Schedule risk analysis is a proven means for assessing and quantifying the impact of risks against a project schedule; providing an analytical means to establish schedule and cost contingency. In fact, most organizations have project management process requirements or contractual requirements to conduct a risk analysis on the project schedule. While the end result – the output of the analysis – is undoubtedly valuable, what’s often overlooked is the value in the process of conducting a risk analysis.
It’s not uncommon to hear that a schedule risk analysis is only being performed to meet a contractual requirement or stage gate review requirement. This highlights the fact that project managers, schedules, and stakeholders don’t fully understand the value a risk analysis can provide. Too often the focus is on checking the box or the “answer” and not on the larger process. While the risk analysis process is simple, the benefits are huge.
Schedule Risk Analysis Preparation
When preparing a schedule for a risk analysis, project teams often focus on the structure of the schedule – logic, open ends, lags, etc. What’s often overlooked is the basis of the schedule. Every schedule is built based on assumptions, whether that be the scope of work, the productivity of labor, or material availability. The possibility that an assumption may not hold true makes it a risk – a risk that should be recorded in the risk register and modeled against the project. Schedules also reflect assumptions that activities or work will happen in a certain logical or sequential order – but what happens if something is delayed? What impact does that have on key milestones? Does the schedule logic maintain proper sequence if there are unplanned delays? This additional review beyond the typical schedule check not only results in a better analysis, but also improves the project team’s understanding of the project and schedule. The addition of simulating these types of impacts via a risk analysis is even more powerful and yields insights that are not possible without a risk analysis.
Collecting and Reviewing
The process of collecting and reviewing the project risk register for a risk analysis is also quite valuable – it increases the project team’s and stakeholder’s awareness of the project risk and uncertainty. Often the team is so focused on creating the schedule and executing against it, they often forget to ask – what are the risks to this schedule? Bringing the project team together for a risk analysis provides a chance to focus on identifying schedule risks.
The end result of reviewing the project schedule and risks and running a schedule risk analysis is a better understanding of the project among the project team and stakeholders. The schedule assumptions have been identified and discussed, risks and uncertainties have been identified and collected in the risk register. When combined in a risk analysis, the result is a clear understanding of the impact of risk on the project, and which risks are the key drivers. With this clear understanding, focus can turn to managing those risks to improve project success.