Spot Delivery Problems Early Part 3: Schedule Risk
No matter how good your plan may be, managing schedule risk is essential to project success. Risk will always be present; the question is, is it effectively managed? In organizations with immature execution behaviors, risk manifests itself as surprises that derail workflows and delay completions. Unless a means of early identification and mitigation of risk is available and utilized, your team is always going to be reacting. As a result, your projects are doomed to delays, constant firefighting, and rising costs. Getting your team out in front of risk is the goal of Schedule Risk Management processes.
Traditionally, project managers have tried to reduce schedule risk by projecting completion times for projects based on the sum of individual task completions in the critical path. But these task-completion time estimates are suspect. When managers ask for time estimates, teams and individuals add “contingency” time that allows for uncertainty and anticipates setbacks. Contingency time in itself is relatively benign— in fact, the need for contingency time is essential— but when added up, the time collectively added by various teams and individuals makes the project much longer than it needs to be, clouding the actual schedule risk and adding unnecessary delays to project completion.
Worse, management has lost control of the project in the sense that resources determine their own contingency time buffers, rather than the project owner. Additionally, the project team loses clear sight of the project; they cannot distinguish between the work and the contingency. To overcome this lack of clarity, they must either react conservatively to keep everything on track (forcing unnecessary overtime and expediting), or wait until the situation is clarified (creating more risk). Multiple projects in execution at the same time compound the risk.
Project managers must maintain constant situational awareness relative to overall project schedule performance, identifying the work remaining versus the time remaining— before time runs out. Too often, the “horse is out of the barn”; the project can’t be stopped midway to correct problems that should have been anticipated during the project planning process. During execution, the problem becomes one of focus. If your project plan is broken, how can your team know which is the most significant risk to respond to at this moment?
Schedule Risk Management is a statistical method for maintaining that situational awareness and improving a project manager’s ability to manage and control work and resource priorities. This in turn enables management to direct action early enough to prevent late deliveries. When applied across a portfolio of projects, Schedule Risk Management aids project and resource-level decision making to accelerate the completion of all of the projects that share resources. It improves project team decision making by identifying the project tasks with the highest schedule risk throughout the life of the project. Teams can then act early to ensure project completion on or before a committed project or milestone delivery date.
Uncertain Task Durations Mean the Project Must Own Contingency
Let’s start with the most basic assumption about projects: that they are full of uncertainty. There’s uncertainty about the deliverables themselves, especially if there is technical risk (i.e., new things being created), and there’s uncertainty about the work that will be necessary to achieve those deliverables, since many projects are “one-off” affairs.
Therefore, the tasks and their durations within the project schedule are an estimate, a forecast. Those who provide these estimates usually have a limited understanding of the work to be accomplished, and they may be pessimistic in their estimations. Few people are trained in estimating task duration, so for most projects, the tasks that make up the project plan are not accurate, making the project completion date(s) suspect as well. In short, duration estimates and completion dates in most projects are not to be trusted.
To correct this deficiency, we could focus on the most obvious problem and strive for more accurate estimates. However, this will take a long time! Here’s a more workable solution: Rather than decompose the duration estimates to make them more accurate (even though that would be helpful to our projects), let’s consider only one element— the contingency time. We can assume the remainder of the estimate is the work.
The contingency time is the amount of time we have in the schedule to compensate for risk. We often call this the time buffer, or just “the buffer.” This time is not owned by individuals or functions, but rather by the project. The reason for that is to protect the integrity of the purpose of contingency— reliable project delivery dates as opposed to individual task completion dates. Thus, since the project is full of uncertainty, the project itself must own and manage the buffer.
As the project progresses, you should expect that task duration variation will occur, both favorable and unfavorable. In some cases, they will cancel each other out. However, you should expect that the buffer will be consumed as work is accomplished; you’ll have more in the beginning and less at the end. In a perfect world, you would have zero on the day you deliver your finished project.
Knowing the amount of time remaining to do the remaining amount of work is valuable for the organization; it tells you where to focus your attention. This knowledge is a simple, straightforward tool to govern portfolio risk.
The Schedule Risk Ratio: Your Early Warning Indicator
The Schedule Risk Ratio is a tool that allows you to accurately identify small problems before they become truly major problems. Even early in the project, you can determine whether you’re ahead or behind schedule by identifying how much risk you have, adding another dimension to your Priority Control processes.
The ratio is determined by how much buffer remains compared to how much work remains along the critical path, and assigning that buffer to the oldest in-work task along that path. Assessing a ratio for each task provides a normalized set of priorities across the project and the portfolio, thereby reducing multitasking.
Use the Schedule Risk Ratio to Direct Project Activity
Using a simple green-yellow-red system, you can easily communicate project status and activity to the team and to the rest of the stakeholders. When the percentage of buffer remaining is more than the percentage of work remaining on the critical path, your project is in the “green (we’re on track) zone.” Your project is in the “yellow (caution) zone” if your percentage of buffer remaining is less than the percentage of critical path work completed. When the ratio of work remaining significantly exceeds the remaining buffer— say, 70 percent of your work remaining and only 30 percent of your buffer— you are probably in the “red (do something!) zone” of project execution.
Now, don’t wait until the project goes “red” before you do something. When the ratio is in the yellow zone, develop a buffer recovery action plan to respond in case the buffer consumption trend continues and your project goes red. If it does, your project team’s buffer recovery plan should go into effect.
With this plan, you will likely be focused on reducing the duration of the longest task on the critical path. Any specific tactic— process changes, additional resources, offloading— is good as long as the project deliverables aren’t compromised. Just don’t assume you’ll work your way out! Don’t jump to rescheduling your entire project, either; your recovery plan absolutely must get done before the project due date is modified.
Use the Risk Ratio to Set Task Priorities
The Risk Ratio is assigned to the open, in-work task in the critical path. When there are multiple ongoing tasks, a Risk Ratio is assigned to each one. Utilizing the Risk Ratio provides your team with a normalized priority system that can function as an early warning tool across a portfolio of projects. It brings the Priority Control process to greater maturity. This enables you to be more strategic in resource allocation and directing activity, and to allocate resources more effectively. If you can see that one project in the portfolio is behind, you can borrow resources from another project that has more buffer for support.
As your team manages the project buffers, you will be monitoring not only the open tasks, but the upcoming ones as well, reinforcing the “future orientation” you established in Basic Collaboration.
The Schedule Risk Ratio provides a measure of the health of the project schedule, tells your team which tasks it should focus on and which ones need additional attention, and alerts the team when they must take action to ensure project delivery by the committed date(s).
Armed with advance knowledge, you can act early and strategically, adjusting priorities and resource assignments to ensure timely delivery. You’ll have greater control, better decision-making ability, and shorter project durations.
You’ll know that your organization effectively manages schedule risk when:
- The work duration for tasks on the critical path is clearly separated from the contingency duration;
- Variability in task duration is accounted for, using time buffers at the project level;
- The project time buffer is explicitly managed; and
- Schedule risks are normalized across the project or portfolio, and the level of risk is used to prioritize resource assignment and activity.
When schedule risk is effectively managed, your projects are more likely to meet deadlines without allocating extra budget dollars to overtime or expediting efforts, or using additional people.
VISUM has schedule risk and buffer management built in. It is the only visual Kanban-type tool with backward and forward scheduling algorithms that constantly assess and display your schedule risk.
In the board view, you can get a quick overview of the schedule risk, looking at the project completion percentage (CP) and buffer consumption (BC).
Looking at the detail of the cards, you can get a Gantt view of past and anticipated completion dates with an optimistic completion date (with no buffer).
These two displays are an integral part of keeping your promises and delivering your projects on time.