Risk Analysis Estimating Methods – Scheduling Risks As Applied to the Panama Canal Case Study 11/8/2010 Kendrick argues that establishing project planning is a necessary key requirement of managing project schedule risk (2009, p. 334). Regardless of how thoroughly a project manager works to ensure that a project’s schedule is accurate, he or she cannot fully control the inevitable and random influences that may negatively impact their project schedule. Equipment failures, nature, and sick employees are just a few of the uncontrollable factors that may jointly cause a project manager to miss their project’s target date.
In preparation for these risks, a project manager needs discipline to devise an appropriate, risk-controlled project schedule. These Kendrick states that scheduling risks fall into three categories (2009, p. 71): * Delays – Usually caused by material delivery and availability issues. * Estimates – Minimize this risk by using better estimation procedures. * Dependencies – When one project depends on other projects or systems, a failure or delay in any area can cause a domino effect.
Risk Identification is the process of documenting risks that threaten a project and determining which of those risk have the potential to cause the most impact it. The act approximating the degree of impact a risk may have on a project schedule is referred to as estimating. This paper discuses two tools or techniques of estimating scheduling risks used to predict and reduce risks and the impact on a projects schedule. This paper also demonstrates how these techniques can be applied to the Panama Canal case study.
To be specific, this paper discusses the use of Brainstorming as a scheduling risk estimation technique and the Pareto diagram as a scheduling risk estimation tool. Brainstorming The PMBOK describes Brainstorming as a group creativity technique used to generate and amass a comprehensive list of project risks (PMI, 2008, p. 286). To be effective, all group members participate in brainstorming sessions in an uninhibited manner and communicate risks they have identified without fear or concern of criticism, threat or embarrassment.
Study Group 1 used the Brainstorming technique as its first step in estimating scheduling risk identified in the Panama Canal case study. Through the participation of all our group members in a brainstorming activity we were able to comprise the list of risks depicted in table 1. Once, this list was completed, the members of our group participated in a brainstorming chat sessions to discuss “what-if” scenarios and probable impact of these risks. Table 1: Panama Canal Risk List The Pareto Diagram
The PMBOK describes a Pareto diagram as a specific kind of histogram or vertical bar chart that ranks an “attribute, or characteristic of a problem/situation” in decreasing order of frequency (PMI, 2008, p. 210). The diagram is based on Pareto’s Law which argues that a significant fraction of all causes will produce in a majority of the problems. To be specific, the law also referred to as the 80/20 rule states that 80% of all problems can be attributed to 20% of all causes (PMI, 2008, p. 211). The purpose of a Pareto diagram is to isolate the major aspects of a risk from the minor ones.
By graphically separating the aspects the risks previously identified in the Panama Canal case study, my study group will be able to better understand where we need to focus our efforts to reduce major negative impact to the project schedule. The expectations is that targeting and eliminating the risks represented by the largest bars in the diagram will yield more desirable results in this effort than eliminating those represented by the smaller bars. Chart 1 depicts the Pareto Diagram created for the Panama Canal case study.
Chart 1: Panama Canal Pareto Diagram For the purpose of this exercise, I consolidated the previously risks into 10 risk elements. In concurrence with Pareto’s Law, two of the10 risks (20%) depicted in chart 1 represent a significant amount of delay or lag time (63. 4%) represented in the chart. Conclusion The main intent of estimating during the risk identification process is to seek those risks that will have most negatively impact your project. Although, there are a variety of techniques and tools available to a project anager to capture risks, these techniques can be used alone or together. A project manager must evaluate each project to determine which techniques and tools will best serve the project team in its effort to seek out those significant risks during risk identification process.
Works Sited Kendrick, T. (2009). Indentifying And Managing Project Risk (2nd Ed). New York, NY: American Management Association. Project Management Institute (PMI). (2008). A Guide to the Project Management Body Of Knowledge (PMBOK Guide) (4th Ed). Newtown Square, PA: Project Management Institute, Inc.