As project managers, one of the important roles we have is assessing and managing risk for our projects. But risk assessment cannot be performed in a vacuum. The organization, customer, or end user needs to have a voice in how much risk should be tolerated.
Take, for instance, the NASA-manned space flight. It involves risks to human life which can’t be completely mitigated. On the other hand, many construction and engineering firms take a zero risk approach to human life and safety on their jobs. Jacobs Engineering goes “beyond zero” in their approach to safety risks.
It’s interesting to think about the potential for conflicting safety standards within a project. What if a beyond zero safety organization is performing project management for a firm that does not consider safety to be a priority? The customer may see the money being spent to ensure safety as an unwanted cost, while the project management firm will consider these costs essential to their ability to perform work for their client.
Let’s move from health and safety risk to schedule risk. In this case, the same potential for conflict arises if the owner and the PM don’t agree on what is tolerable schedule risk for the project. But in this case, it is possible to use statistical modeling and forecasting to examine the probability of certain completion dates.
It seems as though the date some owners pick for completion of their project is driven by considerations outside the strict limitations of the scheduling sciences. In these cases, the job falls to the PM to use best scheduling, risk analysis, and simulation practices to enlighten the owner as to the particular range of possible project completion dates.
As project managers, our role is to bring clarity and transparency to the management of the project. All stakeholders need to be aware of the risks, and, as a team, we need to be on the same page regarding which risks are tolerable and which risks are not. The application of statistical modeling and forecasting through Latin Hypercube or Monte Carlo can be a useful additional source of information when evaluating risks with your client.