Microsoft 365 Project – Risk Reduction Techniques
Every project manager is aware of the outcome of risk within a project – that is usually one or more of delivering late, overspending, or not giving the customer what they really wanted. Indeed, customer dissatisfaction is the result of risk and uncertainty from one or both of poor quality and under-delivering project scope.
Another general risk problem to a project is delivering against a fixed end date.
So what do you do?
You sit down and plan the project schedule to check that your initial estimates show an end date that satisfies senior management providing you with an end date that you must commit to.
Project managers are very much aware of the project’s critical path as this will set the earliest completion date possible for your project. You are also aware of Murphy’s Law as it thrives on projects: anything that can go wrong will go wrong!
One of the biggest crimes on projects is to include padding to try and offset the above risk. your specialist team puts padding in when you ask them for how many hours work, the project manager adds a few extra days to tasks, and maybe even the project board sticks an extra month on the project delivery date ‘just in case’
The result of all that padding will indeed give you a later finish date as well as increase the project budget. So much for the art and science of project management!
You may have heard of the technique called Critical Chain.
This was a departure from conventional thinking because the technique was to reduce estimates to the bare minimum, but then add clearly visible buffers at key points within the project, as well as an end-of-project buffer.
Critical Chain has several advantages to the management of risk. First, it drives the project team work from estimates with best-case time and cost (while all activities are scheduled at late start and late finish), and second, should targets be missed, then this amount is shaved off from the project buffers.
I show you below how easy it is to apply critical chain to manage project risk by using Microsoft Project 365 …
The art of risk contingency reserve
So rather than hide contingency in the form of padding, the time and cost resulting from risk are ring-fenced within either or both of a risk budget contingency, or the addition of tasks named as contingencies.
A contingency reserve is either time or money that is factored into the schedule or the budget to respond to identified risks. A risk is an uncertain event or condition that, if it occurs, affects the schedule (or some other project objective such as cost, resources, or performance).
For those risks you accept, because you choose not to develop a response or can’t further reduce their probability or impact, you can set aside a contingency reserve to address the event when and if it occurs.
Every project is different, but there are some general factors that may help you determine a realistic contingency reserve such as:
- new or unproven technology
- complex projects with numerous interfaces
- projects that are unfamiliar to your organization
- resources unfamiliar with the type of work to be done
- a business critical project
- a high-profile project
- a constrained budget
Applying contingency to Microsoft Project
To provide contingency reserve in a project schedule, an un-resourced task is commonly added at the end of every project phase or before a major deliverable is due. This approach increases the probability that you will meet the due dates of a milestone or phase because it can be dipped into without changing end dates.
Here is an example:
A task called concrete cure time contingency was added and linked within the schedule to reduce the probability that a slip on any task in the elevator wool work packages would delay the elevator wall complete milestone.
If everything went as planned, then the contingency won’t be used. However, if there is inclement weather, a delay in materials, or some tasks needed to be reworked, there is some contingency time built in.
It would also make sense to build some contingency reserve for the budget, so renaming the above task as concrete cure time and cost contingency, fixed costs could be added to that task as well.
Working with risk in Microsoft Project
The way to reduce uncertainty on a project is to carry out a detailed risk analysis by considering the following steps:
- Do involve your team in a risk workshop as this will help unearth most of your project risk areas
- Remember that there are three elements within any risk; the risk root cause, the risk event itself, and the impact or consequences of the risk occurring.
Many project managers make the mistake of just stating the risk impacts and then thinking up potential responses.
This will not work, because any such responses should have been planned against the risk cause, not the risk impact.
There is a very simple formula to use for all risks, and that is, the risk severity is equal to the risk probability multiplied by the risk impact.
So calculating the probability that the risks you have identified will occur, and multiplying that risk by its probability will allow you to list in priority order the most severe risks.
For the most severe risks, you will then want to develop a response plan, and responses may include the following:
- avoid the risk altogether
- find a different way to perform a task
- eliminate the risky part of the project
- reduce the probability or impact of the event(or both)
- transfer the risk to someone else
- accept the risk
- include the work, resources, time, and funding that are necessary to implement the risk responses shown above
Checking task dependencies with Microsoft 365 Project
The timing of your Schedule is determined by the duration of each task and by its dependencies which are the relationships you build between tasks.
To start with, you may have built all the dependencies as finish to start – that is, directly one task finishes the next task starts.
A useful technique is to see if any of such tasks can be done in parallel or at least overlap in some way. The technique of overlapping is also known as fast tracking in order to save you time.
Such a strategy will reduce the project end date if these tasks are on the critical path.
Using the Microsoft Project Task Inspector Pane
The timing of every task in a project is affected by certain conditions, known as task drivers. These in and of themselves, are project risks. The task inspector pane can help you recognize these conditions which can include:
- manual start or end dates or assignments. Here you have manually entered a start or end date
- overallocated resources. Here you have assigned a resource to a task and the resources working on other tasks at the same time or is not available
- calendars. Here you have assigned a different calendar to the task or resource, or both, and the calendar differences are causing a scheduling conflict
- leveling delay. if you have turned on leveling to handle resource overallocation, the leveling may have caused the task to be delayed
- constraints. You have applied a constraint to a task such as forcing it to start or finish on a certain date
- summary tasks. You have manually scheduled a summary task that is out of sync with its child or subtasks
- dependency relationships. A predecessor task is causing issues with the timing of the task
You can use the task inspector to ensure the task schedule you have established works in conjunction with other tasks.
Microsoft project performs behind-the-scenes calculations to determine when each manually scheduled task is likely to occur based on predecessors and its duration.
If Microsoft Project detects that the task Is likely to get off track, it warns you about the potential problem and suggests a solution.
To display the task inspector pane, change to a task-oriented view such as the Gantt chart view, and simply click the task you want to inspect. Then click the inspect button in the tasks group on the task tab.
The task inspector pane appears. This explains the various conditions driving the timing of the selected tasks as shown below:
Microsoft 365 Project – warnings, suggestions, and problems
Okay, so this post is about risks and your management of them. So the focus has been on Microsoft Project flagging areas of concern. But let’s not overlook what are known as issues.
Unlike risks, these have already occurred. Further, risks can cause issues, and issues can cause risks – or at least influence them in some way.
Microsoft Project performs forecasted calculations for each task, given the task drivers such as dependencies, duration, constraints, calendars, and resource allocations.
If Microsoft Project finds a potential problem, it will alert you with an icon in the indicator column and in the task inspector pane.
You may see a red resource to indicate over-allocated resources, a calendar to indicate a constraint or a yellow triangle with an exclamation mark inside it to indicate a warning.
If the task inspector pane is not open you can hover over the icon in the indicator column to see the issues and by right-clicking the task, you can see your options.
Here are some of the main options you might see:
- reschedule to available date: if an over-allocated resource is assigned to the task, this choice reschedules all or part of the task to a time when the resources available to handle the work
- respect links: this warning solution moves the task based on the timing of its predecessor task. In most cases, this solution moves the task later based on the predecessor’s tasks schedule
- switch to auto-scheduled: this warning solution typically appears for manually scheduled tasks. Choosing this schedule change causes the tasks to recalculate based on the task drivers, such as dependencies and resource availability
- ignore problems for this task: this option allows the problem or over-allocated resources to remain. It will keep the warning indicator if the task is still expected to go past its deadline.
Keep an eye out for our latest Microsoft Training Masterclass called Microsoft Project For Scrum, Kanban, and Hybrid Projects!
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