Are your projects missing milestones or running over budget? Practice these simple risk management steps to avoid these pitfalls
by Marius van Ettinger
By Adriana Garjoaba-Oracle on Nov 21, 2014
The fundamentals of project management are to complete the project on time, within budget and according to the prescribed standards and quality. Projects are often completed late due to a lack of proper risk analysis and risk management.
Projects should always employ a problem solving technique to approximate the probability of certain outcomes. By using the Monte Carlo Simulation, you can conduct these trails known as simulations with random variables. These simulations will furnish you with possible outcomes and probabilities and will enable you to account for risks.
It doesn’t matter whether the new PBXs are geographically local or remote.
One key element is to build a risk impacted baseline schedule to indicate the projects P100, P80 and a P50 schedules. This should be done throughout all the project phases and not only when at execution phase.
- P100 schedule refers to 100% probability to achieve the completion date
- P80 schedule refers to 80% probability to achieve the completion date
- P50 schedule refers to 50% probability to achieve the completion date
An effective way to ensure that key milestone are achieved is to base your schedule and key milestones on the P80 schedule while tracking progress and reporting dates to the project execution team & contractors on the P50 schedule. The variance between P80 and P50 will be your float and can be managed if there are any slippages on the project.
Risk can also be defined as the intentional interaction with uncertainty. Having a controlled risk register and risk matrix, provides reporting capabilities to facilitate mitigation decision-making. Having mitigation plans in place is essential, however, analyzing the cost of these plans is crucial as they might end up being costlier to implement than simply accepting the risk.
Primavera Risk Analysis helps you to run these simulations for risk uncertainties and risk events on your risk log. All risks can also be fully managed, and mitigation plans’ impact can be investigated to ensure that you manage and mitigate the correct risks.
Cost control, minimizing project impacts, meeting key milestone dates and preventing project repairs and failures are just some of the benefits you will gain when managing risks early in your project. Make risk management part of your day-to-day operations, include it in your project meetings and communicate all risk factors to all stakeholders. Identify risks early in your project by engaging with the experienced staff on your project and plan for the risks that often creep in on similar projects. Prioritize and analyze your risks, some risks will have greater impact than others and will need to be accounted for in various phases of your project. Keep a detailed risk log that contains risks descriptions, clarifies ownership issues enables you to carry out some basic analyses with regard to causes and effects.
Continuously measure the effects of your risk management efforts and continue to implement improvements to make it even better. By simply using various methods, like the one mention above, and running Monte Carlo Simulations often, you will be in a position to proactively deal with risks and avoid big impacts/slippages on your project.
Marius van Ettinger studied Industrial Engineering at University of Pretoria, he completed his BSC degree in 2002 and started working as a process engineer in the manufacturing sector, after a couple of years he started focusing on managing the improvement projects for his company, thereafter he decided to focus on project planning on large construction projects whilst also completing his Honours degree in Industrial Engineering. He worked on the Transnet Expansion projects and gained experience in the Rail, Infrastructure and Harbour areas.