By: Felix Soto Morales
Schedule risks are both threats and opportunities that affects in any way the project success. Threats jeopardize the meeting of goals in projects, meanwhile the opportunities enhance the probability of achieve these same goals.
So, risks can have good or bad impacts to our project, but what kind of risk could we have in our project schedules?
There are mainly two, and i say “mainly” because some specialists mention more, although these could be consider part of this. These are DURATION UNCERTAINTY and RISK EVENTS.
In several risk management workshops I use to mention the following example to remark and understand the difference between uncertainty and events. As it works, I proceed to give it to you.
If I ask you, how much time do you take to go from your home to the office, what would you answer? Let´s say 45 minutes is your answer. You take that time almost all the times every day. But almost is not always. Sometimes you take 40 minutes maybe because you drove a little faster, other days you get it in 50 minutes just because you made a little stop to say hi to a friend, of course there are days in those you take just 45 minutes. There is uncertainty in your “45 minute” response. You just threw your best estimate. Some called it “average”, although it is not.
Now let´s introduce something else, suppose that one day there is a car accident over the route and the route is closed. You get stuck in the road. You have to take another way to get to the office, this one is longer. That day you took two hours to arrive. This time, an event has happened, and it made you arrive late for 1 hr and 15 minutes. Out of any forecast.
The same thing happens to our scheduled activities, we give our best duration estimates but these are subject to uncertainty and events that could impact the schedule duration in a positive or negative way.
Modeling our schedule with this type of risk produce more realistic schedules
The treatment for each kind of these types of risk is different; uncertainty is treated with Montecarlo simulation which runs a large number of iterations based on the spread and the boundaries of the duration estimates, so that many combinations of durations are used.
Events may occur or not during your Project, the best way to model events is put them into a register, addressing the activities that impact, its probability of existence and the magnitude of its impact in the activities. After this, you can run what- if scenarios with the risk events that have the most risk exposure (probability x impact) adding fragments to your Schedule and see the results. If the event could really impact your project, it will be necessary to mitigate it in any way to reduce the risk. Of course, this will cost you money.
Please read my post about creation of probabilistic schedules called “Probabilistic vs. Deterministic” to get deep into the subject. You can find it at our article section in our website.
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