Thursday, July 29, 2021

The best thing you can do to manage risk?


You ask: What's he best thing I can do to manage risk?
Answer:
Make time your friend. 
 
Insert time buffers in your schedule around every uncertain event, around milestones that are critical to success, and around major blocks of scope that determine whether project objectives will be met.

Time is your friend if it is allocated in your schedule to give you space to work, and rework, mitigations. Time is your friend if you have the space to accommodate the less optimum outcomes. 

But time is not your friend if you've not allowed for the consequence of coupling between risky outcomes, and have not provided a buffer space to work the work-arounds.

Beware of shift-right!

What's "shift right"? 

If a milestone success is determined by the likelihood of multiple independent outcomes finishing together, then the likelihood of the milestone finishing on-time is degraded by the product of their likelihoods. To restore the confidence in the milestone schedule, it has to be shifted to the right.

Example: Two independent outcomes of 80% confidence each result in a 64% confidence in their joint success

So, if you buffer that milestone in the first place, then the "shift right" is built-in from the beginning and is not a shock when it happens.




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1 comment:

  1. Time can be used for aleatory uncertainty creating risk in the form of schedule, cost, and technical margin
    Epistemic uncertainty must be addressed with explicit "risk buy down" activities
    Time will not help you there.

    ReplyDelete

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