Keep an eye on trends to stay on track

During the execution phase, the convenience of the risk register and the assumption that risks are being actively managed by the risk team can prove costly. Proactive identification of trends (see Figure 3) using schedule assessment could help prevent project health deterioration. One example can be the identification of negative float across schedule updates. The presence of negative float, very often, signals the beginning of major setbacks. Why would a healthy project operate with a schedule that contains negative float? The list of responses might be endless but in general, operating on negative float is not a good sign.

In many cases, negative float emerges in situations where contractual/commercial issues between clients and contractors remain unresolved. In many cases, the lack of willingness from either party to share the responsibility of a delay/overspend or identify potential solutions and re-forecast/re-baseline the schedule cause ongoing delays, affecting team coherence, and potentially leading to costly disputes. In this case, a risk register can prove quite inadequate. Effective quality assessment of the project baseline, the regular assessment of schedule updates, and identification of key trends is the first line of defense against potential delays or issues that may hinder the optimum execution of a project or program.

Figure 3: Trend Analysis*

In summary, after establishing a quality schedule through the use of schedule metrics and trend analysis, the next stage would be the use of more traditional risk management tools, e.g. risk registers and Monte Carlo simulation. Running simulations using schedules with inadequate quality can be misleading, so focus on quality first. Additionally, the proactive and regular assessment of schedules can prove a valuable source of data that provides enhanced insights to project status, while informing your project risk processes and tools.

Whether your organization is looking to analyze and improve schedule quality, or risk adjust and optimize projects to help mitigate impacts and accelerate completion, the Acumen Suite is designed to improve schedule and risk management.

*Figures included in this article have been produced using schedule assessment and trend analysis in Deltek Acumen.